The tough new legislation will be brought to parliament next week as Canberra pushes for social media companies to prevent their platforms from being "weaponised" by terrorists in the wake of the Christchurch mosque attacks.
Facebook said it "quickly" removed a staggering 1.5 million videos of the white supremacist massacre live-streamed on the social media platform.
Facebook taps user data to defend workers from threat
A 17-minute video of the March 15 rampage that claimed the lives of 50 people was widely available online and experts said was easily retrievable several hours after the attack.
"Big social media companies have a responsibility to take every possible action to ensure their technology products are not exploited by murderous terrorists," Prime Minister Scott Morrison said in a statement.
Morrison, who met with a number of tech firms Tuesday -- including Facebook, Twitter and Google -- said Australia would encourage other G20 nations to hold social media firms to account.
Attorney-General Christian Porter said the new laws would make it a criminal offence for platforms not to quickly take down "abhorrent violent material" like terror attacks, murder or rape.
Executives could face up to three years in prison for failing to do so, he added, while social media platforms -- whose annual revenues can stretch into the tens of billions -- would face fines of up to ten percent of their annual turnover.
"Mainstream media that broadcast such material would be putting their licence at risk and there is no reason why social media platforms should be treated any differently," Porter said.
Facebook paid teens to track smartphone use
The government was so far "underwhelmed" by the response from tech giants at their Tuesday meeting with Morrison, communications minister Mitch Fifield told reporters Saturday.
But cyber-security expert Nigel Phair, from the University of New South Wales, cast doubt over the ability of proposed Australian laws to impose jail time.
"The penalty is only for Australian domiciled executives, and on the whole they're marketing executives, not those responsible for running and maintaining the platform," he told broadcaster SBS earlier this week.
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