Google has launched a fresh bid to head off a federal government move to make it pay for news content, offering an alternative $1.3 billion program to support journalism.

The world-first news media bargaining code is currently being scrutinised by a Senate committee which is due to report on February 12, before the laws are voted on in parliament.

The government says the code will ensure digital platforms like Google share the benefit they obtain from using Australian-sourced news content with the news media businesses who create that content.

Agreements are encouraged to be struck outside of the code, but “final offer arbitration” will be applied if bargaining between the parties does not succeed, with penalties for bad faith action.

Google Australia managing director Mel Silva said in an open letter published on Wednesday while some changes had been made to the code “the law still threatens to fundamentally damage Google Search”.

“If the code became law today, it would break the way Google Search works undermining the benefits of the internet for millions of Australians, from small business owners across the country, to literally anyone trying to find information online,” she said.

Search engines are built on the ability to link someone to a website for free.

Currently no website or search engine in Australia pays to connect people to other sites through links.

“This law would change that, making Google pay to provide links for the first time in our history,” Ms Silva said.

“The code’s rules would dismantle a free and open service that’s been built to serve everyone, and replace it with one where links come at a price, and where the government would give a handful of news businesses an advantage over everybody else.

“That puts Google’s business in Australia — and the services we provide more than 20 million Australians — at enormous risk.”

She said Google did not object to the principle of paying to support journalists.

“We’re proposing to reach deals to pay publishers through Google News Showcase, a program we’ll invest $1.3 billion in globally over the next three years,” she said.

“It will help news businesses publish and promote their stories online, paying for their editorial expertise and beyond-the-paywall access to their journalism, rather than for links.”

An inquiry by the competition watchdog found there was a “bargaining power imbalance” between the big digital platforms and news businesses.

Talks on a voluntary code failed, leading to work starting on the mandatory code in April 2020.