Facebook is threatening to stop Australian users from sharing news if the social media giant is forced to compensate media companies for publishing their stories.

Facebook Australia and New Zealand managing director Will Easton said a draft code of conduct ignored the relationship between social media and news organisations, which he claimed would suffer the most.

“Assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram,” Mr Easton said in a statement on Tuesday.

“This is not our first choice – it is our last.

“But it is the only way to protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia’s news and media sector.”