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Could Google, Meta quit Canada over Bill C-18?

The government effort to ram through the bill has been anything but honest and fair

Canadian PoliticsMedia Science and Technology

Entrance sign at Meta’s headquarters complex in Menlo Park, California. Photo from Wikimedia Commons.

The high-stakes game of chicken that is the Online News Act reached a new, dangerous level last week after the federal government closed the list of speakers on its pending Bill C-18 without inviting Meta. That prompted the owner of social network Facebook to issue a statement on Friday threatening to stop carrying links to news stories from Canada if Ottawa tries to force it to pay for doing so. “We have always approached our engagement with Canadian public authorities on this legislation in the spirit of honest and fair debate,” the statement read, “and so were surprised not to receive an invitation to participate.”

To anyone following it, the government effort to ram through Bill C-18 has been anything but honest and fair. University of Ottawa law professor Michael Geist, who has attended the hearings, noted on his blog the “disturbing anti-democratic tactics” used by the Liberal minority government, which rules with NDP support, in pushing its planned online controls, including Bill C-18. Last week’s move disgusted Geist. “For a government that once prided itself on consultation, the decision to block further committee testimony is a remarkable abdication of the principles of a consultative, inclusive approach to legislative development.”

Meanwhile the nation’s press, to which Ottawa has promised a piece of the profits Meta and Google now make from online advertising, clamours unanimously for the digital giants to pay them. The CBC is about the only Canadian voice that will even air the other side. Columns by critics like Geist have been spiked by corporate head offices even after being accepted for publication by local editors. Newspaper sycophants instead put clumsily the absurd case for Meta and Google to pay up. “They swipe stories that are the product of hard work by reporters and editors, suggest it is their own, and then get paid billions in advertising dollars,” wrote veteran Liberal operative Warren Kinsella in Sunday’s Toronto Sun. “That’s not fair. Hell, it’s essentially theft. And it’s killing our news media⁠—and, in the process, actually putting democracy in peril.”

Nonsense. Google and Facebook do newspapers a big favour by sending readers to their websites. Newspapers should instead be paying them. Meta claimed in its statement on Friday that it sends Canadian publishers more than 1.9 billion clicks a year worth more than $230 million, or 12 cents a click, based on average cost-per-click auction pricing. But free promotion of their product isn’t enough for publishers, who want the platforms to pay them for the privilege. The problem for newspapers is that they offer an outdated product which has been vastly surpassed in effectiveness by the targeted advertising Meta and Google can provide. Their ability to provide it has very little to do with running links to news stories and relies instead on the vast amounts of data they gather on their members and users by following them around online. Does that give them an unfair advantage over newspapers? Sure, but hardly one the government should attempt to roll back.

Meta finally called publishers on their perfidy in its statement by Marc Dinsdale, Head of Media Partnerships in Canada. “We believe the Online News Act misrepresents the relationship between platforms and news publishers… The framework of the current legislation presumes that Meta unfairly benefits from its relationship with publishers, when in fact the reverse is true.” The statement pointed out that Meta does not “scrape” content, as some websites do, or even aggregate links to news content, as other websites do.

Facebook members instead post links to news articles for their friends to see. Those links make up less than three percent of Facebook feed content, according to Meta, which added that “Canadians tell us they want to see less news and political content.” That’s part of the reason it could be getting out of the news business, along with the potential expense it is causing. “We have repeatedly shared with the government that news content is not a draw for our users and is not a significant source of revenue for our company.”

Meta’s threat to quit carrying Canadian news was unmistakable. “We are being asked to acquiesce to a system that lets publishers charge us for as much content as they want to supply at a price with no clear limits. No business can operate this way. If this draft legislation becomes law, creating globally unprecedented forms of financial liability for news links or content, we may be forced to consider whether we continue to allow the sharing of news content on Facebook in Canada.”

Could it happen? It did briefly in Australia after the government there enacted similar legislation in 2020. The new law came at the behest of Rupert Murdoch, who owns most of the news media down under. Murdoch is anxious to see his plan spread to the US and the UK, where he also owns newspapers, so it’s a business battle going on in several countries, with the worldwide focus now on Canada’s Bill C-18.

Facebook quit carrying links to Australian news stories for several days until the government there amended its law, allowing it to opt out, stating: “The government has clarified we will retain the ability to decide if news appears on Facebook so that we won’t automatically be subject to a forced negotiation.” Meta is now in the process of getting out of the news business, pulling the plug on its partnerships with publishers. Just last week it announced it will end its ‘Instant Articles’ feature that allows newspaper stories to load faster on mobile devices.

Google quit running links to news stories from Spain for eight years after it brought in a so-called “link tax” in 2014 and only returned to the country in June. Google has the most to lose from Bill C-18, as it sells about half of all online advertising worldwide through its AdSense service to websites. At least it got to state its case against Bill C-18, telling the Heritage committee it would “make it harder for Canadians to find and share trusted and authoritative news online” and would have “at best, unpredictable outcomes for the evolving Canadian news ecosystem.” The bill’s prohibition of “undue preference” against publishers would lead to the “proliferation of misinformation and clickbait,” said Colin McKay, head of public policy and government relations for Google Canada. “This means Canadians could be served foreign propaganda outlets alongside reporting from Le Devoir or the Globe and Mail.”

Some scholars claim the undue preference clause would force Meta and Google to pay publishers for running links and prevent them from opting out, but Heritage Minister Pablo Rodriguez admitted in testimony on Friday that such refusal would be “a business decision to be taken by the platform.”

Meanwhile on Friday, Postmedia Network announced that its 2021-22 operating income fell by more than $24 million to just $13 million, about $10 million of which came from government subsidies. The company, which publishes most of Canada’s largest dailies but is majority owned by New Jersey hedge funds, incurred interest charges of $31 million on its $260 million in debt, which is largely held by those same hedge funds. It’s a shell game that can’t go on much longer, but the news received almost no coverage. In a related story which received even less coverage, Rodriguez announced on Thursday another $50 million in news media subsidies over three years, which by my count is the sixth media bailout since 2018. Can anybody else connect these dots?

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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