Google says the Federal Government is forcing Australian to accept “dramatically worse” services.

The Federal Government is working on a new code of conduct for digital platforms and Australian media businesses.

It aims to have internet heavyweights like Facebook and Google pay for the privilege of hosting Australian news.

The new regime would give Treasurer Josh Frydenberg the power to determine which digital platforms are impacted.

Google Australia and New Zealand managing director Mel Silva has written an open letter saying the changes would severely impact Google and its subsidiary YouTube.

“A proposed law, the News Media Bargaining Code, would force us to provide you with a dramatically worse Google Search and YouTube, could lead to your data being handed over to big news businesses, and would put the free services you use at risk in Australia,” the letter said.

“The law would force us to give an unfair advantage to one group of businesses — news media businesses — over everyone else who has a website, YouTube channel or small business.

“The proposed changes are not fair and they mean that Google Search results and YouTube will be worse for you.”

The Australian Competition and Consumer Commission (ACCC) is developing the code, and has disputed Google’s warning.

“The open letter published by Google today contains misinformation about the draft News Media Bargaining Code,” the commission said in a statement.

“Google will not be required to charge Australians for the use of its free services such as Google Search and YouTube unless it chooses to do so.

“Google will not be required to share any additional user data with Australian news businesses unless it chooses to do so.”

The new code is being developed to address an apparent imbalance between media companies in Australia and the tech giants that host their content.

The terms of the draft code would require Google and Facebook to negotiate with media businesses to come to an agreement on fees for news content hosted on their platforms.

If two parties cannot reach an agreement, negotiations can go to arbitration, where an independent arbiter would decide what goes ahead.

Google and Facebook would also be required to give advance notice of changes to their algorithms that affect how news content is displayed.

Additionally, it would set a standard for how Google and Facebook share data on users’ access of news content.

“The Government is consulting on the implementation of a mandatory code to govern relationships between the parties, increase competition, strengthen consumer protection and ensure the sustainability of our media landscape,” Mr Frydenberg said.

“The Government remains committed to introducing this significant reform with a world-leading mandatory code.”

Ms Silva's letter ended by foreshadowing further action from Google in coming days.