Facebook has threatened to stop Australians from sharing news to their social media pages if the tech giant is forced to pay media organisations for their content.
In a world first, the Australian Competition and Consumer Commission released a draft code in July directing social media giants to negotiate fair payment deals.
Treasurer Josh Frydenberg and Communications Minister Paul Fletcher claim Facebook had 'an imbalance in bargaining power' and it needed to be fixed.
The competition regulator is proposing laws that would allow commercial news media companies to negotiate 'an appropriate payment for news content'.
But now Facebook Australia, which was paid $674million by local advertisers in 2019, has retaliated by saying it will 'reluctantly' stop all publishers from sharing local and international news should the new code be legislated.
There are fears the move will lead to a proliferation of fake news and conspiracy content on the site.
Facebook is threatening to stop Australian users from sharing news if the social media giant is forced to compensate media companies for publishing their stories (Pictured: Facebook founder Mark Zuckerberg)
Facebook Australia has retaliated by saying it will 'reluctantly' stop all publishers from sharing local and international news should the new code be legislated (Facebook founder Mark Zuckerberg pictured with wife Priscilla Chan)
Australia and New Zealand managing director for Facebook Will Easton said the draft code of conduct ignored the relationship between social media and news organisations, which he claimed would suffer the most.
'Assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram,' Mr Easton said in a statement on Tuesday.
'This is not our first choice - it is our last.
'But it is the only way to protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia's news and media sector.'
Under the proposed new arrangement, Facebook would be forced to negotiate with media companies for fair payment of their news content.
Should agreement not be reached, an independent umpire would brought into to decide appropriate payment within 45 days, taking into account the value of news content to the platform and the cost of producing the content.
But Mr Easton says the new regulation misunderstands the dynamics of the internet and will do great damage to news organisations.
Similar concerns have been expressed by Google, which has launched an aggressive public campaign warning its services will be put at risk and calling for the proposed laws to be overhauled.
Mr Frydenberg said the Government would not be intimidated by Facebook's threat to blacklist Australia.
'Australia makes laws that advance our national interest. We don't respond to coercion or heavy