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Was Canada’s Online News Act compromise a last-minute win or a failure?

Just before Bill C-18 came into effect, the Canadian government announced a compromise with Google—but not Meta. How did we get here?

February 6, 2024

6-minute read

Public support for any kind of novel legislation is always difficult to predict. In the case of the Online News Act, Bill C-18, the starting point was that the governing Liberals and Opposition Conservatives both endorsed a news bargaining code in their 2021 election platforms, just as the major Australian parties had united around their own code.

When the bill hit the Parliamentary order table the Conservative Opposition abandoned its election promise and opposed the bill as “censorship.”

An army of commentators also opposed C-18. They criticized the legislation as favouring big Canadian media companies over small news outlets, undermining the independence of the press, fueling public distrust of media, leading an unconstitutional federal foray into provincial jurisdiction, interfering with the free linking of content on the internet, and provoking the ire and news throttling power of the Big Tech platforms. Very few of these critics touted an independent news fund as an alternative.

Not one of these critics was buying Rod Sims’ framework of net value exchange between platforms and publishers. Jen Gerson of The Line called it “a lie.” Several others suggested the entire scheme was simply a “shakedown” of Big Tech by politically connected Canadian media companies, driven by the idea that the platforms had stolen “their” advertising revenue.

The argument in favour of net value exchange, while difficult to prove to the satisfaction of critics and skeptics, had one thing going for it: facts on the ground. Google had long split advertising revenues with content providers on YouTube, with 55 per cent paid to creators. Both Google and Meta had made rich deals with the Australian publishers in 2021 and were in the process of settling accounts with French and Spanish publishers too. And perhaps in hopes of deflecting the Liberals’ push for Bill C-18 in Canada, in 2021 and 2022 Google and Meta reached voluntary compensation agreements with many Canadian print publishers.

All of these precedent-setting agreements strengthened arguments that net value exchange indeed favoured publishers. Otherwise, why would Google and Facebook pay so much?

The bill’s opponents needed a less esoteric issue to rally around. Just as the Liberal MPs were hammering “Big Tech” in their public messaging, the Conservatives beat a familiar tattoo: attack “Big Media.” The critique that got the most political traction during the public debate was that the bill, like it or hate it, would favour large Canadian publishers at the expense of small publishers.

The “big” publishers included the large television companies owned by major telecommunications conglomerates Bell Media CTV, Rogers City-TV and Québecor TVA; the incessantly pilloried public broadcaster CBC Radio-Canada, and (depending on who was doing the skewering) the right-wing Postmedia. Because the television companies and the public broadcaster provided the lion’s share of online news to Canadians, the Parliamentary Budget Office reasonably estimated that they would end up with 75 per cent of the final compensation paid out by the platforms.

The Liberals’ bill was approved by the House of Commons in December 2022 with the support of the NDP and the Bloc Québecois. A number of Parliamentary amendments were made without changing its basic policy design.

But what occurred the same month may have been the most influential event of all in the journey of Bill C-18; and it didn’t happen in Canada. In Washington D.C., a milder version of a news bargaining code almost made its way into law in December 2022 during the waning moments of the 117th congress—and remained to be retabled in the future. Google had finally settled its compensation dispute with French and Spanish publishers but others were queued up to implement the EU Directive, and legislators were planning a similar law for the United Kingdom. In July 2023 Google published a cheerful corporate blog in which it celebrated licensing arrangements with “1,500 publications across 15 countries” from which one might infer that its strategy in the face of a transnational battle to discourage legislative action was to voluntarily sign licensing agreements at an agreeable price and threaten news throttles where necessary.

The global platforms faced the same regulatory challenge in numerous jurisdictions and, to use a baseball analogy, they needed to strike out the side. Canada was in the batter’s box.

Early Canadian opinion polls suggested strong public support for greater regulation of the Internet, including Bill C-18, when Nanos released a survey in May 2022, shortly after the bill was tabled. Two weeks later, Newsmedia Canada released a Pollara poll finding that 79 per cent of Canadians (including 71 per cent of Conservative voters) agreed with the principle that “web giants should have to share revenue with Canadian media outlets.”

Opinion polls on detailed legislation invariably capture public sentiment in principle, but subsequent events—more information, more debate and piercing criticism—can change results. When Bill C-18 got into prolonged debate at the House of Commons Heritage Committee in fall 2022, the Conservatives pivoted to oppose the legislation and critics vied to influence the public narrative in media coverage.

But the most impactful opposition was Google and Meta’s ominous threats to reprise news throttle tactics. Meta was more explicit in its threats (and subsequently acted upon them) to evade Bill C-18 by banning news on its Canadian Facebook and Instagram platforms. Google started with a lighter touch, hiring Canadian pollster Abacus to publish a contentiously framed opinion survey that posed questions assuming all of Google’s criticisms of C-18 as facts. Unsurprisingly, the answers suggested a sudden drop in public support for the bill. Yet a broadcaster-commissioned Nanos survey published at the end of the month and asking about “fair payment” suggested that public support for C-18 had hardly budged since earlier Nanos poll from May.

The duelling polls settled nothing. Tellingly, the Abacus poll found that only eight per cent of respondents were familiar with details of the legislation, and the broader public only got engaged when Google and Meta acted on their threats of news throttles. It was Google that first fired a shot across the government’s bow in February 2023 when it ran an unannounced six-week news throttle test that affected four per cent of its audience and then, unsurprisingly, became well publicized after several journalists discovered themselves to be part of the test.

When the bill received Royal Assent in June 2023, Meta announced and then implemented its indefinite news throttle in August. Once the platforms’ news throttles became a reality, various opinion polls carried out in July through September suggested public support for the goals of the bill had slumped to 60 per cent but more significantly half of respondents supported the government backing down in response to the news throttles. The results were skewed regionally and by voter preference, suggesting Conservative-leaning respondents were aligning with their party’s opposition to the bill.

Google threatened to join Meta in a permanent boycott of news in Canada when the Online News Act came into force in December 2023. The previous September, incoming Heritage Minister Pascale St.-Onge had floated a draft regulation that offered the platforms the ability to exempt themselves from bargaining and arbitration in exchange for four per cent of their Canadian revenue.. Fixing the levy at figures much lower than the Parliamentary Budget Office estimate of $329 million—which assumed that compensation would be based on 30 per cent of editorial costs—four per cent would be equivalent to a $172 million annual payment from Google and $62 million from Meta.

Google and Meta both rejected the offer and the clock ticked down to December 19, when the Online News Act would take effect and Google had promised to trigger its news throttle.

But in a buzzer-beater moment on the last day of November, St.-Onge announced she had evaded the looming deadline by negotiating a $100 million annual compensation payment from Google to Canadian news publishers in compliance with Bill C-18.

Hard numbers are difficult to come by when evaluating the bottom-line outcome of the bill. But a news-less Meta is paying no compensation to Canadian publishers and is set to claw back what its spokesperson described as $20 million in its voluntary licensing deals made in 2021. In addition, Canadian publishers can no longer reach their audiences through Facebook or Instagram distribution, affecting their viewership and advertising reach. As for Google, its $100 million in compensation payments to publishers is far less than its projected $172 million share of the initial Heritage target of $234 million for Google and Meta combined.

That leaves 2024 as the year of unfinished business for theOnline News Act. Whether the bill has been a success or a failure in its stated goals will keep being debated.

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