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Australia’s competition watchdog is closely watching a United States case against internet search and advertising giant Google.

The US government has filed a lawsuit against Google, accusing the company of illegally using its market power to fend off rivals.

The Justice Department has warned nothing is off the table, including breaking up the online behemoth.

Australian Competition and Consumer Commission chairman Rod Sims said the case was extremely significant.

“It’s probably one of the major anti-trust cases of the last 10 or 20 years dealing with issues that fundamentally underpin who wields market power in search,” Mr Sims told ABC radio on Wednesday.

The ACCC recently released a major report that found Google was paying Apple nearly $10 billion a year to ensure it was the default search engine for their devices.

Mr Sims said his agency worked closely with the US Department of Justice while compiling its report.

“It’s absolutely fascinating this action has now been taken,” he said.

The competition watchdog is separately working on a mandatory code to make Google and Facebook pay Australian media companies for their journalism.

Facebook has threatened to stop sharing Australian news as a result and Google has indicated it could withdraw some search functions.

“It’s up to them how they want to behave and make those statements,” Mr Sims said.

He said the draft code would change following consultations with the digital giants and media companies.

“We’ll do our best to take everybody’s views into account and accommodate those where we can because we’re not trying to go around poking people in the eye,” he said.

“Ultimately of course it’s a decision for government, but the decision will be made, and then Google and Facebook will have to make their decisions.”