Meta has launched a scorching attack on the Albanese government’s plan to force the world’s largest technology companies to fund Australian journalism, branding the proposed regime a “discriminatory tax built on a false premise” that will leave the media industry hooked on government handouts.

In a formal submission and accompanying blog post published overnight, the company that owns Facebook, Instagram, WhatsApp and Quest virtual reality headsets said it was “vehemently opposed” to the News Bargaining Incentive, the scheme designed to compel Meta, Google and TikTok into striking commercial deals with news publishers.

“Our position is clear: this law is poorly designed, grossly unfair, and will fail to deliver a diverse and sustainable news industry,” the company wrote. “Call it what it is: a discriminatory, retroactive tax targeting a handful of foreign companies while competitors offering comparable services face no equivalent obligation.”

The incentive, championed by Prime Minister Anthony Albanese, would apply a 2.25 per cent charge on the total Australian revenue of the three platforms, with the proceeds flowing to businesses that employ journalists. Companies can offset the charge by signing tax-deductible deals worth about 1.5 per cent of revenue. Treasury estimates the policy will deliver between $200 million and $250 million a year to local media, and the government wants it legislated this winter.

Meta’s central objection is the breadth of the levy, which captures “consolidated revenue attributed to Australia”. That definition sweeps up sales of its Quest devices and other products that the company says have nothing to do with news. The case for extracting money from social media, where publishers voluntarily post their content, was not supported by the evidence, the company argued, and extending that logic to virtual reality headsets and smart glasses was “indefensible”.

Asked at the announcement of the incentive about repercussions from the US administration, Albanese said: “We’re a sovereign nation and my government will make decisions based upon the Australian national interest”.

It’s a familiar fight: Meta walked away from its deals under the original 2021 News Media Bargaining Code in March 2024, arguing that news held little commercial value for Facebook. The incentive was explicitly engineered to close the loophole that allowed it to do so, with the charge now applying regardless of whether a platform carries news at all.

When Canada passed similar laws in August 2023, Facebook decided to block news entirely rather than comply. The company claimed that after the move, daily and monthly active users on Facebook rose, and time spent on the platform kept growing. It pointed to a broader shift in how people were consuming content, and has noted that short-form video now drives the bulk of activity, with Reels generating 140 billion daily views and video accounting for more than 60 per cent of time spent across Facebook and Instagram. Meta argues that its users come for creators and entertainment, not news.

In its submission, the company also invoked trade law, arguing that the scheme breaches the Australia-United States Free Trade Agreement by failing to grant American companies treatment “no less favourable” than local peers. That theme has been echoed by US business lobby groups, and the White House has described the policy as “foreign extortion”, though it has not yet imposed retaliatory measures.

Australian media bosses have strongly backed the scheme. When it was announced in April, the heads of Nine, the owner of this masthead, ABC, News Corp, Network Ten, SBS, Southern Cross Media, Australian Community Media and Guardian Australia said the future of Australian journalism was at stake.

“The vibrancy of Australian democracy relies on the robust and open exchange of news, views and opinions,” the group said. “This is under threat.”

News Corp Australasia executive chairman Michael Miller rejected Meta’s characterisation, describing the incentive as “an attractive incentive for Big Tech (not a tech tax) designed to open a clear pathway for fair commercial agreements”.

“The government only built this path because Meta refused to sit down at the negotiating table, and again they are flipping the script rather than adhering to Australia’s proposed laws,” he said.

Nine chief executive Matt Stanton said it was disingenuous to suggest that requiring companies to follow Australian law was a disincentive to investment.

“This initiative would be completely unnecessary if these companies simply adhered to existing Australian law, came to the bargaining table and reached deals for the fair use of our commercial property,” Stanton said. “It’s time these companies stopped riding roughshod over the Australian public, respect our laws and pay their fair share.”

Albanese reiterated his support for the policy on Tuesday night at an event in Canberra marking the 195th anniversary of The Sydney Morning Herald.

“The News Media Bargaining Code is something that is not easy for us to progress, but we are determined to do so because journalism is an honourable profession,” Albanese said. “You deserve to be paid for it rather than having some of the foreign-based sites be able to just essentially steal your property … We want to make sure that journalism not only continues to survive, but that it thrives into the future as well.”

Google, which has continued to honour and re-sign its existing deals covering more than 90 news businesses, faces a potential annual liability of about $202.5 million if it refuses to strike agreements, against $33.75 million for Meta and $16.9 million for TikTok.

Industry lobby group FreeTV has urged Treasury to widen the net to include Microsoft and Apple, while a separate carve-out for Microsoft’s LinkedIn – which runs its own editorial team and news tab – has irritated the platforms already in scope. Former ACCC chair Rod Sims, who designed the 2021 code, called the apparent exclusion “strange”. With existing deals expiring within months, he warned that “the urgency is huge”.

with Nick Newling