> How exactly will Facebook raise prices in a way that it will hit the average consumer?

The average consumer is also a worker and depends on an employer that will be paying higher advertising costs for the same benefit.

And now %X of that cost will return to the economy instead of going overseas. Ad costs should stay roughly the same, since they are the result of bidding. It's not like Facebook leaves $2 on the table and says we'll keep that there for you guys unless we get taxed.

When something has near zero marginal cost, it is all just about demand. The only scarcity is caused from other bidders.

Why should a country send %X margin on all of their consumer products overseas (via ad costs) to someone who is selling their own citizens' content and capturing the users/locking them in with network effects? There is a lot of innovation at Facebook et. al., but they get a massively outsized portion of the network's value when you compare what they put in vs. what users are putting in.

Where it could hurt would be a service that can barely break even using ad revenue and goes under as a result. But for big corps with network-effect lock-in in their segment, it seems like a net win for any country that does this.

More to the point, if Facebook isn’t selling anything to UK consumers, will it pay any tax?

It's selling ads. Its consumers are the (UK) businesses buying those ads.

If this is a tax on sales, rather than impressions, they could prefer international sales by 2%. If this is a tax on views, then this is harder.

Facebook could also raise the reserve price for auctions for UK ads.

They'll raise prices on advertisers in the UK, who will subsequently raise prices on consumers.

“Why weren’t you already charging more, if you could?” Would be my obvious first question at that point, if I was a shareholder.

Because the competitive equilibrium doesn't allow it unless the cost curve shifts for everyone at the same time.

They are not shifting for everybody at the same time, they are shifting only for “tech companies”, who are currently perceived (rightly or wrongly) as undercutting “normal businesses” in an unfair way. (Scare quotes because in practice I don’t trust the UK government know what they mean by the words).

Well, then tech companies will raise prices and product makers will buy fewer ads, leading them to increase the ad load, or similar. It demands on the demand elasticity.

More ad/content ratio

I’m pretty sure FB already maximizes their profit per user based on what they think the user can tolerate, and I doubt it can be arbitrarily pushed further on a whim.

Facebook has a payment platform with various products.