Germany is perfectly correct that someone cannot stand up in a public square in Germany and state Holocaust denials. In Germany. This does not translate to a Spaniard making a video and posting it on YouTube where German citizens can view it.
That's the problem being faced now. The laws apply within a country's borders and they're trying to figure out how to apply them to technology that crosses their borders. In the previous example the Spaniard is doing nothing illegal. The German citizen may be by viewing the video - that would take a lawyer to answer.
Facebook is a social media platform. There is no one simple solution since there are millions of people posting their personal opinions at any given time. And lots of pictures of food but that's not as much of a problem. Germany is telling Facebook that it's their responsibility to enforce German laws across their entire user base. This is not practical nor is it right.
Sure. Close the Facebook offices in Germany. Don't allow German-based companies to advertise on Facebook. Fine. That's 'not doing business' with Germany. But they can't do much more than that unless Germany blocks all of Facebook. And we all know how well that works.
Germany needs to understand the difference here. They can't tell a Spaniard that laws in Germany apply to them just because they have something on the internet that Germans can view. It isn't going to happen and they need to focus on what they can control rather than what they cannot.