Facebook says it will restrict publishers and users in Australia from sharing or viewing Australian and international news content.
The social media giant said in a blog post that the move was in response to the federal government's proposed legislation to force internet platforms to pay for news content.
Facebook's decision means Australian publishers will not be able to share or post content on Facebook pages, while news content from non-Australian publishers will not be able to be viewed or shared by Australian users.
In addition, users outside of Australia will not be able to view or share Australian news content on Facebook or content from Australian news pages.
"The proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content," Facebook said.
"It has left us facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia. With a heavy heart, we are choosing the latter."
Campbell Brown, Facebook's VP of global news partnerships, said it had been a tough decision.
"Today we made an incredibly difficult decision to restrict the availability of news on Facebook in Australia," Ms Brown said in a statement.
"Contrary to what some have suggested, Facebook does not steal news content. Publishers choose to share their stories on Facebook. From finding new readers to getting new subscribers and driving revenue, news organisations wouldn't use Facebook if it didn't help their bottom lines."
Google similarly threatened to pull its search engine from Australia over the country's proposed Media Bargaining regulation. But in recent weeks Google has been signing deals to pay Australian news publishers, including a three-year pact with News Corp announced Wednesday covering publications in Australia and other parts of the world.
The proposed Australian measure would amend the Competition and Consumer Act of 2010 to require digital-platform companies to negotiate licensing deals with registered news business corporations - and if they can't come to terms, to submit to compulsory arbitration.
The legislation "seeks to penalise Facebook for content it didn't take or ask for," William Easton, managing director of Facebook Australia and New Zealand, wrote in a blog post.
Mr Easton drew a distinction between the social giant and Google. "Google Search is inextricably intertwined with news and publishers do not voluntarily provide their content," he wrote. "On the other hand, publishers willingly choose to post news on Facebook, as it allows them to sell more subscriptions, grow their audiences and increase advertising revenue."
According to Mr Easton, "the value exchange between Facebook and publishers runs in favour of the publishers," claiming that in 2020 Facebook generated approximately 5.1 billion "free referrals" to Australian publishers - which he said was worth an estimated AU$407 million.
Facebook's "business gain from news is minimal," Mr Easton wrote, saying that news comprises less than 4 per cent of the content people see in their News Feed.
Facebook users awoke on Thursday morning shocked to find all prior Facebook posts to major news accounts had already been removed, with websites given a notification they were no longer able to post.
Communications Minister Paul Fletcher told the ABC Radio National on Thursday morning that the government would not back down on its Media Bargaining Code despite the move by Facebook.
"If you do business in Australia you need to deal with the law of the land in Australia," he said.
"Essentially Facebook are saying to Australians what you see on our platforms is not fact-checked, not responsible journalism," Mr Fletcher said.
"At a time when there are already questions about the credibility on Facebook, they need to think about this," he added.
Federal Treasurer Josh Frydenberg put out a Tweet on Thursday morning saying he had had a "constructive" discussion with Facebook founder Mark Zuckerberg.
"He raised a few remaining issues with the Government's news media bargaining code and we agreed to continue our conversation to try to find a pathway forward," Mr Frydenberg said.
Peter Lewis, director of the Australia Institute’s Centre for Responsible Technology, said that without public interest journalism on the site, Facebook would be "a weaker social network”.
“The social network is destroying its social license to operate. Facebook actions mean the company's failures in privacy, disinformation and data protection will require a bigger push for stronger government regulation," he said.
“Without fact-based news to anchor it, Facebook will become little more than cute cats and conspiracy theories
“At a time when the importance of facts in dealing with a global health crisis are critical, Facebook’s decision is arrogant, reckless and dangerous," he added.
Additional reporting by Jarni Blakkarly.
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