The production of news and journalism cannot be left entirely to market forces, and regulation is needed to curb the power of Facebook and Google, the competition regulator says.

The ACCC chairman, Rod Sims, said the digital platforms inquiry, which delivered its preliminary report in December, reveals that the market power enjoyed by the digital behemoths is weakening Australian media.

More than a quarter of traditional newspaper journalism jobs have disappeared, print advertising revenue has dried up, and for every $100 spent on online advertising, $47 goes to Google and $21 goes to Facebook.

In the past three years, Google and Facebook are estimated to have captured 80% of the growth in digital advertising.

However, while taking the lion’s share of advertising revenue, the platforms are not creating any original, quality Australian news.

“Rather they select, curate, evaluate, rank and arrange news stories produced by third parties, disseminating other parties’ content,” Sims said.

But society benefits from a strong and diverse range of media sources on top of the two public broadcasters, ABC and SBS.

“News and journalism are different to many other commercial activities in that they benefit both the individual and also society as a whole,” he said.

“Plurality of editorial voices contribute to the public interest and we should not be in a position whereby we rely on one or even two news sources.

“Given all this, it is also vital that media businesses are not disadvantaged through the exercise of market power or other mechanisms that make it difficult for them to compete on their merits.”

Sims said the new entrants to the market, such as Guardian Australia, Crikey, BuzzFeed and the Daily Mail, do not make up for the shrinking newsrooms of the old Fairfax Media, now a part of Nine, and News Corp Australia, because they typically operate very small newsrooms.

The financial viability of these businesses is also not assured as demonstrated by BuzzFeed and Vice recently announcing redundancies in Australia, as well as worldwide. BuzzFeed’s small news operation will be effectively wiped out by global cutbacks in the business which have targeted 11 editorial jobs in Australia.

Sims said there were issues of privacy and data collection to be addressed in the inquiry’s final report.

The lack of transparency about how much data is collected about consumers was a major concern.

The preliminary report recommended a powerful new authority to oversee the commercial activities of Google and Facebook.

The new regulator would have the authority to inquire into all aspects of the digital platforms’ business and subsidiaries and would have jurisdiction over any platform that earns $100m in revenue in Australia.

“Virtually no media regulation applies to digital platforms and this contributes to regulatory disparity between media sectors that would appear to provide the digital platforms with an unfair advantage in attracting advertising expenditure because they operate under fewer regulatory constraints and have lower regulatory compliance costs,” Sims said.

The competition regulator is also reviewing the Coalition’s regional and small publishers “jobs and innovation package” which was part of the media reforms passed last year, tax offsets for the production of certain types of news and journalism and making personal subscriptions to news media tax deductible.

Submissions in response to the preliminary report are due this week, ahead of a final report in June.