Can Canada Prevail Against Big Tech?

Two U.S.-based tech giants, Meta and Google, have given the Canadian government and Canadian media organizations a Hobson’s choice.

Thomas Hobson, who rented out horses in 16^th century England, told customers they could either take the horse nearest the stable door or none at all.

Meta and Google have told Canadian news creators (including rabble.ca): You can have your content shared on our platforms, but without any of the advertising revenue we derive thereof; or, you cannot share it at all.

The tech giants are fighting the Liberal government’s just-enacted Bill C-18, “an Act respecting online communications platforms that make news content available to persons in Canada”.

That new law requires companies the government calls “digital news intermediary operators” to compensate Canadian news businesses for the journalistic content those operators distribute on platforms such as Facebook (which is owned by Meta).

The law does not set fees or rates which companies must pay to hundreds of recognized Canadian news providers, large and small.

Instead, C-18, in its words, “establishes a framework” for negotiations between the digital intermediary operators and news businesses (such as the CBC or the Toronto Star).

The end result, presumably, would be that the tech giants (the intermediaries) would pay the news businesses for the use of their content.

The Act takes the needs of smaller news businesses, such as community newspapers or rabble.ca, into account. Such organizations would be able to join forces and negotiate collectively with the tech giants.

The stated purpose of C-18 is “to regulate digital news intermediaries with a view to enhancing fairness in the Canadian digital news marketplace.”

The government is deeply worried about the Canadian news industry’s sustainability.

In justifying the new law, former Canadian Heritage Minister Pablo Rodriguez pointed to the “years of major decline in revenue” for Canadian media outlets.

The Trudeau government is also concerned, more broadly, with “the loss of trust in journalism and the rise of disinformation.” Many say such a loss of trust is a threat to democracy, which depends on a well-informed populace.

On the financial front, the House of Commons Heritage Committee did a study of media and local communities in which it noted “serious declines” in advertising revenue for Canadian community and daily newspapers, while “the online advertising revenues of digital platforms grew exponentially.”

A significant, tangible impact of this steep drop in income for Canadian news producers has been the loss of jobs for professional journalists.

One union that represents media workers, the Communications Workers of America, has lost one third of its editorial members since 2010.

Indeed, the media scene in Canada is characterized by repeated bouts of layoffs.

This past June, CTV (owned by Bell Canada Enterprises), slashed 1,300 positions. It closed foreign bureaus, consolidated media operations, and fired some of its most experienced and respected journalists, among them foreign correspondent Paul Workman and veteran Parliament Hill reporter Joyce Napier.

Other media organizations, including Postmedia, have made similar, equally devastating, cuts.

Postmedia owns the majority of English-language major city newspapers in Canada, as well as many smaller local papers, and a number of major news websites, such as Canada.com.

These days, to cite just one example, the Postmedia-owned Ottawa Citizen barely covers municipal affairs in Canada’s capital and fifth largest city.

Were it not for CBC-Ottawa’s excellent and in-depth coverage, citizens of Ottawa would have little information about goings-on at their city hall.

And so, in the face of what is in effect a media crisis in Canada, the Heritage Committee recommended the federal government find a way to “level the playing field among industries publishing Canadian news, on all platforms.”

The response was Bill C-18.

Sadly, for the moment at least, that measure does not seem to be working as planned.

A government compromise?

Although the measures of C-18 are not yet officially in effect Facebook and Meta-owned Instagram decided to block Canadian news on August 1.

Google is holding fire for the time being, but promises to follow suit when the Act comes fully into effect, which will be no later than 180 days after it received royal assent on June 22, 2023.

The tech giants say the government has got it wrong. They don’t suck profits away from Canadian news providers, they argue. Rather they provide a service to those outlets by disseminating their product.

As well, the new law violates the principle of an open internet, they say.

Google put it this way when they announced they would be blocking Canadian news sites rather than paying: “For more than 30 years, the ability to link freely between websites has been fundamental to how the open web works. In fact, free linking – which lets you click on a link and immediately access the source of that information – was the main innovation of the web.”

Facebook has taken a more aggressive tone. Its executives say, dismissively, they do not need the traffic from Canadian (or any other) news sites. Their main business lies elsewhere, mostly in more personal content.

The government seems to have been blindsided by the tech giants’ reaction to C-18. They were expecting a more measured wait-and-see stance, and hoped the “intermediaries” would use the negotiating process to strike the best deal for themselves.

The Parliamentary Budget officer has calculated C-18 could yield over $200 million to Canadian cash-starved news businesses.

That sounds like a lot of money, but tech giants are swimming in money, billions in profits. Paying for Canadian news would have little impact on their bottom lines.

But the tech giants do not like the precedent the Canadian Act establishes. They know the massive European Union, with over 400 million people, is watching with great interest.

Even the free-market-obsessed United States might relish the chance to suck some money away from Facebook, Google and their ilk.

Here in Canada, the Pierre Poilievre Conservatives have decided to politicize the conflict between the government and high tech.

Poilievre claims Canadian news has (or will) disappear from the internet. That is false. Enter the URL for a Canadian news site in your browser and you will find it.

Indeed, Google, in its announcement denouncing the Act, advises Canadians to do just that.

The Trudeau government’s plan now seems to be to use the not-yet-promulgated regulations to mollify the tech giants.

The government has said C-18’s regulations will allow for the tech giants to compensate news organizations in a non-monetary way, through training programs and other services, and will establish a “financial threshold for contributions to sustainability of the Canadian news marketplace”.

In other words, while preserving the new law in principle, the regulations will limit its application.

Most importantly, the regulations will limit the Act’s financial impact on the tech giants.

Such a compromise might work with Google, but Facebook is probably a lost cause.

Canada needs a broader strategy

However this conflict plays out, it should only be a small part of the federal government’s strategy to assure a healthy and diverse Canadian news-media industry.

The industry currently suffers from an enormous level of concentration. A handful of companies control the entire sector.

And there are threats the sector could become even more concentrated. Less than a month ago, NordStar Capital, owner of the Toronto Star and dozens of smaller publications, and Postmedia almost reached a merger agreement.

Those talks ended in failure, but we are not out of the woods yet. Other mergers are likely on the horizon, as media companies deal with declining advertising revenues.

More than four decades ago, the Pierre Trudeau government set up a Royal Commission on Newspapers, headed by Tom Kent, to look into concentration of ownership in Canadian media.

It recommended tough regulations to prevent companies from owning both broadcast and print outlets, to encourage diversity and competition in the sector, and to uphold editorial independence.

The Liberal government of the day drafted a legislative package to put some of those recommendations into practice, but when Brian Mulroney’s Conservatives took power in 1984, they scrapped it.

It might be time for the government to look again at how to foster competition and diversity in the Canadian media sector. The digital-internet era presents new challenges Tom Kent could not have foreseen, but it also affords new opportunities.

Canada’s other great media asset is the public sector.

All Canadians own CBC/Radio-Canada and the National Film Board, but government support for both has been at best tepid.

The time has come for a major investment in the media public sector, with an eye, especially, to providing local and regional news and information.

For all its flaws, that sector has proved its worth over many decades, even as successive governments have, in effect, starved it.

The government should turn its attention away from a sideshow fight with big tech, and start working in earnest at what we can achieve, here in Canada, with our own talent, imagination and resources.

…Can I ask you a question?

Do you ever feel that, with everything that’s going on around the world and a million breaking news stories in your face, on your phone, every day, it’s hard to stay on top of the news that actually matters to you?

That’s why I believe rabble.ca is so important; our national writing team cuts through the corporate news releases, the misinformation and the buzzy, fear-mongering clickbait to share the heart of the stories that most affect Canadians —all through a progressive lens, always corporate free and never behind a paywall.

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