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Tech platform response to pending legislation in Canada is mixed

By L. Carol Christopher

INMA

Pleasant Hill, California, USA

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Following the world-first legislation enacted in February to benefit news publishers in Australia, and in the face of more legislation from countries around the world, Google and Facebook have taken different paths in reconciling themselves to the new world.

Google seems to have made its peace — for now — and struck deals to license news with more than 600 publishers worldwide, including Canada, which is now considering its own legislation.

Facebook has also stepped forward in Canada:

• By committing US$8 million (unspecified currency) over three years to help support the sustainability of the news industry in Canada with a clear focus on local reporting, smaller publications, and underrepresented voices, according to its blog. The funds will be added to millions already announced as part of the Facebook Journalism Project, and US$100 million distributed globally to support the news industry during the pandemic. Those funds all fall under the umbrella of a US$1 billion worldwide pledge over the next three years.

• This year, Facebook will explore commercial deals with media companies in Canada that would allow wider dissemination of news links. In a late March e-mail to the Financial Post, a Facebook spokesperson said the platform would only pay for news items of its choice. “Facebook is not going to pay for news links or content that publishers voluntarily put on our platform. However, in instances where the Facebook community might benefit from additional access to news links, Facebook would pay to bring those opportunities to our users.”

• Kevin Chan, head of public policy at Facebook Canada, said before a standing Parliamentary committee on Canadian heritage in March, that, in the coming months, Facebook would move to begin reporting revenue to the Canada Revenue Agency, which the Toronto Star called an “unexpected move for a U.S.-based tech company.” 

“What people want is transparency,” Chan said. “Regardless of what the rules are in Canada, we will unilaterally make this available.” 

(Canada will begin imposing sales tax on foreign digital services on July and expects to bring in CA$1.34 billion over five years, reported the National Post, which added that an additional corporate tax on companies providing digital services, scheduled to take effect in 2022, is estimated to bring in CA$3.4 billion over five years.)

The need for legislation persists

Nevertheless, Facebook’s contributions fall short of potential gains anticipated by legislation designed to level the playing field: 

“In Australia, where there is legislation to ensure fair compensation, Facebook will be contributing upwards of US$100 million a year,” said John Hinds, president of News Media Canada, in a comment reported in the Financial Post. That association of newspaper publishers estimates the value of Canadian news content on the platform at more than CA$600 million.

Steven Guilbeault, Canadian Heritage Minister, says the call for legislation in Canada is presistant.
Steven Guilbeault, Canadian Heritage Minister, says the call for legislation in Canada is presistant.

Steven Guilbeault, Canadian Heritage Minister, noted that even media companies that have made deals with the tech platforms are calling for legislation. “…one-off initiatives, such as those proposed by digital platforms, won’t be enough,” he said.

INMA members we spoke with concurred.

“In Australia, the legislation has prompted the current activities of Google and Facebook with publishers and allowed publishers to organise in a way that counters the market power of the digital giants,” Bob Cox, publisher of the Winnipeg Free Press and INMA member, told INMA.

“So-called philanthropic support for journalism by any digital company is not enough to mitigate against the need for legislation.” 

But Cox also said this: “At FP Canadian Newspapers, we have worked with Facebook for the past three years, benefitting from grants, training, and access to resources. … We want to continue building our business model to include Facebook, not exclude it. Most news publishers have multi-faceted relationships with Facebook and neither side wants to see those broken.”

An Australian drama to be replayed in Canada?

Despite the good works, Facebook is meanwhile threatening to reenact the drama it created in Australia — in Canada.  

When it became apparent that impending anti-trust legislation there would reign in the tech giants, “Our unfortunate response to an unworkable piece of legislation … was that we had to exit the [Australian] market,” said Chan during testimony at the hearing, reported the Toronto Star. 

Australian Facebook users who relied on that platform for news were out of luck for five days in February when the platform blocked all news sharing — and inadvertently some other public service sites. Service was restored at the last minute only after Australia amended the legislation, according to the CBC.

News media companies in Canada do not expect a Facebook blackout in the country.
News media companies in Canada do not expect a Facebook blackout in the country.

According to the Financial Post, “both Google and Facebook objected to Australia’s code and pushed to be able to negotiate commercial licensing agreements with the publishers of their choice to feed specific news products, rather than being forced to pay for simply carrying news links or snippets. But the spectre of the mandatory code has been credited with pushing forward arrangements that were acceptable to both sides.”

Facebook says it will impose a Canadian news blackout only as a last resort. “It is never something we would ever want to do unless we really have no choice,” Chan said at the late March hearing.

Guilbeault called that approach “totally unsustainable,” asking if the company would be willing to cut ties with what he predicts is another five to 15 countries likely to seek fair remuneration via a united front. 

Cox does not believe it will happen, he wrote. Given that Facebook expects to sign deals with Canadian news publishers in 2021, he said, “it is pretty unlikely we would see the kind of high-stakes drama that took place in Australia. I don’t think Facebook wants to see a repeat of the kind of bad publicity that happened worldwide over its Australian effort.” 

Another Canadian executive spoke off the record with us and agreed the blackout is unlikely. The logic is that without news publishers, Facebook’s brand would be damaged and would no longer be trusted for anything but fake and toxic news.

What Canadian legislation could look like

Guilbeault, who oversees Canadian media and communications, told the Canadian Press that the government is consulting with France and Australia over the “market imbalance between news media organisations and those who benefit from their work. News is not free and never has been.”

But, he said, “No matter how appealing the French to some or the Australian models may seem to others, we have our own sets of laws, regulations, institutions, practices that are different, so we can’t just import a model.” The Australian system is based on a regulator that doesn’t exist in Canada, while the French approach would also have to account for Canadian copyright laws and regulations, and international agreements like the USMCA, he noted

The Canadian Press described the response to how media in Canada has been “financed, regulated, and policed in the past,” saying a proposed prong of multi-part legislation will change how Internet companies are taxed and, in turn, how traditional media companies are financially supported, the article said.

The government, Guilbeault said, hopes to table legislation on fair remuneration as early as June, although the Financial Post reported there will be “further consultations with publishers, the tech platforms, and other affected parties and experts before the legislation is introduced.” 

According to a report in the National Post, Prime Minister Justin Trudeau promised in February to coordinate efforts with Australian Prime Minister Scott Morrison on pressuring big tech companies to pay for online content.

About L. Carol Christopher

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