With Australians about to lose their local and metropolitan newspaper coverage, the competition watchdog sent to the rescue is facing the prospect of litigation from tech giants Google and Facebook.

This became clear as Australian Competition and Consumer Commission chairman Rod Sims told The New Daily the ACCC now had “considerable vital and urgent” work to be done to develop the world’s first mandatory news media revenue sharing laws.

The draft laws will be ready by July and are likely to be legislated with bipartisan parliamentary support later this year.

The laws will stipulate that digital platforms, which include the market dominant Google and Facebook, will have to comply with “the monetisation and the sharing of revenue generated from news through data sharing, ranking and display of news”.

But because the laws will mandate “revenue sharing” rather than a European “Google tax “ or an “aggregators’ fee” imposed in Spain, the ACCC has asked its legal advisers to frame the legislation in anticipation of a legal challenge in the Federal Court – and ultimately the High Court – to test competition and copyright law in Australia.

Any precedent established in Australia is likely to have flow-on effects in all other jurisdictions worldwide.

Google and Facebook, both United States enterprises, have devastated American local and metropolitan media – leading to closures of print mastheads across the US after collapsing ad revenues, rapid circulation declines, dramatically depleted local coverage and the vaporising of thousands of media industry jobs. 

There has been little or nothing traditional print media companies in the US have been able to do about it.

But under the proposed new laws here the Australian Communications and Media Authority will be the assigned digital platform regulator with enforcement powers through fines and copyright “take down” orders.

The ACCC’s digital platforms inquiry last year, the most comprehensive investigation ever undertaken, recommended requirements for “designated agents of digital platforms” to be available during Australian business hours and for bulk notifications to stop and penalise repeated infringements.

Google and Facebook both say they had been negotiating in good faith for the development of a voluntary code before Treasurer Josh Frydenberg and Communications Minister Paul Fletcher intervened last week to order the ACCC to urgently move to develop a mandatory and enforceable code.

The ACCC had formally reported to the government that any voluntary code appeared to be non-negotiable.

“Google this,” Rupert Murdoch’s The Australian provocatively headlined when breaking the news of the Treasurer’s determination to regulate the tech giants.

News Corp Australia’s chairman Michael Miller and Nine Entertainment CEO Hugh Marks have been leading the lobby pressure on the Morrison government for regulation.

Both entities operate pay walls for access to their many masthead sites but have complained the tech giants effectively plagiarise their news articles through what are called ‘snippets’, short descriptions that appear when users search for a topic or question.

Nine, which publishes The Sydney Morning Herald, The Age and the Australian Financial Review, has a separate commercial arrangement with Google but has demanded tech platform regulation nevertheless.

Google and Facebook have argued that the use of ‘snippets’ is allowable under fair dealing conventions and generate click-through traffic to news sites from which paying subscribers may be signed up.

The ACCC inquiry did not recommend banning or licensing the use of snippets, instead urging parties to negotiate commercially over their content and length.

• Related: Now is not the time for the media to hibernate

In the past 10 years as the tech giants gathered user ubiquity and market power in Australian advertising and commercially exploitable mass consumer data, the loss of revenue, coming after “rivers of gold” classified advertising migrated to separate website businesses from the 1990s, has hit even harder.

In the 10 years to 2018 a net total of 106 newspapers closed.

The ACCC found 21 local government areas initially serviced by at least one local or regional newspaper were left with no coverage.

And now through the COVID-19 pandemic, all print and online media have been devastated by the further loss of advertising during the national lockdown.

Regional mastheads have suspended their print editions during the crisis.

News Corp suspended the print editions of 60 community newspapers.

So severe is the revenue impact that the federal government has announced $100 million of direct financial stimulus and grants to help save regional media from insolvency.

It seems unlikely that many of these print mastheads will return after the COVID-19 lockdown.

And last week former News Corp CEO Kim Williams told an Australia Institute “media in crisis” webinar that while regional print was effectively over, all Australia’s metropolitan masthead newspapers also were now “terminal” within a matter of years.

While their names may live online with digital subscription revenues increasing, metro newspaper circulations were still rapidly declining caused by the loss of advertising revenues and consequential depleted coverage.

The ACCC’s digital platforms inquiry found that while total advertising expenditure in Australia has risen with population growth to $16 billion annually by 2018, radio, TV, outdoor and cinema and print ad revenues have fallen consistently since 2007.

By 2018 Google, Facebook, and online classified sites had taken half –$8 billion.

Although the ACCC has coercive powers to break through commercial-in-confidence secrecy, it has not posted any conclusive findings on the revenues calculated to be generated specifically by news content searchable on Google and Facebook.

• Read the Digital Platforms inquiry final report here

The digital revolution in Australia has produced free online-only startups like Guardian Australia, The New Daily and The Conversation, which should all benefit financially from any revenue sharing.

These free news and current affairs sites acknowledge they all benefit from user traffic directed to them via Google search, Facebook, Twitter and social media generally.

They are happy that their content is freely accessible, as is the content from the public broadcasters, the ABC and SBS.

There is concern that if the ABC and SBS earn income from any new level playing field revenue sharing regime a hostile federal government will simply discount their taxpayer appropriations by the requisite quantum each year.

This is likely to be a contentious point as both public broadcasters complain of funding starvation.