This article first appeared on GuruFocus.
Meta Platforms Inc. (META, Financials), the social media giant, Alphabet Inc. (GOOGL, Financials), the parent company of Google, and Microsoft Corp. (MSFT, Financials) face a new cost in Australia after lawmakers approved a levy aimed at pushing major platforms to pay local news publishers.
The new News Bargaining Incentive imposes a 2.5% charge on Australian advertising revenue for qualifying platforms that fail to reach commercial agreements with media companies.The rules also apply to TikTok and Microsoft’s LinkedIn. Companies must generate more than A$250 million, or about $178 million, in local advertising revenue to fall under the scheme.
Platforms can avoid the levy by reaching agreements with at least eight publishers before the end of their reporting period.Spending with smaller publishers receives a larger offset, giving companies an incentive to spread deals across the media industry.
For investors, the direct financial impact may be manageable for companies of this size.The bigger issue is precedent. If similar frameworks spread to other markets, payments to publishers could become another recurring regulatory cost for the world’s largest advertising platforms.
