Canadian MPs confront, supplicate Meta over threat of C-18 retaliation

Meta’s Global Policy Chief Kevin Chan appeared before the Heritage Committee on October 28th 2022

October 31, 2022

Australia, February 2021:

[From the Wall Street Journal]...[W]hen Facebook blocked news in Australia in response to potential legislation making platforms pay publishers for content, it also took down the pages of Australian hospitals, emergency services and charities. It publicly called the resulting chaos “inadvertent.”

Internally, the pre-emptive strike was hailed as a strategic masterstroke…

The goal, according to the whistleblowers and documents, was to exert maximum negotiating leverage over the Australian Parliament, which was voting on the first law in the world that would require platforms such as Google and Facebook to pay news outlets for content.

Despite saying it was targeting only news outlets, the company deployed an algorithm for deciding what pages to take down that it knew was certain to affect more than publishers, according to the documents and people familiar with the matter…

“We landed exactly where we wanted to,” wrote Campbell Brown [in an internal e-mail], Facebook’s head of partnerships, who pressed for the company’s aggressive stance, in a congratulatory email to her team minutes after the Australian Senate voted to approve the watered-down bill at the end of February 2021.

Facebook CEO Mark Zuckerberg and COO Sheryl Sandberg chimed in with congratulations as well, with Ms. Sandberg praising the “thoughtfulness of the strategy” and “precision of execution.”

Heritage Committee hearing – Ottawa, October 28, 2022

“Faced with adverse legislation based on false assumptions that defy the logic of how Facebook works, and which, if passed, will create globally unprecedented forms of financial liability for news links and content, we feel it is important to be transparent about the possibility that we may be forced to consider whether we continue to allow the sharing of news content on Facebook in Canada” — Meta’s Global Policy Director Kevin Chan to Heritage Committee MPs studying Bill C-18, the Online News Act.

It was expected that when Meta appeared before the Heritage Committee to double down on its threat to blackout Canadian news in response to Bill C-18 that MPs would react angrily.

Canadian-born Kevin Chan, Meta’s Global Chief of Policy, obliged in the first minute of his remarks.

At the first opportunity Liberal MP Anthony Housefather grilled Chan and his Canadian Partnerships colleague Marc Dinsdale on the Wall Street Journal reporting on Facebook’s strategic blackout of Australian news designed to water down pending legislation.

The Canadian-based Dinsdale said he had no personal knowledge of Facebook’s Australian news blackout but claimed its broad scope was inadvertent. Chan, the Global Policy Chief, provided no further information.

Next in the question queue, Conservative MP Marilyn Gladu asked Chan solicitously which amendments Facebook had won in Australia by imposing a blackout and what changes he would like in Canada so Meta doesn’t do the same here.

Conservative MP Marilyn Glade (Sarnia-Lambton)

Yes, that’s an accurate characterization of her question, watch the two-minute video. 

Chan responded he would submit Meta’s Canadian amendments (its Australian amendments are already incorporated into C-18).

Liberal MP Chris Bittle, a civil litigation lawyer before entering politics, delivered a courtroom-like series of rhetorical questions (video link here) in which he demanded to know if Facebook believed they could bully Canadian MPs. 

Liberal MP Chris Bittle (St.Catharines)

Dinsdale mostly couldn’t get a word in edgewise and Bittle concluded by asking him if the California-based Meta intended to make the same threat to US Congress currently considering its own version of C-18. 

Alas, time expired before Dinsdale could reply. Interesting question though.

Central to Chan’s pitch to the Committee was his claim —unchallenged in the absence of supporting data— that Facebook provides Canadian news organizations with nearly 2 billion clicks worth $230M annually in “free marketing” of their content.

Chan’s figure was an estimate of what publishers would have to pay to post their content at Facebook’s advertising rate. If measured by relevant data however, the value of what the Australian Competition Commission calls “media referral services” would have to come from news organizations’ data on subscription and advertising revenue linked to Facebook referrals.

As for the countervailing value of news content to Facebook’s own advertising sales and aggregation of consumer data, Chan offered neither a word nor a number. 

That is consistent with Facebook’s position that it does not monetize news content.

If news is worthless to Facebook, asked Bloc MP Martin Champoux, why did Meta fork out millions in settlements with Australian news organizations and then sign a series of confidential agreements with major Canadian news publishers? 

Chan denied those agreements were compensation for news content but rather the deals, whose terms he had said he would not divulge to MPs because of non-disclosure clauses, were to develop “new innovation models” on the platform.

“Yes of course,” Champoux responded. “I am sure Facebook could win the Nobel Prize for generosity.” Chan’s claim has been refuted by Canadian news organizations who say the deals were for news content.

The discussion moved on to Facebook’s argument, echoed by many opponents of C-18, that hyperlinks to news content posted outside of Facebook’s platform should not be considered “news content” because that would be a “link tax” and anathema to the notion of free content being available on the Internet.

On this point, Conservative MP Gladu asked Chan if Facebook planned to charge Canada’s 22 million Facebook users a fee equal to the cost of compensating news organizations “for links.” 

Chan replied cryptically that “taxes are leaky” but moments later added “we haven’t discussed it.”

Amid all of the jousting, there was at least one exchange of value to policy debate. 

Dinsdale criticized the Bill’s undue preference provisions allowing CRTC-recognized news outlets to challenge “unjust” algorithmic ranking of news content on Facebook. 

The question is whether a faux news organization that managed to obtain the stamp of legitimacy from the CRTC would then successfully contest Facebook’s curated suppression of their misinformation and inflammatory content.

That concern goes straight to the adequacy of the eligibility provisions in section 27 of the Act which as yet does not require legitimate news organizations to certify their professional standards or belong to a recognized Press Council: think Epoch Times or Rebel News. The latter publication was decertified by the independent journalism panel that administers the federal government’s “QCJO” aid to journalism grants. 

The Toronto Star’s coverage of the October 28th Committee meeting is posted here. The C-18 debate continues this week on November 1^st and November 4^th. 

***

Facebook’s threat to blackout Canadian news in retaliation against Bill C-18 raises the question of how vital news content is to their business model. The same question would arise in respect of Google should it make a similar threat. In other words, are they bluffing?

It’s difficult to generate the data required to determine authoritatively the extent to which either platform relies on monetizing news content, as opposed to any other content. That is because neither Facebook nor Google share data with governments, economists, or the general public for that matter.

Research by Cambridge economist Matt Elliott estimates a final tally of Google and Facebook’s monetization of news content in the UK.

Elliott estimates that in the UK the two platforms earn the equivalent of 1.2 billion to 1.6 billion Canadian dollars from British news content, split two to one between Google and Facebook. This would not be a final figure for “compensation owed” under a British version of C-18 because it doesn’t subtract the benefit accruing to news organizations of referrals from the platforms.

Elliott contends that posts or links to news content are of especially high value to the platforms because they attract consumer eyeballs looking for reliable and up to date information.

Because of that, the platforms harvest high grade data from these news consumers: past, current and intentional interests for the purpose of showing ads to those consumers but also to aggregate more data for the platforms’ third party ad targeting businesses.

It is easier to verify how much of Google’s traffic is news-related because Search is a purposeful platform: a user entering a keyword search allows researchers to measure how often consumers are looking for news organizations’ content or posing questions that news organizations often answer.

For Google, Elliott drew on US and UK data that showed a high proportion of search activity is for news content and that the results appear on pages displaying paid advertising.

His survey data also revealed that if news were removed by Google, it would take an unsustainable hit of consumers migrating to other Search engines even though it currently has 92% of the market.

It’s harder for researchers to run scenarios pinning down the value of news content to Facebook without obtaining data from Meta.

Feed has less focussed consumer intentionality than Search. But we know that Facebook, like any media, sells ads in anticipation of users looking for content.

Compared to key word searching, checking our Facebook Feed is passive and experiential in a manner similar to channel surfing on cable television, radio or free ad-supported online TV. Consumers log on to Facebook with general expectations and tastes about content that might be found but they don’t know very precisely what they are going to get (which might be the attraction).

That expected content might be “what are my neighbours or family posting today,” funny memes or goofy videos. But it is also news, hence the oft-cited Pew data that 36% of Facebook users regularly check their Facebook Feed for news.

Regardless of what proportion of all Feed posts are news, it’s the consumer demand for news that will determine its prominence, consumption, and monetization by advertising.

Facebook’s Dinsdale told Canadian MPs that Meta plans to downgrade the priority of news for its Canadian users, citing an undisclosed internal survey in which 21% of respondents wanted less news in Feed and only 3% wanted more (the opinions of the other 76% was not disclosed).

Facebook famously tweaked its algorithm in 2018 to favour emotionally engaging content over straight up news reporting by prioritizing engagement responses (i.e. likes, anger emojis, shares).

Facebook whistleblower Frances Haugen said this tweak diminished the demand for conventional news reporting and increased the consumption of inflammatory opinion and disinformation.

But the real question is what impact the 2018 tweak had on news consumption on Facebook’s Feed and if so how much. 

The answer to that question is relevant not only to Facebook’s threats to retaliate against Bill C-18, but also its announced intentions to further downgrade news in favour of non-news content (memes, what-my-neighbour-is doing).

But the uncertainty over how badly Facebook needs news content and how much or little it will prioritize news in Feed doesn’t affect the policy considerations for Bill C-18, only the compensation outcomes.

The Act sets up a basic math to establish a fair market price for news on these platforms —-attempting to factor out the distortion of the platforms’ overwhelming market power over digital advertising, audience data, and distribution—- by establishing the monetized value of news content to the platforms and then subtracting the value of the platform’s media referrals to the news organizations’ websites. 

If Facebook publishes less news (as a business strategy, not a regulatory retaliation) then they will owe less money to news organizations.

In 2021 in Australia, three years after the 2018 news downgrade in the Facebook Feed algorithm, it is estimated Meta paid out $65M (a third of the rumoured $190M).

Also from MediaPolicy.ca:

Must it be war? A peace proposal for Bill C-18

The error-riddled C-18 Abacus Poll commissioned by Google tells us nothing.