This article originally appeared in the Hub.
By Peter Menzies, September 21, 2023
One Elvis has left the building.
Another is still taking requests but no one knows for how long.
The first is Meta. As we are all aware by now, it decided, following the June passage of the Online News Act (Bill C-18), to no longer allow its Facebook, Instagram, and Threads users to post links to news.
That exit from news carriage has already resulted in economic harm to online news innovators who lost a key (and free) platform they once used to build audiences. Entrepreneurial companies such as Village Media have called a halt to growth while long-established publishers are losing millions of dollars in sorely needed revenue due to the loss of traffic Meta once drove to their websites. The pain will only grow for all sectors of the news industry as Meta winds down its funding arrangements for journalism rather than being forced to pay for the privilege of delivering it.
Google is the other offshore “Web Giant” targeted by Bill C-18, which compels the global behemoths to subsidize approved Canadian news organizations through faux “commercial” agreements reached at the point of a legislative gun and approved by the Canadian Radio-television and Telecommunications Commission.
It has indicated it is also prepared to disengage from its current journalism supports and de-index Canadian news organizations from its search engine rather than play along with what many view as a shakedown.
Google, though, hasn’t entirely given up on Canada, or if it has it isn’t saying. While skeptical, it has officially remained open to the idea that Heritage Minister Pascale St-Onge can allay its primary concerns through the regulations that always follow the passage of legislation.
Chief among its worries is that Bill C-18 exposes Google to unlimited financial liability (in other words they had no idea how much they would have to pay to satisfy the demands of Postmedia, Bell, the Toronto Star, Rogers, and many, many others). It also mistrusts the idea that regulations could be “future-proofed.” Like Meta, Google is glaringly aware that whatever it agrees to in Canada will be replicated globally as media outlets in other countries look to belly up to the Big Tech bar. As one source told me, “multiply it by at least 50” when it comes to the potential worldwide cost of Bill C-18.
The regulations were published in draft form on Sept. 1. St-Onge declared them “reasonable,” having forecast optimism they would quickly lead to Google and Meta reaching the desired arrangements with news organizations and all would be well by Christmas.
Forget it, said Meta.
“As we have communicated to the government, the regulatory process is not equipped to address the fundamentally flawed premise of the Online News Act,” it said in a statement. “As the legislation is based on the incorrect assertion that Meta benefits unfairly from the news content shared on our platforms, today’s proposed regulations will not impact our business decision to end news availability in Canada.”
Google indicated only that it would engage in the process, which gave interested parties 30 days to comment on the draft regulations before they are finalized and come into force no later than Dec. 19.
But based on what St-Onge has laid out so far, happiness remains a long shot.
As observers such as Michael Geist, who follows this file like a hound in a fox hunt, have pointed out, St-Onge’s proposed regulations still constitute a tax on links that, instead of putting a cap on Google’s liability, merely put a floor in place.
The regulations insist that agreements must be based on the number of journalists employed by each news organization (which means CBC would be the largest beneficiary). They then confuse matters by stating that the lowest cost deal can be no less than 20 percent of that paid to the largest recipient. Then there’s the CRTC, which is so overwhelmed by its new duties under the Online Streaming Act that it has abandoned dealing with most broadcasting issues for at least two years. It. has announced it won’t have a list of approved recipients ready until late 2024 which, in CRTC years (the regulator is notoriously slothful) means 2026.
There’s more. The amount of money that St-Onge and the Act’s proponents have deemed “reasonable” is $62 million from Meta (irrelevant as it stands) and $172 million from Google. People in the know are generally of the belief that Google is good for no more than $100 million with some question around whether that includes amounts they are already paying through existing deals. But $172 million (remember x 50+) is not going to fly. Throw in that Google must allocate a “significant” amount to Indigenous and official language organizations and, well, it’s difficult to see this mess working out anytime soon.
Google’s vice president of news, Richard Gingras, recently gave a speech in Taipei in which he indicated the company wants to support journalism because Google does better in democracies than in the alternatives.
Take that however you want.
But for those of you wondering if St-Onge has managed to salvage at least something from the Bill C-18 debacle by satisfying Google, don’t hold your breath. The best guess is that it will file its response to the draft regulations, describe them as deficient but still allow the government time to bend to its wishes in a final, amended, version.
The government, meanwhile, has to find a way to declare victory while in full retreat.
If it does, news organizations might be provided some solace. They might even make up a little of the money they are losing through Meta’s departure.
If it doesn’t, if Google leaves the building, last week’s Metroland bankruptcy will be small beer compared to what comes next.
Either way, the news industry will be far weaker than it was before it talked Ottawa into helping it out.
Peter Menzies is a Senior Fellow with the Macdonald-Laurier Institute, a former newspaper executive, and past vice chair of the CRTC.
