SYDNEY (Reuters) -Australia said on Wednesday it will include Alphabet-owned YouTube in its world-first ban on social media for teenagers, reversing an earlier decision to exempt the video-sharing platform.

Australia's internet watchdog last month urged the government to overturn the proposed exemption for YouTube after its research found 37% of children aged 10 to 15 reported seeing harmful content on the platform, the most of any social media site.

Other social media companies such as Meta's Facebook and Instagram, Snapchat, and TikTok had argued an exemption for YouTube would be unfair.

"Social media has a social responsibility and there is no doubt that Australian kids are being negatively impacted by online platforms so I'm calling time on it," Prime Minister Anthony Albanese said in a statement.

"Social media is doing social harm to our children, and I want Australian parents to know that we have their backs."

Social media firms will be fined up to A$49.5 million ($32.2 million) from December if they break the law, which passed through parliament in November.

A YouTube spokesperson said the company would consider next steps and would continue to engage with the government.

"We share the government's goal of addressing and reducing online harms. Our position remains clear: YouTube is a video sharing platform with a library of free, high-quality content, increasingly viewed on TV screens. It's not social media," the spokesperson said by email.

Online gaming, messaging apps, and health and education sites will be excluded from the centre-left government's minimum age rules as they pose fewer social media harms to teens under 16, or are regulated under different laws, Communications Minister Anika Wells said.

"The rules are not a set and forget, they are a set and support," Wells said.

($1 = 1.5363 Australian dollars)