Canada wants digital giants to compensate local news outlets

'This is an absolutely massive intervention into the news sector,' says Ottawa law professor Michael Geist.

OTTAWA, Ont. — Canada is taking on Big Tech with new legislation that would force companies like Facebook and Google to compensate the struggling domestic news industry for the use of its content.

Heritage Minister Pablo Rodriguez unveiled the proposed, Australian-style “Online News Act” on Tuesday. He framed the effort as a way to combat the rapid spread of disinformation and its threat to Canada’s democracy.

“The news sector in Canada is in crisis,” Rodriguez told reporters in Ottawa. “This contributes to the heightened public mistrust and the rise of harmful disinformation in our society.”

The government’s goals: Before the announcement, a senior government official briefing reporters on background said key goals of Bill C-18 are to support domestic outlets, preserve Canadians’ access to local and national news and counter disinformation.

The bill is intended to help news outlets during their negotiations with the increasingly powerful global platforms.

If passed, the legislation would put the Canadian Radio-television and Telecommunications Commission regulator into an administrative role for key elements such as whether a platform meets the criteria and to help oversee the negotiation process. An assignment of this scope would create yet another major task for the CRTC, which already regulates the complex broadcasting and telecommunications spaces.

The government says the legislation will contribute to the sustainability of the sector, which has been hit hard in recent years. The drop in revenues has led to layoffs and the closure of many outlets.

Rodriguez said between 2008 and today 451 news outlets in Canada closed up shop — including 64 in the last year alone.

News businesses have less advertising revenue to work with, he said, and are therefore investing less into their journalists and newsrooms.

“I would say that the reality is grim,” Rodriguez said. “In 2020, online advertising revenues in Canada were close to C$10 billion, with two dominant digital platforms taking over 80 percent of those revenues. That's an incredible chunk of power in the market.”

Legislation at a glance: Bill C-18, which Rodriguez says builds on an arbitration model established in Australia, would require global platforms to strike voluntary, fair commercial deals with Canadian news media.

Last month, a report in Australia found that Google and Facebook paid Australian news companies around A$200 million over a one-year period. The research found that the compensation helped pay for least 50 new journalist positions.

In Canada, Rodriguez estimated the legislation could bring as much as C$200 million in compensation. He said platforms and news outlets would have between six and 12 months to reach agreements once the legislation is passed.

When platforms do not reach an agreement voluntarily with news outlets, they will be subject to mandatory negotiation and remediation, with arbitration as a last resort.

The legislation is also drafted to enable news outlets to work as a collective to negotiate compensation. The government official stressed this feature would allow smaller news organizations to participate, even if they have limited resources.

Bill C-18 also lays out six criteria for commercial deals between platforms and news outlets. The list includes ensuring “an appropriate portion of the compensation would be used by the news businesses to support the production of local, regional and national news content.”

Deals in place: Digital platforms have already negotiated deals with many news media in Canada, including an agreement last fall between Google and the company that owns the Toronto Star.

Rodriguez said Tuesday that some of those deals may need to be revisited once Bill C-18 becomes law to ensure, for example, that they meet the criteria.

Rapid response: Michael Geist, chair of internet and e-commerce law at the University of Ottawa, has warned in recent months about the dangers of such a policy for press independence and competition.

“This is an absolutely massive intervention into the news sector with the government ruling that links to news must be paid for and the CRTC overseeing what deals are ‘fair,’” Geist wrote Tuesday on Twitter as he read through the bill.

Campaign context: Prime Minister Justin Trudeau’s Liberals vowed during the 2021 election campaign to introduce legislation that would require online platforms that generate revenues from news content to share a portion of their earnings with Canadian news outlets.

The Liberals promised the framework would be based on the Australian model to “level the playing field” between global platforms and domestic news publishers.

What’s next: Rodriguez called Bill C-18 the second step in the government’s effort to build “a fairer, safer, more inclusive and more competitive internet for all Canadians.”

In February, he introduced Bill C-11, which is designed to amend the Broadcasting Act to regulate online streaming so it supports and promotes Canadian creators and their content.

Rodriguez’s mandate letter from Trudeau also calls for legislation, as soon as possible, to “combat serious forms of harmful online content to protect Canadians and hold social media platforms and other online services accountable for the content they host.”

“Two down, one to go,” Rodriguez said.