Facebook Won't Let Australians Share Any News, If It's Forced To Share Revenue

Facebook Inc FB said Monday it would have to “reluctantly” stop people in Australia from sharing local and international news on both its and subsidiary Instagram's social media platforms, should a draft law that mandates revenue sharing with news organizations come into effect. 

What Happened: The Menlo Park, California-based social network company said in a statement that it would stop people and publishers from sharing news to “protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia’s news and media sector.”

The company alluded to Facebook News, a platform where it pays some of its partner publishers, saying, it looked to bring the service to Australia, but the proposals were “overlooked.”

Alphabet Inc GOOGL GOOG subsidiary Google also voiced its concerns over the draft law earlier this month, claiming it would be forced to share sensitive search data with news publishers under the proposed code.

Google said it paid millions of dollars to Australian news media businesses and sent them billions of “free clicks every year.” The company claims free services Austrlians use such as YouTube and Google would be impacted. 

Why It Matters: The draft law only applies to Facebook and Google initially and requires them to negotiate with media outlets on revenue sharing in good faith, according to Bloomberg.

Should no agreement be reached, a binding arbitration process will apply and penalties up to $7 million or 10% of local revenue could be imposed.

Facebook said that over the first five months of 2020, it sent 2.3 billion clicks from its News Feed feature to Australian news websites at no charge, which it estimated to be worth $147.6 million.

Price Action: Facebook shares closed 0.16% lower at $293.20 on Monday and fell another 0.12% in the after-hours session.