“Many established and small media operators use Facebook as a free means to reach an existing audience or an audience that they may previously not have had access to.”

The media bargaining code was legislated in an effort to force Google and Facebook to pay eligible large and small news publishers to display articles in the search engine and “newsfeed”. It was introduced after the competition regulator found there was an imbalance of bargaining power between media companies and the digital platforms.

Facebook was so concerned with the introduction of the code that it withdrew all news from its platform in Australia,while Google threatened to withdraw its search engine from the market. The main concern was that the new laws would set a precedent and potentially force Google and Facebook to pay millions of dollars to publishers all over the world.

But after high-level negotiations between Mr Pichai,Facebook CEO Mark Zuckerberg and the federal government,both tech platforms agreed to operate in Australia and strike deals with news outlets.

The loophole was that the new laws would not apply - or ‘be designated’ - to either Google or Facebook as long as they went to the effort to negotiate commercial deals with local news publishers for use of their content. Being designated under the code means Google or Facebook would be legally required to enter negotiations with eligible publishers or risk fines of up to 10 per cent of Australian revenue.

Treasury will review in March whether Facebook and search giant Google have struck enough agreements and,if not,implement legal measures to force the companies to co-operate.

Google has signed deals with news outlets including News Corp Australia,publisher ofThe Australian,The Daily Telegraph andThe Herald Sun,Nine Entertainment Co,publisher of this masthead andThe Australian Financial Review,Seven West Media,Guardian Australia,national broadcasters the ABC and SBS and small news outlets such as Junkee Media andThe Saturday Paper.

Facebook has signed deals with most of these media companies,but is refusing to engage with SBS or not-for-profit organisationThe Conversation.

Some small news outlets are still concerned that Google and Facebook have only struck deals with major or notable outlets to avoid designation. This was exemplified in a submission made by a small group of independent publishers to a government inquiry into regional newspapers.

The Public Interest Publishers Alliance (PIPA) - which includes theNaracoorte News,The Star Observer,City Hub Sydney,The Australian Jewish News,Time Out and The Greek Herald -said they are struggling to do deals with the tech platforms despite being eligible under the laws.

They said that without designation of Google and Facebook,there was no way to secure payment. “Our status as an eligible news business,determined by the regulator applying the law in the Code,does not hold any sway when it comes to our collective bargaining negotiations with Facebook or Google,” the submission said.

Google and Facebook were approached for comment.

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