“Unfortunately, no business can operate that way,” a Facebook executive said.

Associated Press

Facebook Inc. threatened Monday to block users in Australia from sharing news stories, rather than comply with a pending regulations requiring the social-media giant to pay publishers for their content.

In July, Australian lawmakers approved a draft code of conduct giving Facebook

and Alphabet Inc.’s


Google three months to negotiate deals with publishers to compensate them for featuring their news content. The Australian Competition and Consumer Commission, the country’s top antitrust regulator, is drafting a bill that’s expected to go to Parliament soon. The proposed law would force the tech giants into revenue-sharing deals with publishers, and if they cannot agree, terms would be set by independent arbitrators.

Google has already warned the regulations could result in Australia losing access to Google’s free services and “would force us to provide you with a dramatically worse Google Search and YouTube.”

On Monday, Facebook also rejected the proposed rules. “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,” Will Easton, managing director of Facebook for Australia and New Zealand, said in a blog post.

He argued that news publishers benefit more from Facebook than vice versa. “News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us,” Easton said. “We are left with a choice of either removing news entirely or accepting a system that lets publishers charge us for as much content as they want at a price with no clear limits. Unfortunately, no business can operate that way.”

News publishers worldwide have been gutted by the shift to digital advertising, with Google and Facebook collectively controlling with more than 60% of the global online ad market — and about 70% in the U.S.

After the Australian draft code was announced, Michael Miller, executive chairman of News Corp. Australasia, said: “The tech platforms’ days of free-riding on other peoples’ content are ending. They derive immense benefit from using news content created by others and it is time for them to stop denying this fundamental truth. … it ultimately means they will no longer be able to use their power to walk away from negotiations with news creators.”

(News Corp. Australasia and MarketWatch parent News Corp.

share common ownership.)

Australia’s proposal is seen by some as a blueprint of possible future regulation in the U.S. But the path will likely be difficult. Google News shut down in Spain in 2014 rather than comply with a law passed there requiring payments to Spanish news outlets, and France and Germany have also tried to force Google to pay publishers.

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