Facebook has announced to block both Australian users and media companies from sharing or viewing local and international news content, in response to Australias proposed new Media Bargaining law.

Facebook said that the proposed law fundamentally misunderstands the relationship between "our platform and publishers who use it to share news content".

"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," said William Easton, Managing Director, Facebook Australia & New Zealand.

Late last month, Google also threatened to pull its Search engine from Australia if the proposed media bargaining code, that directs Google and other tech giants to pay news publishers for using their content, goes into effect.

Also read | Explained: Here's why Google is threatening to withdraw its services from Australia

But the tech giant has launched its News Showcase platform in Australia where a growing number of local and regional publishers will be paid to provide content for News Showcase.

Facebook said that its platforms have fundamentally different relationships with news.

"Google Search is inextricably intertwined with news and publishers do not voluntarily provide their content. On the other hand, publishers willingly choose to post news on Facebook, as it allows them to sell more subscriptions, grow their audiences and increase advertising revenue," Easton explained.

Last year Facebook generated approximately 5.1 billion free referrals to Australian publishers worth an estimated $407 million Australian dollars.

"For Facebook, the business gain from news is minimal. News makes up less than four per cent of the content people see in their News Feed," Easton said.

"We were prepared to launch Facebook News in Australia and significantly increase our investments with local publishers, however, we were only prepared to do this with the right rules in place".

Facebook said that it will now prioritise investments to other countries.

Australian publishers are now restricted from sharing or posting any content on Facebook Pages and Admins will still be able to access other features from their Facebook Page, including Page insights and Creator Studio.

They can continue to publish news content on Facebook, but links and posts can't be viewed or shared by Australian audiences.

The common Facebook users cannot view or share Australian or international news content on Facebook or content from Australian and international news Pages.

Last week, slamming both Google and Facebook over their approach to the News Media Bargaining Code in Australia, Microsoft President Brad Smith said that the Unites States and its tech sector should not object to a creative proposal that strengthens democracy by requiring tech companies to support a free press.

The US should copy the new media code instead, Smith said, stressing that he and Microsoft CEO Satya Nadella had reached out to Australian Prime Minister Scott Morrison and explained that "even if Google wanted to leave Australia, we would stay".