Social media company Meta has accused a federal parliamentary committee of ignoring “the realities of how our platforms work” and the value Facebook and Instagram bring to news outlets, as a fight reignites over the news media bargaining code and funding of media publishers.

The Albanese government has also given its strongest indication yet it will look to reshape the code or replace the framework entirely, voicing concern Meta is trying to simply “sidestep obligations to pay for news”.

The parliament’s joint select committee on social media and Australian society on Monday recommended a “digital platform levy” on companies like Meta and Google – referred to by some as a “tech tax” – to fund public interest journalism.

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The recommendation was prompted by the degradation of the news media bargaining code, legislated under the former Coalition government, which forced the online platforms into signing deals with media organisations for the content they generate.

But the tech tax suggestion from the committee was rejected by two of the biggest news publishers, Nine Entertainment and Seven West Media, in favour of designating the tech firms under the code.

“Seven West Media maintains its call to designate Meta under the news media bargaining code,” a spokesperson said. “The government should be using what is available to them now; new reform such as a levy takes time. If Meta chooses to pull news from their platform following designation, only then should other approaches be considered.”

The publisher of the Sydney Morning Herald and the Age, Nine Entertainment, also called on the government to utilise the law already in place.

“We welcome the committee’s view that a sustainable news media industry is vital to Australian democracy and maintain our position the federal government should use the powers available to it under the News Media Bargaining Code to ensure the platforms fairly compensate news publishers for our valuable journalism,” a spokesperson said.

News Corp Australia did not respond to a request for comment.

The Public Interest Journalism Initiative (PIJI) welcomed the consideration of a levy on digital platforms.

“A standard, percentage-based digital levy in Australia could create financial and operational certainty for digital platforms, while generating important new investment in public interest journalism,” PIJI said.

Google has voluntarily renewed agreements, but Meta, which operates platforms including Facebook and Instagram, said it would not – potentially threatening a major revenue stream for news outlets.

The social media committee’s interim report focused on Meta, specifically criticising its decision not to renew deals and the “de-prioritisation of news” on its platforms. MPs also recommended establishing a short-term transition fund to help news media businesses to diversify.

The committee’s report stated that the code should not be abolished but “further measures may be needed” to fulfil the spirit of the code.

In a dissenting report, Coalition members said they “strongly reject” the wider committee’s assertion the code was no longer fit for purpose.

“Under this Albanese government, Meta has demonstrated its utter contempt for the Australian government, its people and its laws – and has gotten away with it,” the Coalition members said.

Meta was critical of the report and the inquiry.

“The committee’s recommendations ignore the realities of how our platforms work, the preferences of the people who use them, and the value we provide news publishers who choose to post their content on our platforms,” a spokesperson said.

Google was contacted for comment.

The committee’s recommendations offer potential insight into the government’s thinking on ensuring media sustainability and addressing the influence of the social media companies.

A government spokesperson said a range of options were being considered.

“The Albanese government has been clear that digital platforms must contribute to Australia’s news media industry to ensure quality and diverse content,” the spokesperson said.

The government response was also scathing of the Coalition’s dissenting report, indicating the government’s potential to reform the code.

“The Coalition is stuck in 2021 – while the code achieved some short-term deals it is clear in 2024 the circumstances are very different,” the spokesperson said.

“The Coalition’s stubborn and short-sighted response shows they are all negativity, no plan, and have refused to listen to concerns raised by industry about limitations of the Code that could see Meta sidestep obligations to pay for news.”