The long-awaited decision sets out a successor to a world-first law that Australia passed in 2021, which was designed to make giants like Meta and Google pay for hosting news on their platforms.

Earlier this year Meta – which owns Facebook and Instagram – announced it would not renew payment deals it had in place with Australian news organisations, setting up a standoff with lawmakers.

The new rules, announced on Thursday, will require firms that earn more than A$250m ($160m; £125m) in annual revenue to enter into commercial deals with media organisations, or risk being hit with higher taxes.

In a statement, Meta said it was concerned that the government was “charging one industry to subsidise another”.

Unlike the previous model, the new framework – called the News Bargaining Incentive – will require tech firms to pay even if they do not enter deals with publishers.

“Digital platforms receive huge financial benefits from Australia and they have a social and economic responsibility to contribute to Australians’ access to quality journalism,” Assistant Treasurer Stephen Jones said on Thursday.

The previous News Media Bargaining Code saw news organisations negotiate commercial deals with tech giants, while also committing firms like Facebook and Google to invest millions of dollars in local digital content.

That code aimed to address what the government called a power imbalance between publishers and tech companies, while offsetting some of the losses traditional media outlets have faced due to the rise of digital platforms.

As deals brokered under that arrangement neared expiry, Meta said that it would not be renewing them, leading to a roughly A$200m loss in revenue for Australian publishers.

Instead, Meta said it would phase out its dedicated news tab – which spotlights articles – on Facebook in Australia, and reinvest the money elsewhere.

“We know that people don’t come to Facebook for news and political content… news makes up less than 3% of what people around the world see in their Facebook feed,” it said in a statement in February.

The announcement prompted a strong response from Prime Minister Anthony Albanese’s government, which described the move as “a fundamental dereliction” of Meta’s “responsibility to its Australian users”.

“The risk is that misinformation will fill any vacuum created by news no longer being on the platform,” Communications Minister Michelle Rowland said at the time.

The new taxation model begins in January 2025 and will be cemented into law once parliament returns in February.

The government says it will be designed to make tech companies fund Australian journalism in exchange for tax offsets, not to raise revenue.

The measure, applicable from January 1, will force firms like Meta and Google with an Australian-based revenue in excess of 250 million Australian dollars ($160m) to pay for content or face a hefty tax bill that could amount to millions.

Announcing the move, Communications Minister Michelle Rowland said on Thursday that the rapid growth of digital platforms had “disrupted” the media landscape and was “threatening the viability of public interest journalism”.

“[Digital platforms] need to support access to quality journalism that informs and strengthens our democracy,” she said.

The new rules will shore up traditional media companies waging a battle for survival as their content is made freely available on platforms, wiping out precious advertising dollars. Amid the ongoing crisis, hundreds of Australian journalists have lost their jobs.

The Australian government indicated the parent companies of Google, Facebook and TikTok would be targeted by the tax, which will be waived if they voluntarily enter into commercial agreements with Australian media companies.

The real objective … is not to raise revenue – we hope not to raise any revenue. The real objective is to incentivise agreement-making between platforms and news media businesses in Australia,” Assistant Treasurer Stephen Jones told reporters.

Under previous laws introduced in 2021, Google and Meta struck a string of deals with Australian newsrooms worth a combined $160m.

However, Meta, which owns Facebook, Instagram and WhatsApp, has indicated it will not renew arrangements when they expire in March, arguing that news makes up a tiny portion of its traffic.

Reacting to the new rules, a Meta spokesperson said that Australia was “charging one industry to subsidise another” and that the proposal failed to account for “the realities of how our platforms work”.

Google and Meta have pushed back against efforts in other jurisdictions to compensate news outlets.

Google started removing links to some California websites earlier this year after the state indicated it would make them pay for traffic driven by news.

Facebook and Instagram have blocked news content in Canada to avoid paying media companies.

The measure marks Australia’s attempt to rein in tech titans. Last month, the country voted for new laws banning social media access for under-16s.

It is also mulling fines for companies that fail to stamp out offensive content and tackle disinformation.