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Thecompetition regulator was instructed by the Morrison government last month to impose the code on the digital giants as meaningful progress was not being made through a voluntary process. Media outlets,including Nine Entertainment Co (owner of this masthead) and News Corp Australia,have since argued publicly for annualpayments of between $600 million and $1 billion from the tech platforms.

Mr Sims refused to comment directly on how much Google or Facebook should pay but said payments to publishers would be measured predominantly on the value that journalism brings to Facebook and Google rather than how much advertising revenue it generates.

“Clearly the biggest benefit is not the direct benefit which is the ads shown against news items. That’s the really,really small benefit,"Mr Sims said."The indirect value that Google and Facebook gain from having news on their platform. I’m not going to give numbers now,that is something we will come to later."

Google Australia boss Melanie Silva said two weeks ago thatthe tech platform "struggled" to make money from news publishers through search or its news tab. The company has since released itslocal financial results,reporting gross revenue of $4.8 billion and advertising and re-seller revenue growth of 16 per cent to $4.3 billion.

“You want to be the all singing,dancing search engine ... you need news so that when someone types in coronavirus you want all the news articles on that. Otherwise it’s a pretty limp search,"Mr Sims said."But there’s other benefits from having news media. One is that you get better content. It’s in the platform’s commercial interest to have quality.

"They talk about benefiting society. Journalism does benefit society ... how important is it to them to be part of that? In their public pronouncements I don’t think Google and Facebook have really been addressing that issue,but it is going to be front and centre of what we will be discussing over the coming couple of months.”

The ACCC's options paper outlines four options for payment to publishers. One proposal is to allow media companies to negotiate individually with Google and Facebook and use the code as the basis for arbitration. An alternative is a collective bargaining agreement which would allow all media companies to work together on a set price for content in an attempt to receive better commercial terms.

"The most straightforward way of doing this is that there is a collective on one side of the media companies ... Google on the one hand and Facebook on the other ... let them collectively bargain and work something out. The only issue with that is that it may end up going to arbitration,"Mr Sims said.

A collective boycott if commercial negotiations fail is a more radical idea put forward in the report,but the ACCC said that this option would likely cause problems for both media outlets and digital platforms. A fourth proposal is a collective licensing agreement or fee arrangement,which would include a fixed fee for the use of news content which could be distributed by a"collecting society".

The ACCC is also asking for feedback on which parts of Google and Facebook's businesses to include in the code,i.e. Google News,Android TV,YouTube or Facebook Watch,and how to best define news outlets. Notice of algorithm changes,treatment of pay-walled news content,display of content on the platforms and control of advertising associated with news are also issues being considered as part of the code. Submission are due by June 5.

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