The Australian Content Requirements for Subscription Video on Demand Bill 2025 (ACO Bill), introduced earlier this month in the Parliament of Australia, would require large video-streaming platforms to spend either 10% of their Australian expenditures or 7.5% of their Australian revenues on locally produced original programs. While framed as a cultural measure, the bill functions in practice as a market-distorting industrial policy that may violate Australia’s trade obligations and ultimately harm Australian creators themselves.
By compelling U.S.-based platforms to meet a fixed local-spending quota, the ACO Bill would trigger a rush by foreign producers to hire Australian crews, studios, editors, and other scarce production inputs simply to satisfy the mandate. This would drive up costs and divert resources away from Australian creators by crowding out smaller local firms —the opposite of cultural support.
Moreover, these obligations are economically misaligned on their own terms. These regulations impose significant costs on streaming platforms, as well as on consumers and even the local-content producers the legislation is intended to support. Consumers want the best content at the lowest price, and online streaming platforms face fierce competition from both other digital-streaming services and other forms of media delivery, including broadcast and cable-television service, social-media platforms like YouTube and Instagram, and even other forms of entertainment like online video games.
This dynamic also raises trade concerns. A compulsory production quota looks less like cultural promotion and more like an industrial-policy transfer to local firms, functioning as a non-tariff barrier (NTB) that will inevitably invite trade scrutiny. And because the obligation focuses on local production, rather than the distribution or global circulation of Australian works, platforms will have weaker incentives to promote Australian content abroad.
Notably, the bill follows a global trend of similar laws and initiatives. For example, the Canadian Online Streaming Act has garnered significant attention for requiring online platforms to invest in local Canadian content. It has been estimated to cost upwards of C$450 million annually as currently implemented, but could reach nearly C$750 million a year if the Canadian government decides to apply fees as far as the law allows. The European Union, for its part, has imposed similar regulations with the added complexity of differing implementation among member states.
While these bills do not target U.S. firms specifically, in practice, only American firms meet the the legislation’s size definitions. U.S. firms are therefore forced to invest in local content at the expense of international competitors and the platforms’ consumers. As the Trump administration continues trade negotiations, it should consider these laws as NTBs to trade.
The ACO Bill’s Requirements
The ACO Bill is the latest in a series of international laws designed to promote local-content production and distribution. The bill would require subscription-video-on-demand (SVOD) services with more than 1 million subscribers to spend 10% of their total Australian expenditures or 7.5% of their Australian revenues on local original programming, including drama programs, children’s program, documentaries, arts programs, and educational programs. The bill would, however, explicitly exclude news programs, sports programs, and advertising as eligible programming. Streamers can satisfy these requirements by “acquiring, producing or commissioning a program,” as well as investing in a program or devoting resources to the program’s “pre-production expenditure.”
Importantly, the bill treats SVOD services differently than other technologies. Subscription broadcasters (cable and satellite television, for example) are only required to invest 10% of their programming expenditure on drama channels locally, instead of 10% of their total programming expenditure. Broadcasters lack a share-of-revenue obligation entirely. Platforms in violation of the bill would be subject to civil penalties of up to a yearly maximum of 10,000 penalty units (currently valued at $330 per unit), or 10 times the original expenditure requirement.
The bill would also impose reporting requirements on SVOD services. This report must include details about compliance by the service, the service’s qualifying expenditure, the service’s total program expenditure, the revenue derived from the service, the number of paying subscribers, and the expenditures on Australian content. If a platform fails to provide a compliant report, the Australian Communications and Media Authority (ACMA) could impose additional civil penalties.
Content Quotas and Taxes Fail to Deliver Benefits While Adding Costs
Quota obligations and taxes often fail to promote the cultural diversity and circulation of local works. Analysis of the European audiovisual market after the implementation of EU regulations requiring broadcasters to reserve a minimum of 50% of their programming for European works found that consumers were not choosing these works in VOD services.This is at least partly because, while content regulations tend to increase the investment in local production, firms’ incentives are simply to meet the quota, rather than increase the quality of local programming.
In the long run, this type of quota could actually harm Australian content producers, because the incentive to produce quality content that can compete with international alternatives is diminished. As a result, local programming fails to meet consumers’ needs and will see limited circulation, especially outside of the local market.
Moreover, using a tax as a means to transfer funds to local content producers encourages the overproduction of local content beyond what the market actually demands. Not only does this create inefficiencies, it also raises the costs on Australian content producers. Content generation requires a vast array of scarce local labor and resources. Financial obligations to contribute to local production will increase the costs of every resource involved in those productions. In turn, this could lead to fewer local producers being able to afford to compete.
Requiring platforms to invest significantly in local content may also limit investment in content produced outside of the local jurisdiction, even if the foreign content would better meet consumer demand. American media performs well internationally because U.S. producers develop shows that consumers want to watch. If a consumer has less access to that content on a given platform, they may cancel their subscription and find services with better content. By establishing quotas and taxes to support local content, Australia could run the risk of harming Australian consumers who have less access to quality content they want.
Finally, there does not even appear to be any threat to the production of Australian cultural content. SVOD expenditures on Australian programming have increased by an average $46.9 million per year over the last five years, reaching $341.5 million last year. And excluding sports, SVOD providers made 5,351 hours of Australian content available last year, up from 3,081 hours in 2020. In other words, the market for Australian content has been growing on SVOD services and it is unclear that drastic regulatory changes, which could ultimately harm the market, are even necessary.
Why the ACO Bill Likely Violates Australia’s Trade Obligations
The ACO Bill does more than impose a cultural-policy obligation; it functions as an NTB targeted almost exclusively at U.S. streaming services. As Eric Fruits explained earlier this year at Truth on the Market, NTBs arise when governments use regulatory design, production mandates, or local-content requirements to influence trade flows without imposing an explicit tariff. These measures often operate as industrial-policy tools or rent-seeking schemes, even when framed as serving public or cultural interests.
The ACO Bill fits this pattern squarely. While drafted in neutral terms, the legislation’s thresholds are calibrated so that only U.S.-headquartered platforms would satisfy the subscriber or revenue tests. More importantly, the bill defines “Australian programs” so narrowly that culturally relevant content created by U.S. producers—such as a show about Australia written by an Australian expatriate, filmed abroad, and developed with Australian cultural consultants—does not qualify.
What matters in these definitions is not cultural authenticity or Australian creative involvement, but whether production spending is routed through Australian firms and Australian labor markets. This makes the measure indistinguishable from an industrial-policy subsidy for the domestic screen-production sector, rather than one that seeks to preserve local culture.
This structure raises two trade-law concerns.
First, Article 16.4 of the Australia–United States Free Trade Agreement (AUSFTA) prohibits measures that accord “less favorable treatment” to digital products based on the nationality of the author, performer, producer, or distributor. The ACO Bill does precisely that: it disfavors U.S. digital products by imposing a mandatory spending obligation triggered almost exclusively by U.S. platforms, and by counting only programs physically produced inside Australia as qualifying expenditures. Under Article 16.4, disadvantaging digital products because their creators are not Australian—or because the production occurred outside Australia—is forbidden.
Second, AUSFTA Article 11.9 bars “performance requirements,” including mandates compelling an investor to use local goods, purchase local services, or achieve a given level or percentage of domestic content. Requiring U.S. platforms to spend 10% of Australian expenditures or 7.5% of Australian revenue on domestic production is precisely such a prohibited performance requirement. It obliges foreign firms to divert spending to local suppliers as a condition of market access—a textbook NTB, in which domestic industry uses regulation to extract rents at the expense of foreign competitors and domestic consumers.
Because the bill neither advances cultural dissemination nor recognizes culturally authentic non-Australian production, its real effect is rent transfer, not cultural preservation. It channels revenue from U.S. firms to Australian production houses, inflates the cost of local production inputs, and restricts the market access of U.S. digital products. For those reasons, it is difficult to reconcile with Australia’s FTA commitments, and is likely to become the subject of trade-policy disputes.
Growing International Trend of Content Quotas
The Australian ACO bill is just the latest of what essentially amounts to a digital-services tax on online streaming platforms. As mentioned above, Canada passed the Online Streaming Act, which gave the Canadian Radio-television and Telecommunications Commission (CRTC) the authority to impose fees and regulations on streaming platforms to support local Canadian content. In implementing the statute, the CRTC decided to impose a 5% tax on platforms’ in-country revenue, but this figure could drastically increase if the CRTC decides to go further.
Potentially more problematic, Canada’s Online Streaming Act also gave the CRTC authority to regulate how Canadian content was promoted and delivered to consumers, although the commission has not thus far developed regulations to implement these provisions.
The Trump administration should take two steps to address this issue.
First and foremost, it should ensure that the Australia ACO and other similar content-quota bills around the world comport with existing trade agreements. As noted,the ACO likely violates Sections 16.4 and 11.9 of the AU-US FTA. The administration is within its rights to demand enforcement of this agreement.
Second, as the White House continues ongoing trade negotiations with other countries, it should include these types of content quotas as NTBs subject to a calibrated response. This will better encapsulate the costs foreign jurisdictions impose on American firms. While specific fees can be easily incorporated, the administration should also consider behavioral mandates and content-hosting quotas when evaluating existing barriers to trade.
Conclusion
Content quotas and fees to support local industry have been a growing issue for U.S. firms in recent years. The Australian bill is the latest example, disproportionately targeting SVODs. The bill will likely come with significant negative unintended consequences for both consumers and the very industry that lawmakers are attempting to support. As the Trump administration continues to negotiate trade deals, it should include these types of quotas as non-tariff barriers to trade.
