The federal government will this week begin the process of designating Meta under its News Media Bargaining Code after the tech giant announced plans to ditch support for Australian news entirely.

Facebook owner Meta on Friday announced that it would not be signing any new commercial deals with Australian media companies for the use of their news content, with current deals worth $70 million annually coming to an end within months.

The deals were signed in the wake of the launch of the News Media Bargaining Code in 2021, which gives the government the power to designate a tech firm and then force it to participate in arbitration to nut-out a revenue-sharing deal with a media firm.

No company has yet been designated under the code as deals were secured outside of it.

But after Meta’s announcement late last week, Assistant Treasurer Stephen Jones will this week get the ball rolling on applying the code and forced arbitration on Facebook, as the Australian Financial Review reported.

Under the News Media and Digital Platforms Mandatory Bargaining Code Act 2021, the Minister can, via legislative instrument, make a determination to designate a company under the code.

To do this, the minister must consider whether there is a “significant bargaining power imbalance” between the two parties.

Jones will write to a number of media companies to gather evidence on the power imbalance between them and Meta in order to build this case, and will also prove that Meta has not done enough to support local news content.

This issue will be discussed at a government Cabinet meeting in Melbourne on Monday. Treasurer Jim Chalmers has recused himself from these discussions as his wife works for News Corp, so Jones and Communications Minister Michelle Rowland have taken the lead.

If satisfied that Meta is eligible to be designated, the government must then give the company written notice and allow 30 days for the tech giant to respond.

Forced arbitration

If Meta cannot convince the government otherwise, it will then be designated under the News Media Bargaining Code.

This allows the government to force Meta to negotiate with a media company to agree to a revenue-sharing deal, and to enter into forced arbitration if an agreement cannot be reached.

To be forced into arbitration, a tech company will have been unable or unwilling to reach a deal with a news business through mediation after three months.

If this occurs, an arbitration panel will be established, and both parties will present their final offers on a revenue-sharing deal.

The panel will select from one of these final offers, which will consist of a lump sum to be paid to the media company over instalments across two years.

Under the code, Meta will then be required to abide by this revenue-sharing deal or face a fine of either $10 million, three times the determined value of the benefit obtained from not complying with the deal, or 10 per cent of its annual turnover in the 12 months prior, whichever is greater.

Jones has said the government is willing to properly implement these conditions through the Code.

“I will follow the code to the letter, but nobody should be in any doubt about the Albanese government’s resolve to back Australian journalism,” Jones said.

Both the Opposition and the Greens have already urged the government to designate Meta under the News Media Bargaining Code.

“The government must consider all options under the existing legislation to support Australian publishers and deliver a sensible outcome to support Australian media,” Shadow Treasurer Angus Taylor said.

“This is world-leading competition policy and the government needs to use it. The warning signs were there and the government ignored them. Labor has been all talk and no action.”

Greens Senator Sarah Hanson-Young also called on the government to step in.