In what one industry observer described as the “nuclear option,” Facebook announced today that it will restrict publishers and people in Australia from sharing or viewing Australian and international news content. The announcement comes amid growing tensions between the big tech platforms, government and traditional media companies around the world, including here in Canada.

Today’s announcement by Facebook Australia & New Zealand managing director William Easton comes as the Australian government prepares to pass a landmark law that would require Google and Facebook to pay publishers for displaying their content.

Google has already agreed to separate deals with publishers including Rupert Murdoch’s News Corp., but Facebook is taking a hardline approach. It said today that Australian publishers would be restricted from sharing or posting any content on the platform, while links and posts from international publishers cannot be viewed or shared by Australian users. International users will also be prevented from viewing or sharing Australian news content or content from Australian news Pages.

Easton said that Australia’s proposed law “fundamentally misunderstands” the relationship between Facebook and publishers sharing news content, and left the social media giant facing what he described as “a stark choice”: complying with the law that “ignores the realities of this relationship,” or stop allowing news content on its services in that country. “With a heavy heart, we are choosing the latter,” wrote Easton.

He said that Google and Facebook have “fundamentally different” relationships with news content. While Google Search is “inextricably intertwined” with news, and publishers don’t voluntarily provide it with content, they do “willingly choose” to post on Facebook because it enables them to sell more subscriptions, grow audiences and increase advertising revenue. Easton said that in 2020, Facebook generated approximately 1.5 billion “free referrals” to publishers, worth an estimated AU$407 million.

The business gain for Facebook from news is “minimal,” he said, noting that it makes up less than 4% of the content people see in their feed. “Journalism is important to a democratic society, which is why we build dedicated, free tools to support news organizations around the world in innovating their content for online audiences,” he said.

The outsized power of Google and Facebook in the Canadian ad market was the basis for the recent “Disappearing headlines” campaign spearheaded by News Media Canada and Torstar. The campaign saw dailies and community newspapers across the country run blank front pages to demonstrate the potential impact of the duopoly continuing to siphon away advertising revenues. In Canada, Google and Facebook account for an estimated 80% of the estimated $8.8 billion spent on digital advertising.

Speaking with The Message about the campaign earlier this month, News Media Canada CEO John Hinds said that he was encouraged by the hardline stance being taken by the Australian government. It was recently reported that Canadian Heritage minister Steven Guilbealt is meeting with representatives from several countries including France, Australia and Germany to discuss forming a “formal coalition” of countries to stand up to the tech companies.

Last month, Google threatened to pull its search engine from Australia if the law was passed, saying that it would “break Google search as you know it.” It has since struck deals said to be worth tens of millions of dollars with publishers—including a three-year arrangement with News Corp. announced today that includes content from The Wall Street Journal, The New York Post, The Times, The Sunday Times and The Australian.

According to a News Corp. announcement, the deal also includes the development of a subscription platform, the sharing of ad revenue via Google’s ad technology services, the cultivation of audio journalism and “meaningful investments” in innovative video journalism by YouTube.

News Corp. CEO Robert Thomson said in the announcement that the deal would have “a positive impact on journalism around the globe as we have firmly established that there should be a premium for premium journalism.”

“Google’s rush to pay up in Australia shows how regulation in a relatively small country—or just the threat of it—can dramatically alter the behaviour of a global tech behemoth that grew with impunity back home in the United States,” said a story published by The New York Times.