Facebook runs the risk of getting slugged with a general tax on all internet transactions if it goes ahead with its threat to remove all news content from its platforms to avoid sharing revenue with Australian media companies, former competition regulator chairman, Professor Allan Fels, has warned.

On Tuesday, the world's largest social media company threatened to ban all local and international news content from Facebook and Instagram if the Morrison government went ahead with a mandatory code of conduct that would force tech giants to share their revenue with the media companies whose content they republish.