The federal government has announced "world-leading" changes to the regulation of tech giants, putting the companies on notice over their business models, treatment of users and dealings with traditional media outlets.

Responding to the Australian Competition and Consumer Commission's (ACCC) landmark digital platforms inquiry, the government committed to a series of reforms to address the tech giants' market power, boost transparency and ensure fair competition.

The government has announced significant changes to regulation of digital platforms. Credit:AP

The watchdog will have a new dedicated unit, with enforcement powers, to investigate the activities of digital platforms. Under the direction of Treasurer Josh Frydenberg, the unit's first priority will be inquiring into the companies' advertising technology and algorithms.

The government committed to addressing concerns about the bargaining power imbalance between tech giants and media businesses, directing the ACCC to lead development of a code of conduct to ensure fair dealings between the companies. The government will step in with a mandatory intervention if it is not satisfied with progress made next year, warning the companies need to "do more" to be transparent about the impact of their operations.