The parent company of the Sydney Morning Herald and the Age has dismissed Google’s offer to pay media organisations with the launch of News Showcase in Australia, stating it would not negotiate with the tech giant before the news media code comes into effect.

Google launched its News Showcase product in Australia on Friday with seven Australian publishers Google will pay to host content in Showcase. The initial deals cover 25 mastheads, including the Canberra Times, the Illawarra Mercury, the Saturday Paper and Crikey.

The move is seen as a softening of Google’s position against the news media code, with an aim to get as many publishers signed up to Showcase as possible before the code comes into effect. Google is understood to be in discussions with several other publishers to sign deals to be part of the Showcase.

One of the biggest news media outlets, Nine – which publishes the Sydney Morning Herald, the Age, and the Australian Financial Review – dismissed the launch, indicating it would not participate in negotiations until the code is brought in.

“This is what monopolies do, they put an offer, in the form of Google Showcase, but not offer to negotiate,” a Nine spokesman said.

“It has to be all on their terms and that is not an approach we will participate in, we support the legislation the government is proposing as the best way to secure a fair payment for our content.”

Guardian Australia has sought comment from News Corp – the other major publisher to benefit from the code, however News Corp publication the Australian reportedthe offer was “unlikely to satisfy” the company.

An ABC spokeswoman declined to comment, but said the national broadcaster is in ongoing discussions with Google.

Showcase puts publishers’ content in panels providing more information and content from news websites than is found in search results or snippets in Google News. The panels appear on Google News on Android, iOS, mobile websites, and Discover on iOS, with plans for it to appear in search in the future.

Publishers also have access to analytics from Showcase to show how content performs.

Google had previously withheld bringing the News Showcase product to Australia as part of its US$1bn global investment in news over disagreement about the Australian government’s proposed news media code. The federal government plans to proceed with legislation that would force Google and Facebook to enter into negotiations with media companies over payment for content, with an arbiter to decide the final deal if no agreement can be reached.

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Google has threatened to withdraw its search product from Australia as a worst case scenario if the code goes ahead, but prime minister Scott Morrison indicated on Thursday the company was moving ahead with negotiations with Australian publishers to include them in Showcase, which could ultimately lead to a compromise to prevent Google search exiting Australia.

Morrison said on Thursday he had held a “constructive” meeting with the Google chief executive, Sundar Pichai, this week where the prime minister urged Google to “conclude the arrangements … with the various news media organisations in Australia – and that is the best way to enable that matter to be settled”.

The comment suggests the government may be open to compromise in how the code could be applied to Google should the company reach agreements with enough publishers before the legislation passes and comes into effect.

Google and Facebook are the only two digital platforms designated by the government as being subject to the code. This designation can be changed by the minister without the need to amend the legislation, meaning platforms can be added or removed, or the government could deem only parts of the platform would be subject to the code.

Google already successfully lobbied the government to exclude YouTube from the code.

In a statement on Friday, a Google spokesman said the company was “looking forward to bringing more Australian media partners on board in the coming weeks and months as we further build out the experience for publishers and users”.

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On Thursday, Morrison indicated he was more optimistic Google would remain in Australia after his meeting with Pichai.

“I think we have been able to get that into a much more positive space about the ability to continue to provide services here in Australia,” he said. “But at the end of the day, they understand that Australia sets the rules for how these things operate. And I was very clear about how I saw this playing out.”

On Friday the treasurer, Josh Frydenberg, said some of Google’s “threats have been misplaced … because they certainly see a future in the Australian market”.

Google Search accounts for over 90% of the search market in Australia. Microsoft – the company behind its nearest rival, Bing – has promised to invest in substantial improvements in its search engine if Australians are locked out of Google Search.

Morrison has also held a meeting with the Facebook chief executive, Mark Zuckerberg, which was also described as “constructive” but did not dissuade the government from proceeding with the code.

• Note: Guardian Australia has been in discussion with Google over inclusion in its new Showcase offering that would see the company pay news providers for inclusion in this product.