Treasurer unconvinced after meeting with Facebook

US social media giant Facebook has rebooted talks with local news outlets about payment for content in a sign it may be willing to cooperate and avoid financial penalties being proposed under new media laws.

Treasurer Josh Frydenberg and Communications Minister Paul Fletcher revealed yesterday that they had discussed with Facebook chief executive Mark Zuckerberg his concerns about the media code. The talks were ‘‘constructive’’ but did not change Mr Frydenberg’s view.

The proposed code, deemed ‘‘unworkable’’ by Google and Facebook, will force the tech giants into binding commercial agreements to pay Australian news providers or risk steep fines up to 10 per cent of their annual revenues.

‘‘Mark Zuckerberg did not convince me to back down, if that’s what you’re asking,’’ Mr Frydenberg told the ABC’s Insiders program yesterday morning.

Small news media companies will warn a Senate committee hearing today to take the tech giants’ threat to their business seriously, as they push for a ‘‘workable’’ news media bargaining code following threats by Google to shut down its search engine in Australia if the proposed laws aren’t altered.

Industry sources familiar with the talks said Facebook started speaking to publishers after its appearance before the Senate committee where it faced criticism for not negotiating with media groups. The tech giant is not trying to do deals for its news product but is discussing payment of existing articles in its newsfeed.

Facebook has previously stated it would pull news from its platform if the code went ahead in its current form. .

The renewed talks follow a similar step by Google, which decided to push ahead with the launch of its new product, Google News Showcase, after it was grilled at the first Senate hearing. Google wants to pay publishers for the use of the new product rather than the existence of articles in search. The product is expected to launch this week.

Co-operation from Facebook and Google is crucial for smaller publishers reliant on their platforms for revenue and referral traffic. Country Press Australia, an industry group representing 160 regional and local newspapers, will ask for several changes to the proposed laws when it gives evidence to the committee today. It wants to exclude the ABC and SBS from the code and change the revenue requirements of publishers to be eligible for funding.

‘‘Sadly, the current digital platforms bill rewards the large companies and their digital only syndicated content models, at the expense of smaller media businesses with true local news that is expensive to produce and will only lead to reduced diversity of media in Australia,’’ CPA chair Bruce Ellen told The Age.

Online youth publication Junkee Media will outline its support for the code but will argue the tech giants’ threats to abandon news would significantly affect its revenue and referral traffic.

Mr Frydenberg’s meeting with Mr Zuckerberg and a separate discussion last year between Prime Minister Scott Morrison and Google boss Sundar Pichai indicate how seriously the tech giants are taking the legislation.

Involvement of the US Trade Representative and US Chamber of Commerce also suggests the precedent the proposed laws could globally.

A Facebook spokesperson said it was common for executives to meet with government stakeholders.