Australia has passed new legislation that will require major technology companies to pay a 2.5% levy on local advertising revenue if they fail to reach commercial agreements with Australian news publishers.

The News Bargaining Incentive applies to companies including Meta, Google, TikTok and Microsoft’s LinkedIn if they operate significant social media or search services in Australia and generate more than A$250 million ($178 million) in local advertising revenue.

Platforms can avoid the levy by signing qualifying agreements with at least eight publishers before the end of their financial reporting period. Payments to news organizations will be credited against the levy, with stronger incentives for deals involving smaller and medium-sized publishers.

Spending with large publishers will receive a 150% offset, while agreements with smaller outlets will receive a 200% offset. The rules are designed to encourage technology platforms to financially support journalism while still allowing companies to negotiate commercial arrangements directly.

Revenue collected through the levy will be directed toward Australian news organizations, reflecting the government’s view that media content contributes significantly to engagement and advertising revenue on major digital platforms.

The legislation strengthens Australia’s broader effort to rebalance the relationship between technology companies and traditional media businesses as news publishers struggle with declining advertising income and increased competition from digital platforms.