SYDNEY (Reuters) -Australia's internet watchdog and YouTube exchanged barbs on Tuesday after the regulator urged the government to reverse a planned exemption for the Alphabet-owned video-sharing platform from its world-first teen social media ban.

The quarrel adds an element of uncertainty to the December rollout of a law being watched by governments and tech leaders around the world as Australia seeks to become the first country to fine social media firms if they fail to block users aged under 16.

The centre-left Labor government of Anthony Albanese has previously said it would give YouTube a waiver, citing the platform's use for education and health. Other social media companies such as Meta's Facebook and Instagram, Snapchat, and TikTok have argued such an exemption would be unfair.

eSafety Commissioner Julie Inman Grant said she wrote to the government last week to say there should be no exemptions when the law takes effect. She added that the regulator's research found 37% of children aged 10 to 15 reported seeing harmful content on YouTube - the most of any social media site.

"This is not a fair fight where our kids are concerned, vis-a-vis social media sites," Inman Grant told the National Press Club in Sydney.

She said social media companies deployed "persuasive design features" like recommendation-based algorithms and notifications to keep users online and "YouTube has mastered those, opaque algorithms driving users down rabbit holes they're powerless to fight against".

YouTube, in a blog post, accused Inman Grant of giving inconsistent and contradictory advice, which discounted the government's own research which found 69% of parents considered the video platform suitable for people under 15.

"The eSafety commissioner chose to ignore this data, the decision of the Australian Government and other clear evidence from teachers and parents that YouTube is suitable for younger users," wrote Rachel Lord, YouTube's public policy manager for Australia and New Zealand.

Inman Grant, asked about surveys supporting a YouTube exemption, said she was more concerned "about the safety of children and that's always going to surpass any concerns I have about politics or being liked or bringing the public onside".

A spokesperson for Communications Minister Anika Wells said the minister was considering the online regulator's advice and her "top priority is making sure the draft rules fulfil the objective of the Act and protect children from the harms of social media".