Facebook users in Australia may soon be blocked from sharing news.
The social media giant is threatening to make it impossible for users in Australia to share local and international news content on both Facebook and Instagram if the government passes new regulations altering the financial arrangement between publishers and online platforms.
The new rules, strongly backed by Rupert Murdoch's News Corp Australia, would force Facebook and Google into giving news outlets a bigger cut of digital advertising revenue. It is the most aggressive effort yet by any nation to curb Silicon Valley's power over the news business.
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As Facebook sees it, the new regulations are untenable. It would force the social network to enter into revenue-sharing agreements with publishers where the final terms would be decided by independent arbitrators — and Facebook would have no recourse to back out of the deal.
"We tried to make this work," Campbell Brown, Facebook's head of global news partnerships, said in an interview. "We proposed our version of something workable... Unfortunately, there are so many things in this proposed legislation that just make it untenable."
In a Monday night post, Brown said Australia had left Facebook with two choices: "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."
"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," she wrote.
News organizations around the world have long chafed at Facebook and Google's takeover of the digital ad industry. The two companies account for more than half of the annual digital ad spending in the U.S., and more than 70 percent in Australia. That has left publishers scraping for smaller pieces of the pie, even as their content reaches larger and larger audiences.
In recent years, European countries have tried and largely failed to force the platforms to give more to publishers. When Spain signed a law in 2014 forcing Google to pay for headlines and news summaries in Google News, Google removed Spanish news outlets, dealing a blow to the nation's news industry. France and Germany have also tried and failed to bring Google to heel.
Australia's new legislation goes further by establishing a panel of arbitrators who would determine the price that Facebook and Google must pay publishers. The platforms would have no recourse to exit the agreement, and could face fines as steep as 10 percent of their overall revenue in Australia for each offense.
While news accounts for a relatively small part of Facebook and Google's overall revenue, the ability to access and share news is seen as part of the appeal of the platforms. Facebook's decision to deprive users of the ability to share news could thus have larger effects on its reputation, especially if other countries were to follow suit.
Brown is not worried about any such ripple effects. "I think Australia is an outlier," she said.
"We're pushing ahead with our news investments here in the U.S. and in new markets around the world," she added. "We've found things that actually work, and we have no intention of slowing down. We're going to accelerate our expansion of Facebook News into other markets."
For Murdoch's News Corp, which started in Australia and controls the majority of the nation's news industry, the legislation is a clear win. Murdoch has been at the forefront of the fight against Facebook and Google in both the U.S. and Australia, criticizing the platforms publicly and even going so far as to launch a much-lampooned news aggregator called Knewz.
Last October, Facebook finally agreed to pay publishers millions of dollars a year to feature their content in a dedicated news tab. Fittingly, it was News Corp Chief Executive Robert Thomson who appeared with Facebook CEO Mark Zuckerberg to announce the news. "What took you so long?" Thomson asked the Facebook chief.
Google has not made any similar overtures to the news industry. Like Facebook, it has long touted the unprecedented reach that it gives to publishers. And, like Facebook, it has made several philanthropic donations to journalism and investments in the news industry. Richard Gingras, Google's vice president of news, did not respond to an NBC News request for comment.
Whether Australia's effort is an overall win for the news industry is still very much up for debate. Many news industry veterans believe that harsh regulations are counterproductive, and could ultimately undermine publishers' ability to benefit from the distribution offered by platforms like Facebook and Google.
"By inducing platforms to do away with news snippets and previews altogether, it will in all likelihood reduce publishers’ traffic, depress ad revenue, erode competition, impede innovation and needlessly deprive consumers of a valuable service," the Bloomberg Opinion editorial board recently argued.
Mark Thompson, the outgoing chief executive of The New York Times Company, is similarly wary of Australia's move.
“My own view is, the more we can get the major platforms to work bilaterally and voluntarily to help support journalism at every level, the better it will be,” he recently told Reuters. “The more it becomes part of a long, extended, regulatory and political process, the less likely it is to help in time, and the more likely you are to get different kinds of adverse consequences.”