Meta has threatened to block all news content on Facebook and Instagram if the Australian government enforces a new code, claiming that news publishers benefit from sharing links on its platforms.

This potential move could severely impact smaller media outlets that rely on social media for traffic, raising concerns about the creation of a news desert.

Australian publishers are warning the federal government against pushing Meta to abandon news content, emphasizing the risks of diminished news access on social media.

Assistant Treasurer Stephen Jones is currently leading negotiations with Meta and may opt not to designate the company under the news media bargaining code to prevent it from discontinuing news in Australia.

A decision on Meta's designation is expected in the coming months after consultations with the Australian Competition and Consumer Commission and Treasury.

Previously, Meta had agreed to pay around $70 million annually to publishers in 2021 to avoid arbitration, but those deals have now expired, and the company is unwilling to enter new agreements.

In 2022, Facebook generated nearly $1 billion in local ad revenue in Australia but only paid $24 million in taxes, with most revenue sent overseas.

Discussions have taken place regarding a proposed levy for Meta and other tech giants to support local journalism, indicating a potential shift in government strategy.

Job cuts in the media industry have been linked to Meta's decision to stop funding local journalism, as reported by major firms like News Corp and Nine.

The Albanese government is expanding its efforts against misinformation, scams, and copyright violations, signaling a broader approach than previous measures.

Smaller online news outlets, such as The Daily Aus and Broadsheet, are urging the Labor government not to enforce a previous code that could lead to lengthy arbitration with tech giants.

Jones has acknowledged that while the original news media bargaining code was effective in 2021, the circumstances have changed significantly since then.

News Corp Australia executive chairman Michael Miller has proposed that tech companies should pay for a 'social licence' to operate in Australia, which would include funding mental health programs and establishing local complaint centers.

The Digital Publishers Alliance, representing online-only outlets, opposes the arbitration process, fearing that blocking news on Meta platforms could lead to their collapse.