Meta, the parent company of Facebook and Instagram, has accused Australia of violating a free trade agreement with the United States. The tech giant is responding to Australia’s proposal to impose a 2.25% tax on the total revenue of certain tech companies, including revenue unrelated to social media, if they do not strike licensing deals with local media.

Dispute Over Free Trade Agreement

Meta argues that this proposed tax breaches the commitments made in the bilateral Free Trade Agreement between Australia and the United States. The agreement requires Australia to treat American companies no less favorably than their Australian counterparts. Meta’s blog post highlights that the proposed tax is broader than existing digital services taxes in other countries, which have already led to U.S. trade actions.

The Australian government, led by a center-left administration, remains committed to the tax, stating that any revenue collected would be redistributed to the news media industry. This issue has been contentious since 2021 when Australia first passed a law requiring social media companies to negotiate deals with news outlets or face government arbitration.

Impact on U.S.-Australia Relations

The situation has become a flashpoint under the current U.S. administration, with a congressional committee calling for Australia’s internet regulator to testify about what it describes as a regime censoring American free speech. The regulator has not yet confirmed participation.

Meta’s response to the proposed tax follows its decision in 2024 to stop paying for news content in Australia, a move that came after initially agreeing to deals with major outlets. The Australian government has since shifted from arbitration to a tax model, expanding the list of affected companies to include Google and TikTok, alongside Meta.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.