The bargaining code, which passed through the House of Representatives on Wednesday night, will require social media companies to pay media outlets for using their content. The bill is expected to pass the Senate and become law as early as next week.
In a blog post on Thursday (AEDT) Facebook said that it had carried through on the threat made in September after being unable to find a solution in discussions with the Australian government.
Content on Facebook pages from news websites such as The Sydney Morning Herald and The Age, News Corp newspapers such as The Australian and The Herald Sun and all ABC content were made unavailable to users from early Thursday. Articles published by online youth publication Junkee Media and satirical news websites The Betoota Advocate and The Chaser were also removed. Some Facebook groups run by news outlets have no articles on them.
The ban also appears to have struck down the Facebook pages of government agencies, including the Bureau of Meteorology, SA Health, ACT Health and Queensland Health. The pages of several Sydney local health districts have also been wiped, as has the Royal Children's Hospital in Melbourne.
"The proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content," William Easton, Facebook's Australia and New Zealand managing director, said.
"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.
Responding to Facebook's announcement on Thursday morning, Communications Minister Paul Fletcher said the government would not back down from legislating the code.
"We'll be maintaining the path that we've been following. The Prime Minister, the Treasurer and I have been very consistent on that," Mr Fletcher told 2GB radio.
He said Facebook's decision to block authoritative news sources would further expose the company to the spread of misinformation and unverified content.
"It's very important that we have a diverse and well-resourced news media sector in Australia, that's a critical part of our democracy. Now, that may not seem important to a company in Silicon Valley, but it's very important to the Australian government and the Australian people," Mr Fletcher said.
"They are effectively saying to Australians if you're looking for reliable news Facebook is not the place to look for it."
Facebook has announced it will restrict people and publishers in Australia sharing or viewing Australian and international news content.
Labor, who voted to support the code in House of Representatives on Wednesday, said on Thursday that the government had failed to deliver a "workable code".
"This is not a workable code that has been landed by this government," communications spokeswoman Michelle Rowland said.
"It is incumbent on this government to explain where it goes from here. The reality is they have been talking the biggest game in the world over the last couple of weeks."
The ban appears to have come into effect for at least some users, who are now unable to post links to Australian news articles on their Facebook pages or to see past articles posted by major media companies. Easton's blog said that not only are Australian outlets restricted from sharing content on Facebook Pages but international articles from newspapers such as The Wall Street journal and The New York Times cannot be viewed or reposted by Australian users.
A Nine spokesperson said the decision was disappointing.
"This action proves again their monopoly position and unreasonable behaviour," the spokesperson said. "But today's statement does not mean Facebook will not have to abide by the federal government's proposed code. Value has already been transferred and Facebook has benefited from our content for many years."
"We should be able to access their monopoly platform and have the right to monetise our content as a result."
ABC's managing director David Anderson said the national broadcaster was affected and were discussing the change with Facebook.
Facebook's decision comes after multiple discussions between Treasurer Josh Frydenberg and the company's global chief executive Mark Zuckerberg. Talks were still occurring as recently as Sunday and Mr Frydenberg previously described them as "constructive".
"Mark Zuckerberg didn't convince me to back down, if that's what you are asking," Mr Frydenberg said on the ABC's Insiders program in late January.
But industry sources familiar with the government's discussions with Facebook said that Mr Frydenberg was not given any meaningful notice about Facebook's plans to follow through with its threat today.
Mr Frydenberg said on Twitter this morning he had just spoken to Mr Zuckerberg who raised a few more issues with the government's newly proposed laws. "We agreed to continue our conversation to try to find a path forward," Mr Frydenberg wrote.
News outlets that currently have a relationship with Facebook and post articles in its newsfeed were informed early on Thursday morning that their content would be affected.
A note sent by Facebook Australia and New Zealand's head of news partnerships Andrew Hunter, seen by The Sydney Morning Herald and The Age, said the tech platform was "disappointed" that it had to follow through with its threat and that it would engage the news outlets further to discuss the changes in the coming days.
Facebook was in talks with news outlets such as Nine Entertainment Co, owner of this masthead, and News Corp Australia about payment for their content over the past two weeks.
But those talks stalled in the past five days because of several sticking points, including explicit provisions in Facebook's contracts that would allow it to blow up any deal if new laws were legislated. The main reason for this is that failure to comply with the code could cost Facebook fines of up to 10 per cent of their local revenue.
Mr Easton said the government's proposed legislation "seeks to penalise Facebook for content it didn't take or ask for".
"This legislation sets a precedent where the government decides who enters into these news content agreements, and ultimately, how much the party that already receives value from the free service gets paid," he said.
"We will now prioritise investments to other countries, as part of our plans to invest in new licensing news programs and experiences."
Facebook's stance represents a different approach to search giant Google, which had also threatened to exit Australia. Google has since struck multi-million dollar deals with major Australian publishers for the use of their content.
Google has agreed to pay Nine Entertainment Co, which owns The Sydney Morning Herald and The Age, more than $30 million in cash annually for the use of its news content. The company has also struck similar deals with Seven West Media and overnight announced a global deal with News Corp.
(Pity I don't use Fakebook, as I would probably now enjoy the serenity of blank news pages)