The threat escalates an antitrust battle between Facebook and the Australian government, which wants the social-media giant and Alphabet Inc.’s Google to compensate publishers for the value they provide to their platforms.

The legislation still needs to be approved by Australia’s parliament. Under the proposal, an arbitration panel would decide how much the technology companies must pay publishers if the two sides can’t agree.

Facebook said in a blog posting Monday that the proposal is unfair and would allow publishers to charge any price they want. If the legislation becomes law, the company says it will take the unprecedented step of preventing Australians from sharing news on Facebook and Instagram.

“This is a decision we’re making reluctantly,” said Campbell Brown, Facebook’s vice president of global news partnerships. “It is the only way to protect against an outcome that will hurt, not help Australia’s media outlets.”

Facebook is still working through the details of how it would block articles from being shared, she said.

Responding to Facebook’s announcement, Australia Treasurer Josh Frydenberg said: “We don’t respond to coercion or heavy handed threats wherever they come from.”

Forcing digital platforms to pay for original content would help create “a more sustainable media landscape,” Frydenberg said in a statement.

Google’s Concern

Google has also raised alarms about Australia’s proposal. The measure “would force us to provide you with a dramatically worse” Google Search and YouTube, and “put the free services you use at risk in Australia,” Mel Silva, managing director of Google Australia and New Zealand, wrote in an open letter.

The Australian government has said it’s trying to level the playing field between the tech giants and a local media industry that’s struggling from the loss of advertising revenue to those companies. In May, for example, Rupert Murdoch’s News Corp. announced plans to cut jobs and close or stop printing more than 100 local and regional newspapers in Australia.

The Australian-born Murdoch has for years advocated that Facebook and Google pay for news articles that appear on their platforms. And News Corp. has lauded government efforts to force the two companies to pay for news.

Michael Miller, executive chairman of News Corp Australasia, was quoted widely as saying: “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.”

Yet Facebook’s decision to block news on its platform could prevent publishers from reaching a wider audience. In the first five months of 2020, the company said it sent 2.3 billion clicks from its News Feed to Australian news websites.

‘Insignificant’ Loss

The decision could also limit the appeal of Facebook’s social-media platform to Australians who use it to read news. However, Brown said removing news articles from Facebook in Australia would be “insignificant” to its business because they are a small fraction of what users see.

Australia’s new rules are part of a global push by government agencies to regulate the tech giants. In some countries, officials are concerned not only that Facebook and Google are capturing much of the advertising dollars that have sustained journalism, but also with the types of articles getting shared. The stories that tend to go viral on Facebook are those that stoke emotion and divisiveness, critics argue.

In April, France’s antitrust regulator ordered Google to pay media companies to display snippets of articles. In June, Google said it would pay some media outlets that will be featured in a yet-to-be-released news service in Germany, Australia and Brazil.

Last October, Facebook introduced a separate news section, paying some publishers whose stories are featured. Brown declined to share numbers on the popularity of the Facebook News tab, but said nearly all of the readers are a new audience for publishers. Last week, Facebook said it plans to expand the news section to other markets globally.