Australia is on course to pass laws that would make tech giants Google and Facebook pay local media outlets for news content. Canberra said a probe found the companies held too much power and threatened democracy.

US tech giant Google on Friday threatened to block its services in Australia if the government proceeds with plans to make it and Facebook pay media companies for news content.

The mandatory code of conduct proposed by the Australian government aims to make Google and Facebook pay local media companies for the right to use their news content in search results or news feeds.

"If this version of the code were to become law, it would give us no real choice but to stop making Google search available in Australia,'' Mel Silva, managing director of Google Australia and New Zealand, told a Senate inquiry into the bill.

According to Silva, 95% of internet searches in Australia are done through Google.

Facebook has also threatened to remove news content from its site in Australia.

Australia 'doesn't respond to threats'

Google's threat to cut off services in Australia came just a day after it reached a content-payment deal with French news publishers as part of a three-year, $1.3 billion (€1 billion) push to back French publishers.

Australian Prime Minister Scott Morrison, however, slammed the tech giants for their positions, saying the country doesn't "respond to threats."

"Australia makes our rules for things you can do in Australia," Morrison told reporters in Brisbane.  "That's done in our Parliament. It's done by our government. And that's how things work here in Australia."

Australian journalist Max Walden said he did not expect lawmakers to back down.

"These laws definitely look like the government will push something through," he told DW. "I think that Google will ultimately look to come to some sort of negotiation. It's in both parties' interest to come to some sort of middle ground."

Silva maintained that the proposed code would lead to a "bad outcome" not only for Google "but also for the Australian people, media diversity, and the small businesses who use our products every day."

She said Google was willing to pay news outlets for their contributions but not under the current proposed rules, including payments for links and snippets. She added that the code's "biased arbitration model" also posed unrealistic financial and operational risks for the company.

If Australia and the tech giants cannot come to an agreement, a government-appointed arbitrator will decide the price.

Silva made no mention of video service platform YouTube, which is expected to be exempted under revisions to the code.

Potential threat to democracy

Australia decided to introduce the bill in December last year following a probe that found Google and Facebook possessed too much market power in the media industry. Canberra stated that such power could pose a threat to democracy.

Silva suggested a series of modifications to the legislation. "We feel there is a workable path forward," she said.