Facebook's parent company Meta could be legally forced to carry Australian news on its platform or face new taxes to support local journalism, under proposals being considered by the federal government.
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The ideas were raised at the Social Media and Australian Society inquiry on Tuesday, where Treasury officials outlined advice given to government to make the US tech giant participate in Australia's News Media Bargaining Code.
The inquiry comes after Meta announced its decision to ditch further deals with Australian publishers under the code in a move estimated to have cost the industry $70 million.
Assistant Treasurer Stephen Jones responded to its announcement by saying the government would take "all of the steps available to it" to force the company to negotiate with local firms.
Treasury competition and consumer branch assistant secretary Tony McDonald told the inquiry the department had provided detailed policy and legal advice to the minister, addressing issues including whether digital platforms still had a bargaining advantage over news businesses.
Mr McDonald said officials had also considered whether Meta could remove all Australian news content from its platform, as it had done in Canada, and what actions the government could take to prevent that.
"I'm not saying that is what they would do but we've been exploring through what might you be able to do to encourage them to continue - encourage or force them to continue - to carry news in those circumstances," he said.
"There's a number of legal as well as policy issues that are associated with that so, as you would expect, we've been seeking legal advice on a number of questions."
Mr McDonald also told the joint select committee that officials had investigated the possibility of introducing "must-carry" rules to force Meta to include Australian news content on its platform, as well as levying new taxes on the company to "buttress the code".
"The focus of points that we have been considering ... is to what extent might the taxing power be an avenue to encourage compliance with the News Media Bargaining Code," he said.
"That's probably saying more than I'm supposed to."
The inquiry's second public hearing comes days after its first, at which several media organisations urged the government to take action against Meta under the News Media Bargaining Code.
Digital platforms that are designated under the laws are legally required to negotiate commercial deals with media outlets or face fines of up to 10 per cent of their local revenue.
But Digital Publishers Alliance chair Tim Duggan said online news outlets were concerned that using these powers could see Facebook ban local news from its platform entirely, which would have a devastating effect on their audiences.
"I think a news ban would be terrible, not only for the industry but also for Australian democracy," he said.
Meta announced its decision to walk away from agreements made with Australian news outlets in February in what it described as part of an "ongoing effort to better align our investments to our products and services people value the most".
The committee is expected to deliver its final recommendations by November 18.
Australian Associated Press
