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Canada’s newspaper chains badly overplayed their hand in attempted tech shakedown

Online News Act fiasco is the result of a series of miscalculations based on misinformation and misconceptions

Media Canadian Business

Photo by Sue Thompson/Flickr

As the staredown continues between the Trudeau government and digital giants Meta and Google, the awful reality seems to be finally sinking in that the Online News Act, formerly Bill C-18, has been nothing less than a “massive policy blunder,” as Internet law expert Michael Geist puts it. Meta has broken off talks with Ottawa and is following through on its threat to remove news from its Facebook and Instagram platforms. Google, which is apparently still in discussions about how much it might be required to pay under the new law, may well do the same.

That would be a full-on disaster for Canadian news media, whose articles would disappear from not only the most popular social network by far, but also from the most popular search engine by far. Also disappearing would be the millions of dollars both companies already pay our news media under voluntary agreements. Meta has begun canceling its aid to publishers here and Google is sure to follow if it similarly drops Canadian news.

Caught in the middle are not only news consumers, who will be unable to share links to news stories on Facebook or Instagram and may soon be unable to even find them on Google, but news media themselves, which will lose the traffic those platforms drive to their websites. Many are now attempting to re-train their readers to find news by instead bookmarking their websites, downloading their mobile apps and subscribing to their email newsletters. Disproportionately affected will be online-only news media, which may lose half their traffic.

The whole fiasco has been the result of a series of miscalculations based on both misinformation and misconceptions. The latest miscalculation is that Meta was bluffing when it threatened to block news in Canada because it lifted a similar 2021 blockade after only a few days. That came after the Australian government amended its legislation to allow the platforms to opt out of carrying news entirely, as Meta now seems to be doing worldwide, and also to pay the publishers of their choice. The Online News Act, on the other hand, would prevent Meta and Google from discriminating against or giving preference to any eligible news business.

Another important difference between the Online News Act and Australia’s Mandatory Bargaining Code is that the latter has actually never been implemented, which would require the minister responsible to “designate” a digital news intermediary for not paying its fair share toward news gathering. Google and Meta thus got busy signing agreements with Australian media, and so far neither has been designated. The Online News Act instead singles out Google and Meta, as it does not apply to Twitter or any of the many other websites that carry links to news stories. Coupled with the planned three percent Digital Services Tax, which Ottawa seems determined to implement next year, Google and Meta might rightly feel that they are being asked to pay twice.

Ottawa’s intractable stance, commentators have noted, is in sharp contrast to Australia’s more conciliatory approach. Prime Minister Justin Trudeau’s recent cabinet shuffle, which saw the Heritage portfolio get its fourth minister in little more than five years (fifth if you count Pablo Rodriguez serving twice), brought little hope for rapprochement. Pascale St-Onge, the latest Heritage Minister, is a former president of Quebec’s largest media union and was reportedly one of those behind the push for the Online News Act. She has already pledged to stand firm on the Online News Act because “Canadians expect tech giants to pay their fair share.” That is at best misinformation and is arguably gaslighting, since twice as many Canadians actually say the government should back down than urge it to stand firm.

Editorials in Canadian newspapers, however, continue to urge Ottawa to hold its ground. The Winnipeg Sun, a Postmedia Network property, called the tech companies’ actions “extortion” and “predatory behaviour,” when that might instead be a better description of its parent company’s promotion of the Online News Act. Postmedia columnists not only criticize Google and Meta for “bully tactics,” but even label critics of the Online News Act as “apologists for Big Tech” and accuse Conservative MPs who question its wisdom of “cozying up” to the digital giants.

Even more over-the-top is commentary in the Toronto Star where, under the headline “Big Tech’s hands are on the throat of democracy,” songstress Loreena McKennitt argued that “journalists are being drowned out by global tech companies who do not respect the law or the truth.” Worse was a column by PEN Canada President Grace Westcott that does not appear on the newspaper’s website, perhaps because it exaggerated Google and Meta’s share of online advertising revenues at “more than 90 per cent,” or far higher than the 75-80 percent usually cited. “With ruthless disregard for Canadians’ welfare, Meta, like a kind of digital despot, has responded to legislation passed by the Parliament of a sovereign nation by punishing that country’s citizens,” wrote Westcott.

The country’s two largest newspaper chains are merely continuing the relentless, one-sided propaganda campaign that helped bring them a $595 million federal bailout in 2019, which runs out early next year. It worked so well that they soon turned their guns on Google and Facebook in what Globe and Mail columnist Andrew Coyne deemed a shakedown as early as 2020. Geist went farther, calling what was then Bill C-18 “an embarrassment to the news media lobby that demanded it” and pointing out that requiring payment for carrying links is contrary to Canadian law. “The government’s plans effectively require compensation without something deserving of compensation. That is best described as a shakedown.”

Our credulous government, however, seems to believe anything the newspaper lobby tells it without considering for a moment that it might be twisted by self-interest. Postmedia is 98 percent owned by US hedge funds that have been bleeding it dry since they took it over in 2010 with more than $500 million in payments on the massive debt they also mainly hold.

Torstar was similarly taken over by private equity players in 2020 and has ever since been weaponizing its opinion pages and even its news coverage in pursuit of more and more federal largesse. The chains relentlessly promote the misconceptions that newspapers are dying and that Meta and Google somehow enjoy an advertising monopoly.

In hooking themselves up to government subsidies and now government-ordered subsidies, the chains have apparently been willing to sell out press freedom in Canada to federal bureaucrats, first at the Canada Revenue Agency, which decides what news media outlets are eligible for bailout payments. Any wealth redistribution from Meta and Google would be supervised by the Canadian Radio-television and Telecommunications Commission broadcasting regulator.

But the chains badly overplayed their hand by apparently never considering the possibility that Meta and Google might not sit still for such extortion and predatory behaviour and would simply walk away instead.

Marc Edge is a journalism researcher and author who lives in Ladysmith, BC. His books and articles can be found online at www.marcedge.com.

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