US tech giants are complaining to Daddy that Australia and other nations are being mean to them

Some of America’s most profitable tech companies have seized on their chance to join US president Donald Trump’s global trade war arguing that laws and taxes in other nations are costing them money.

Industry lobby group the Computer & Communications Industry Association (CCIA), which represents Amazon, Apple, Meta, Google and Elon Musk’s X, among others, has written to the Office of the United States Trade Representative (UTSR) as part of a trade review ordered by Trump, complaining that Australian media laws are “coercive and discriminatory”.

While the biggest whinge in the 45-page submission to the USTR, which oversees US international trade and direct investment policy, is Canada’s proposed 3% digital services tax, Australia features prominently among more than a dozen countries, including the UK, India, Indonesia, Belgium, Italy and even Kenya, where US tech feels hard done by in local regulations.

Having already slapped a 25% tariff on Australian steel and aluminium, the Trump administration is threatening further tariffs on April 2 against countries with “unfair” barriers against US companies.

Australia’s News Media Bargaining Incentive, Labor’s revamped version of the code introduced in 2020, which sees the likes of Google and Facebook contribute funding for local news content, is also a focus of the CCIA’s ire.

“Australia’s extraction and redistribution of revenue from U.S. digital suppliers to local news businesses is reported to have cost U.S. firms US$140 million ($222.6 million) annually,” the submission says.

Meta, which owns Facebook and Instagram, has already refused to take part.

The Greens are keen to follow in Canada’s footsteps as Australia heads to a federal election, proposing a ‘Big Tech Tax’ on Meta, Google, Amazon & others, claiming it will deliver $11.5 billion.

The other burr in US tech’s saddle is Australia’s proposed requirements for US streaming services to fund the development and production of Australian content – as local TV channels have long been required to do – seeking between 10% and 20% of local expenditure towards it.

“Australia’s online video streaming market is estimated to generate up to $2.3 billion of annual revenue, with the majority of it earned from U.S. companies,” the submission says.

“If the Australian government pursues the 20% expenditure mandate it has floated in the past year, that would put this revenue at risk.”

The CCIA is also worried about “the contagion effect of specific barriers”, concerned that other countries will follow suit – a reason it fought so hard against Australian initiatives.

You may recall that Facebook briefly blocked hundreds of sites in early 2021, including government departments, hospitals, arts organisations, ASX-listed companies, and essential services, after saying it would ban the posting and sharing of news stories in Australia over the introduction of the code.

The CCIA doesn’t want tariffs though, arguing that “expansive tariffs could also invite retaliatory actions that further diminish the competitiveness of U.S. exports, particularly for markets where U.S. digital services and products are already under threat”.

Low local tax

While the submission argues that foreign regulations, especially Canada’s DST “would not only reduce export revenues and income for U.S. businesses and their shareholders, but would also reduce the US tax base correspondingly” it’s worth noting that technology companies have often claimed that only very small amounts of their income in Australia are taxable.

Less than 4% of the actual revenue generated in Australia is booked as local income, with the tax rate for US tech sitting at around 1% – well below the national corporate tax rate of 30%.

Microsoft’s local data centre business paid no tax in 2022-23 on $1.1 billion of income, while the company’s main Australian arm paid more than $118 million in tax on $7.5 billion in income, almost $400 million of which was taxable.

Apple paid almost $142 million in tax in 2022-23 after raking in more than $12 billion in income in Australia — only $481 million (or around 4%) of which was reported as taxable.

Facebook Australia paid almost $38 million in tax on almost $1.3 billion of income in the same year, while Google Australia paid $124 million on $2 billion in income and its Google Cloud arm paid almost $9 million on $158 million in income.

The Australian Tax Office said it has “issues with the tech sector”.

The CCIA is also miffed about Australian plans to regulate artificial intelligence (AI).

“The Australian government is proposing to classify all general-purpose AI models as high-risk in a new regulatory regime that would add significant compliance burdens to U.S. companies with AI products and services operating in Australia,” the submission says.

It argues that “the proliferation of AI laws and regulations that could adversely affect investment in or the cross-border supply of AI-enabled services and technologies”.

Communications minister Michelle Rowland said in response to news of the CCIA submission that the government’s digital policies apply equally to all companies operating in Australia no matter what country they are based in.

“The Albanese government’s proposed Incentive is an enforcement mechanism of an existing law – the News Media Bargaining Code, that was legislated by the Coalition government in 2021,” she said.

“It is designed to encourage big digital platforms to continue to enter into deals with news media organisations. While some US companies may be captured under the incentive, others are expected to benefit from the commercial deals encouraged by the incentive.”

On Tuesday Australian treasurer Jim Chalmers hands down his fourth budget, a week before Trump makes his decisions, and ahead of an election in May.