Australia’s competition watchdog is looking into a claim that Facebook Inc. refused a publisher’s request to negotiate a licensing deal, the regulator told Reuters, setting the stage for the first test of the world’s toughest online content law.

The Conversation, which publishes current affairs commentary by academics, said it asked Facebook to begin talks as required under new Australian legislation that requires the social media firm and Alphabet Inc.’s Google to negotiate content-supply deals with media outlets.

Facebook declined without giving a reason, The Conversation said, even though the publisher was among the first in Australia to secure a similar deal with Google in the lead-up to the law in 2020, Reuters reported from Sydney.

The knockback could present the first test of a controversial mechanism unique to Australia’s effort to claw back advertising dollars from Google and Facebook: if they refuse to negotiate licence fees with publishers, a government-appointed arbitrator may step in.

In a statement responding to Reuters questions, Facebook’s head of news partnerships for Australia, Andrew Hunter, said the company was “focused on concluding commercial deals with a range of Australian publishers”.

Hunter did not answer specific questions concerning The Conversation, but said Facebook was planning a separate initiative “to support regional, rural and digital Australian newsrooms and public-interest journalism in the coming months”, without giving details.

“If Google’s done a deal with them, I can’t see how Facebook should argue that they shouldn’t,” Rod Sims, the chair of the Australian Competition and Consumer Commission (ACCC), said in an interview.

“The question of designation might need to come into play,” he noted, using the term for assigning an arbitrator.

Under the law, the decision to designate a Big Tech firm for intervention was made by the treasurer, which is advised by the ACCC, noted Sims, but “an absolute ‘no’ for an organisation that should be getting a deal is something we’ll look into.”

The Conversation was “exactly what we had in mind with the Code”, he said, although the situation had some way to play out before any further action would be taken.

Governments around the world are introducing laws to make the tech giants compensate media companies for the links that drive readers – and advertising revenue – to their platforms. But Australia is the only country where the government may set the fees if negotiations fail, a factor that drove Facebook to block newsfeeds in the country just before it was passed.