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 the move was in response to the federal government's proposed legislation to create a news media bargaining code.
"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."
In the blog post, Facebook said the company understood why different tech companies would respond differently to proposed laws, due to platforms having "different relationships with new".
Facebook said Google search is "inextricably intertwined with news", as publishers do not volunteer to provide content, whereas publishers chose to share content on Facebook, which "allows them to sell more subscriptions, grow their audiences and increase advertising revenue".
"In fact, and as we have made clear to the Australian government for many months, the value exchange between Facebook and publishers runs in favour of the publishers — which is the reverse of what the legislation would require the arbitrator to assume," Facebook said.
In a separate statement, Facebook vice president of global news partnerships Campbell Brown said the decision was "difficult" and said publishers benefit from putting their content on Facebook.
"Today we made an incredibly difficult decision to restrict the availability of news on Facebook in Australia," Ms Brown said.
"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."
What this means for Facebook users in Australia
Facebook said the changes meant Australian users could not view or share international news content on Facebook, or content from Australian and international pages.
"The changes affecting news content will not otherwise change Facebook’s products and services in Australia," Facebook said.
"We want to assure the millions of Australians using Facebook to connect with friends and family, grow their businesses and join Groups to help support their local communities, that these services will not change."
Facebook will not be launching Facebook News in Australia, as the company was prepared to do so, with the "right rules in place".
Users elsewhere in the world will not be able to see Australian news content on Facebook.
Australian publishers are restricted from posting any content on Facebook pages.
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