The voice of journalism
Parliamentary hearings for Canada’s Online News Act–or the Liberal government’s attempt to rectify the imbalance between platforms and publishers–have so far yielded insight into the news industry’s reluctance to wholly embrace the legislation as it stands. The hearings have also captured the attention of stakeholders not only in Canada but globally as countries, including the US, Brazil, and India, consider legislation of their own. As part of our ongoing platforms and publishers work, the Tow Center is summarizing the committee hearings to help make sense of the bill as it quickly weaves its way through the House of Commons.
While witness testimonies are finished in the House, hearings restart on Friday, where the committee is expected to begin clause-by-clause consideration.
Tow reviewed thirty two opening statements from outside witnesses across seven hearings in the House of Commons’ Standing Committee on Canadian Heritage (CHPC) in regards to Bill C-18. We also recently published a database and accompanying timelines of Meta (formerly Facebook) and Google’s key investments in Canadian news.
The Online News Act, or Bill C-18, which was formally introduced in April 2022, is Canada’s answer to legislation that resembles Australia’s News Media Bargaining Code. While some of the bill’s staunchest Canadian critics wish to kill the legislation entirely, others see Bill C-18 as an opportunity to learn from Australia’s mistakes.
The proposed Canadian legislation and the progress, or otherwise, of similar legislation in other territories is taking on a new urgency. Recession is predicted in many countries, following the economic turmoil precipitated by the COVID-19 pandemic and the Russian invasion of Ukraine, with advertising markets a likely early causality.
Additionally, Meta, a substantial voluntary contributor to news projects, especially in North America and Europe, is in the process of pulling funding support and products once aimed at the news publishing industry. In just the past month or so, Meta announced it’s unwinding Bulletin, its newsletter platform aimed at paying local writers, which was launched just last year; withdrawn News Tab deals with larger publishers; and ended support for Instant Articles. And after the company’s second-ever quarterly revenue decline posted in late October, as well as Mark Zuckerberg’s $10 billion pivot towards the Metaverse, the tech giant laid off 11,000 of its workforce–leaving not just the future for the Meta Journalism Project but the company as a whole largely up in the air.
Select journalists, academics, trade associations, and other witnesses from around the world have been making their final pitches to the CHPC on what the most equitable legislative framework should look like for requiring digital platforms, namely Google and Meta, to share their revenues with news businesses. Held in video and in-person hybrid format, each witness was successively given five minutes to speak before the floor was opened for questions from parliamentary members of the committee.
Canada’s Online News Act establishes a framework for digital news intermediaries and publishers to enter into agreements with respect to news content made available on social feeds and platforms.
The government would grant the Canadian Radio-television and Telecommunications Commission (CRTC) the power to determine publishers’ eligibility for agreements, exempt platforms from designation if existing agreements satisfy certain criteria, and, if a deal cannot be made in good faith, force parties into arbitration.
This threat of regulated, “baseball-style” arbitration will, the Canadian government hopes, incentivize fairer deals for all–and serve as the second draft for legislation others around the globe could themselves adopt. What these revisions should contain–or whether Bill C-18 should go forward at all–depends on who you ask.
Industry experts have drawn on Australia’s News Media Bargaining Code (NMBC) as proof that legislation including arbitration-style negotiations can work despite skepticism that this could seamlessly translate to the Canadian news landscape.
Australia, using competition law, passed the NMBC in early 2021. News organizations have since extracted hundreds of millions of dollars from Google and Meta in hopes of addressing the power imbalance between the news industry and Big Tech.
One oft-cited criticism of the “Australia model” is that larger, legacy news publications in Australia disproportionately benefited from the bill while smaller newspapers and independent, digital-native outlets didn’t get a fair shake from the platforms.
It’s true that the bulk of platform revenue flowed to the largest media companies in Australia that employ over 90 percent of Australian journalists. And one of the most high-profile deals involved Rupert Murdoch’s News Corp, which ended in three-year landmark licensing agreements estimated to be worth $50 million per year.
However, Rod Sims, former chair of the Australian Competition and Consumer Commission, argued it’s simply false that the independent news sector missed out entirely.
Nearly all eligible media businesses in Australia, Sims said, made deals with Google, while Facebook has entered licensing agreements with publishers that employ around 85 percent of all Australian journalists. Sims also pointed to Country Press Australia, an affiliation of 160 smaller, regional publications, as receiving possibly the highest payment per journalist employed.
With more than $200 million AU ($134 million US) per annum worth of platform money flowing into Australian news media businesses–a finding Sims published this year at the Judith Neilson Institute for Journalism and Ideas–he believes the bargaining code “has been extremely successful in achieving its objective.”
Paul Deegan, president and CEO of News Media Canada, agreed with Sims. “Sure, large organizations are benefiting the most on a total dollar basis. That’s understandable, Australia has one of the most concentrated media markets in the world,” Deegan said. But deals with independent publishers have happened and are still underway, he pointed out, like the twenty-four small Australian publishers who reached a deal with Google this spring, largely thanks to the bill’s collective bargaining powers.
It’s also essential to identify the main differences between the Online News Act and Australia’s bargaining code.
Taylor Owen, associate professor and director of the Center for Media Technology and Democracy at McGill University, said in his early November hearing that Bill C-18, “adds meaningful public accountability and transparency tools that the Australian bill lacked.” He also noted that the addition of a specified exemption criteria for platform designation, which acts as the bill’s central policy mechanism, is “absolutely critical to this policy working in the public interest.” (Disclosure: Owen is the former research director of the Tow Center, however, the author of this piece did not work at Tow during this period.)
Canadian newspapers associations, such as News Media Canada and Hebdos Québec, have lobbied hard to pass Bill C-18. If the precedent set in Australia has any influence on how the Online News Act will play out, many believe that traditional newspaper publishers stand to gain the most, especially if the collective bargaining provisions remain in the bill.
Those gains could amount to hundreds of millions of dollars across the industry, according to a recent report by the Parliamentary Budget Officer published in early October. This independent body, which provides economic and financial analysis to parliament, estimated that news businesses will receive $329 million CA per annum from Big Tech in just their first round of deals under the bill.
The PBO also believes this compensation could cover thirty percent of the costs to create news–an estimate that’s drawn criticism for both how it was calculated and how it could be interpreted by the CRTC.
Evan Jamison, president of the Alberta Weekly Newspapers Association, believes that the PBO’s thirty percent figure is encouraging but expressed broader concern. He asked, “what happens to the thirty percent if Meta isn’t involved, does Google pay the full thirty percent? Is the thirty percent assumption even accurate? Or should this be some sort of mandated target?” This is especially important to consider as Meta pulls away from its news investments and implements mass layoffs due to continued quarterly revenue decline for the first time in the company’s history.
Other PBO figures have raised red flags for some–specifically that around 75 percent of the funds could go to Canadian broadcasters, such as the Canadian Broadcasting Corporation, Shaw and Rogers, and Bell, if the bill becomes law–a departure from outcomes in Australia.
Matthew Hatfield, campaigns director at Open Media, thinks the Online News Act might create more opportunities to influence these compensatory deals–especially since the CRTC would mediate the deals were they to enter arbitration.
“[The Standing Committee on Canadian Heritage] has criticized the secrecy of the deals Google and Meta make with publishers. Fair enough,” Hatfield said in late October. “So why doesn’t Bill C-18 fix that? You can’t rejuvenate public trust in journalism by making these problematic secret revenue deals larger and more secret, with more opportunity for the CRTC, government, and platforms themselves to quietly influence them.”
A coalition of independent publishers and digital startups that together employ more than one thousand journalists across Canada issued a joint letter in late May 2022 also expressing their concerns with the bill.
The Tyee’s publisher, Jeanette Ageson, representing the Independent Online News Publishers of Canada, said in a September committee hearing that, “while we appreciate the assurances” that smaller publishers in Australia are happy with their deals, “we see nothing in [Bill C-18] that guarantees us the tools we need to achieve and independently verify an equitable outcome.”
To ensure publisher equity, the coalition is asking for a universal funding formula that’s applied consistently and publicly.
The Minister of Canadian Heritage, Pablo Rodríguez, who introduced Bill C-18 back in April, has promised more transparency than Australia’s Code, which allowed Big Tech to cloak the terms of its deals behind nondisclosure agreements. However, as the bill is currently written, the terms need only be disclosed to the Canadian government, not the public, which some argue could disadvantage smaller publishers with less leverage and resources than their counterparts.
Another major sticking point for the coalition is the employee threshold that would require newsrooms to “regularly employ” two or more journalists in Canada for eligibility. They wrote in their letter that this “may exclude dozens of important news innovators” because of a threshold “that news startups often don’t reach until their third or fourth year of operation.”
Annick Charette, president of the National Federation of Communications and Culture, similarly noted in her opening statement that in addition to emerging digital media, some local news outlets–regardless of ownership structure–also employ only one journalist.
Representatives from Indigenous news companies–Jean LaRose, president of Dadan Sivunivut and Monika Ille, CEO of the Aboriginal Peoples Television Network–both told the committee they’d like to see explicit language in Bill C-18 that ensures Indigenous news is meaningfully supported. The bill should reflect, according to LaRose, “the unique characteristics of Indigenous news outlets and the core issues affecting Indigenous rights and self government in the same way that Canada’s democratic institutions and practices are core matters for non-Indigenous new services.”
If Indigenous media is not properly reflected in the bill, “intentionally or not, it creates a kind of hierarchy of Canadian news services,” APTN’s Ille said. “Diverse news outlets, including those serving Indigenous communities, are last.”
Criticisms of Bill C-18
“The first major problem that I have with this bill is that it’s predicated on a lie,” said Jen Gerson, co-founder of The Line, an independent, commentary newsletter in Canada. To Gerson, the lie–that aggregation sites and social media platforms are unduly profiting from news–is indeed the opposite, she argued in the study’s first hearing, because platforms provide free distribution for news sites. She believes it’s up to publishers to monetize this traffic through subscriptions and advertising. (Despite Gerson’s strong criticism of the bill’s premise, The Line undersigned the independent publishers coalition’s joint statement asking to amend it.)
Meta’s global policy director, Kevin Chan, made arguments in a late October hearing that closely resembled Gerson’s. “The framework of the current legislation presumes that Meta unfairly benefits from its relationships with publishers when, in fact, the reverse is true,” he said. Because news publishers voluntarily share links on Facebook, Chan argued, this leads to increased readership and, in turn, more opportunities to sell subscriptions and advertising. Citing Meta’s own internal data, Chan said that in a single year, Facebook sent registered publishers in Canada more than 1.9 billion clicks at an estimated marketing value of more than $230 million.
President of the SWNA, Chris Ashfield, takes issue with this argument in general. He told the committee in late September that, “it is easy to charge that media has failed to transition to digital platforms.” However, Ashfield argued, “[Community publishers] simply do not have the scale or the population to generate much, or any, revenue in the digital world,” adding that, “a click and eyeballs method of sustainability will not work for small community media.”
In a later hearing, Kevin Desjardins, president of the Canadian Association of Broadcasters, acknowledged that platforms are, in fact, directing audiences to online news sites, but noted, “they are not doing this out of the goodness of their heart.”
He pointed out that search and social platforms are “retaining most of the value from those user interactions with news sites through their ability to gather, aggregate, resell, and exploit user data to advertisers through their algorithms.” The lack of regulatory oversight, as well as Big Tech’s dominant market positions, have left Canadian news organizations with “no realistic option but to agree to the platforms’ terms,” according to Desjardins.
Hal Singer, managing director of Econ One, cast further doubt on the ‘clicks and subscriptions’ logic pushed by platforms and their allies. He argued in early November that because Google and Facebook reframe some newspaper articles in rich previews and curate this content alongside advertisements, it “decreases the likelihood of a user clicking on the article, thereby depriving news publishers of clicks while enriching the dominant tech platforms.” Singer added that “this appropriation of newspaper content at zero access price also decreases newspaper subscriptions.”
However, The Line’s Gerson believes that with only four out of every one thousand links posted to Facebook being news content, publishers are setting themselves up for financial fault by making themselves dependent on a business that doesn’t need them. (This figure from Meta’s own quarterly transparency report was also highlighted by a Meta spokesperson in an email to Tow after we published our timelines and database on both the tech duopoly’s investments in Canadian news.) Still, a recent Maru Public Opinion survey published in September found that “mainstream media sources still dominate where Canadians consume daily news.” Of the 1,517 adults polled who check the news, 26 percent said they get their updates from social media sites like Facebook or Instagram.
Another outspoken critic of the Online News Act is Sue Gardner, the McConnell Professor of Practice at McGill University’s Max Bell School of Public Policy, who appeared before the committee in early November. She argued that Bill C-18 misdiagnoses the nature of the problem by characterizing the tech duopoly’s outsized share of the digital ad market as “unfair.” Rather, Gardner said, “Google and Facebook out-innovated the business side of the news industry and that is not a fairness issue, it’s not a moral issue, it doesn’t make them villains.”
Gardner’s version of legislation is much simpler. She wants to take platforms’ money and make an independent fund rather than have the government awkwardly force Google and Facebook into the role of directly funding journalism. “Google and Facebook are private sector, Silicon Valley megacorporations, and their job is to advance their own business interests,” she noted. “They don’t have a mission to serve the people of Canada, we don’t elect them, and they are not accountable to us.”
Google voiced its concerns over Bill C-18 just a little over a month after its introduction. The Online News Act, Google wrote, would lower the standard for journalism in Canada, benefit peddlers of misinformation, and even break Google Search.
In the first round of committee hearings, Digital Content Next CEO, Jason Kint, characterized Google’s concerns as “frankly misinformation that we spent many late hours rebutting in Australia, as Google and Facebook’s favorite advocates suggested the law would break the Internet.” Despite the Code’s passing, Kint pointed out that, “the Internet is still working as well as ever in Australia.”
Google’s Head of Public Policy and Government Relations, Colin McKay, appeared before the Heritage Committee on Oct. 18. His remarks largely echoed what had already been said in Google’s initial written statement, although this time it explicitly drew on small and independent publishers’ warnings, like the bill’s lack of transparency, as further cause to support regulatory alternatives, such as a fund.
In a later hearing, McGill’s Owen expressed dismay that Google’s lobbying strategy, in his opinion, sought to divide news organizations, parliamentarians, and Canadians. “I hate that journalist friends from small and large organizations alike are being pitted against each other,” he said.
Meta was noticeably absent from Google’s hearing. Days after Google presented its case to the CHPC, Meta issued a statement online that said they “were surprised not to receive an invitation to participate, particularly given public comments by lawmakers that this law is targeted at Facebook.” That same day, news broke that Meta was threatening to block news content on Facebook in Canada over the revenue-sharing bill. On Oct. 28, Meta finally appeared before the CHPC.
There, Meta’s Kevin Chan reiterated the tech company’s threats, saying that if “faced with adverse legislation based on false assumptions that defy the logic of how Facebook works,” Meta “may be forced to consider whether we continue to allow the sharing of news content on Facebook in Canada.”
Many witnesses shared mixed feelings about even the potential for further government intervention in the Canadian news media.
Big Tech’s intervention into Canada’s journalism industry is, however, already underway. The Tyee’s Ageson told the committee that, “if nothing is done, Google and Meta will continue to strike uneven deals on a case-by-case basis that favor the largest legacy news publishers based on formulas they don’t have to share, or deals based on which news publishers lobbied the hardest or criticized tech companies the loudest.”
News Media Canada’s Deegan agreed that the platform duopoly is already picking winners and losers by entering content licensing agreements with a dozen or so hand-selected publishers, some of which are NMC’s own members. The most prominent example is the launch of Google News Showcase in Canada about a year ago, where Google entered “partnerships” with publishers like Torstar, Village Media, and others to curate their content on Google News and Discover for publicly undisclosed amounts. These deals have created “a situation of haves and have-nots,” Deegan told the House, which has left entire publishing sectors without deals.
One of those sectors has been ethnic media, according to Maria Saras-Voutsinas, executive director of the National Ethnic Press and Media Council of Canada. She said that while NEPMCC, whose members primarily publish in languages other than English and French, is encouraged to see that digital giants have made deals with select outlets in Canada, they are troubled that none have been with ethnic media. “It is clear Meta and Google will not willingly partner with the ethnic press to ensure that compensation is equitable,” Saras-Voutsinas told the committee in early November, and is why her organization supports Bill C-18.
David Skok, CEO and editor in chief of The Logic, noted in his September remarks that factors like this have created an “anti-competitive market that privileges some and risks starving this country’s journalism ecosystem of the innovation it so desperately needs.” While some believe Bill C-18’s eligibility guidelines could stymy news startups’ growth, Skok says that rectifying the existing imbalance through the Online News Act will actually make room for much-needed innovation in journalism. “It is a backstop, forcing publishers and platforms to come to the table for fair, equitable, and transparent agreements that don’t privilege only those with negotiating power,” he argued. “Bill C-18 is a pro-competition bill.”
How Bill C-18 will play out, if passed, remains hypothetical, and some are wary of the news industry becoming further intertwined with both platforms and the government for its survival.
Digital Content Next’s Kint believes, per his September testimony, that Bill C-18’s “flexible approach” relies primarily on the market, not the government, to set the rates of compensation tailored to each business’ needs. “In the bill’s final offer, arbitration is an elegant solution to accelerate negotiation towards a fair deal at a time when it may likely determine how many journalists can be employed for the coming year,” Kint said.
However, Dr. Michael Geist, the Canada research chair in Internet and E-Commerce Law at the University of Ottawa, who often characterizes Bill C-18 as a link tax, doesn’t buy this ‘minimal market intervention’ argument. “The reality is that there is an astonishing number of standards and bargaining rules established by the government or the CRTC in the bill,” Geist argued in September, “which has a real-world impact on government interference, blurring the news editorial and business divide.”
Peter Menzies, former president and vice chairman of the Canadian Radio-television and Telecommunications Commission, similarly worries about further government intervention.
“Bill C-18 will permanently entrench the industry’s dependency not on the loyalty of citizens, readers, viewers, but upon the good graces of politicians and the ability of offshore, quasi-monopoly tech companies to remain profitable,” Menzies said before the House in late September. When 61 percent of Canadians believe journalists are purposefully trying to mislead them and 58 percent think the same of the government, Menzies argued, “having those two team up doesn’t seem like the best idea.”
Some have argued that the Online News Act could also make Canadian news markets reliant on a platform’s overall financial health. Open Media’s Hatfield says it is a “dangerous weakening of credibility and independence” to make “news outlets dependent on the continued success of online platforms to survive.”
This is especially relevant considering Meta’s ongoing identity crisis and pivot away from news. Meta’s Chan remarked that it would be, “a most peculiar and unorthodox arrangement” for Canada to require Meta “pay publishers for giving them free marketing on Facebook” as they “prioritize long-term investments in the Metaverse and in the growth of short form video.”
There are shared anxieties that legislation will further scare off Google and Meta, both of which have spent hundreds of millions of dollars globally training journalists, funding innovation, and more. (Others have called this lobbying money intended to stave off federal legislation.)
The platform duopoly has responded forcefully to past legislation. When ancillary copyright laws were passed in 2014, Google News was shuttered in Spain and some German publishers that refused to give Google access to paywalled content were delisted from its search results. In the days leading up to Australia passing its NMBC, Meta banned, then unbanned, news on Facebook.
Some appeared largely unfazed by the possibility of retaliation from the platforms. Witness Hugh Stephens, executive fellow at the University of Calgary’s School of Public Policy, seemed reassured from the precedent set abroad. “We know that when Australia decided to bell this cat, Google and Facebook mounted a vigorous lobbying campaign and threatened to pull out of Australia,” he recalled in late September. “In the face of the legislation, however, the platforms backed down.”
However, McGill’s Owen directly addressed Meta’s recent warnings in his opening statement earlier this month. “Facebook’s threat to turn off access to reliable information is, to me, revealing about their place in our democratic society,” said Owen. He further urged it be treated “with the seriousness it warrants at the highest levels of the Canadian and US governments.”
While Canada’s Online News Act is one of Google and Meta’s largest nuisances at the moment, the tech duopoly faces mounting threats of similar legislation globally.
Last year, thirty Danish media organizations created a collective bargaining assembly, akin to the Australia model, as a way to together negotiate with Google over payments for news. A couple months later, France’s Institute for Digital Fundamental Rights announced plans to do the same. And in Brazil, Patricia Campos Mello, reporter at large at Folha de São Paulo newspaper and Tow fellow, reported that in an accidental allyship, Google, Meta, and Bolsonaro’s government together successfully killed Bill PL 2630, more commonly known as the Fake News Bill, which contained a news compensation clause directed at Big Tech.
The relationship between platforms and publishers is rapidly changing, too. Meta has all but announced its parting ways with the news after its decision to lay off some of its most prominent news partnership employees, such as David Grant and Dorrine Mendoza, in last week’s layoffs that affected about 13 percent of its total workforce. While Google continues to funnel money into its news initiatives–especially in partnership with Local Independent Online News (LION) Publishers for their Startups Labs, Sustainability Audits, and other programs–the shifting winds show continued platform support is far from guaranteed.
Striking a more cynical tone, former CRTC president Menzies argued that, “Bill C-18 might keep the wolves from the door of a few legacy companies for a few more years, but it won’t save journalism, and while the amount of money involved may keep some from starving, it will still leave most hungry, needy, and assumed to be grateful.”
Others drew the focus back to why meaningful legislation was created in the first place.
“This legislation must not be about publishers; it must be about the public,” said Ben Scott, Director of the Reset, in a mid-October hearing. “Too much of this debate plays out as if the government were simply refereeing a contest between big tech and big publishers. That’s wrong.” He continued that, “these aren’t just failures among industries; this has hastened the destruction of public service journalism, in ways that really undermine democratic integrity.”
What’s next for the Online News Act is, for now, not entirely clear. The Standing Committee on Canadian Heritage has finished calling witnesses, and Friday they will begin going through Bill C-18, clause-by-clause, before heading to the report stage.
Justin Smith and Ben Smith are not related, nor did it seem likely that they’d ever become partners; the first time they met, it didn’t go so well. It was 2008, at Big Nick’s Burger Joint & Pizza Joint Too,…