War and Peace: Big Tech tells Parliamentarians how it’s going to be

May 4, 2023

Google and Facebook made their big play at a Senate committee on Wednesday night. That play was hardball, as expected. Facebook says it will block Canadian news if the Online News Act becomes law. Google says it might do the same. 

We must acknowledge that Big Tech has ratcheted up the stakes. The government’s winning strategy on C-18 is in disarray. 

Google and Facebook tabled a raft of amendments gutting the Bill with a rewrite that would narrow the scope of the legislation to full-text news content, effectively eliminating application of the scheme to 99% of the written, audio and video news currently on their platforms.

Big Tech’s real proposal is to create a voluntary news fund to which Google and Facebook would contribute and let Fund administrators sort out which news outlets get access. 

The Fund idea works for Big Tech because the companies harbour dreams of being limited to the minimal contributions that Google is making to news outlets in Taiwan, approximately three per cent of the value they paid under the Australian New Media Bargaining Code, the forerunner of Bill C-18.

In the face of this corporate hubris, Parliamentarians must acknowledge that Big Tech is not offering a face-saving solution. They are offering a humiliating defeat to a sovereign government.

It seems the power game must be played out before a solution can be found. 

Last week MediaPolicy suggested the government amend the Bill to strengthen penalties if Google or Facebook throttle news in avoidance of C-18.

On that point, it is interesting that Heritage officials seemed to concede last week that, under the current wording of C-18, Google and Facebook can deindex Canadian news stories or block posts by Canadian news outlets even though those actions might violate section 53 as inconsistent with the purpose of the Act.

Another card the government is holding is the delayed implementation of the Digital Services Tax. Federal Finance Minister Chrystia Freeland has suspended that three per cent tax on the revenue of offshore digital platforms until 2025 as a fallback option to an international agreement on minimum corporate taxes.

When it was introduced, the DST was described by the government as an ‘audience tax’ on Big Tech for monetizing the personal data of Canadian citizens without compensation. All major Canadian political parties endorsed this tax (in fact it was the centrepiece of the Conservative election platform on Bill C-11).

An announcement to implement the DST early would put the current impasse between the government and Big Tech on a different footing.  

Then perhaps we will find a solution to this mess. When Google and Facebook began making their news throttling threats last year while C-18 was before the House of Commons, MediaPolicy published a post entitled “Must it be War? A Peace Proposal for C-18.” The post canvassed the different amendments available to House and Big Tech that might cool tempers.

It’s not that Facebook and Google haven’t made reasonable policy arguments.

Heading Big Tech’s list of arguments is that the Bill creates uncertainty about the amount Google and Facebook will have to pay to news outlets.

But there are tools within Bill C-18 to deal with that. Michael Geist put his finger on that during his Senate testimony on Tuesday morning when he suggested the Big Tech companies go into negotiations with Canadian news outlets and propose a single fund for the news industry with fixed contributions from Google and Facebook. 

If a deal can be reached including an acceptable amount of funding, and access for all legitimate news organizations willing to accept their fair share of it, the CRTC would likely grant the companies the exemption from further liability contemplated by section 11 of the Bill.

Whatever the solution, it ought to be conceded by Google and Facebook that most capitalists live with uncertainty. It’s known as the free market economy. Possibly the Big Tech monopolists thought they had risen above that inconvenience.

The sleeper issue however is not uncertainty. It’s the Bill’s ‘undue preference’ provisions. That provision in the Act —not included in the Australian legislation— contemplates a CRTC complaint being filed by a Canadian news outlet against Google or Facebook for unreasonably downranking (or blocking) their journalism.

That puts the onus on the digital platforms to defend themselves. That defense necessarily requires them to divulge their deepest commercial secret, their ranking algorithms.

The government acknowledged this concern in November by amending C-18 in the House to narrow the undue preference test to either (a) Google and Facebook preferencing their own news services or (b) punishing news outlets as a bargaining ploy. Importantly, ranking news stories ‘in the normal course of business for the operator’ is a complete defense to undue preference. 

If making the ‘normal course of business’ defense even more airtight is the only thing standing in the way of a peaceful resolution of this political scrap over C-18, it seems hopeful that compromise could be reached.

Whatever path we can find to a resolution, one thing Google’s Richard Gingras told Senators remains compelling: the politics around C-18 are setting up an unrealistic expectation that Big Tech can foot the full bill for journalism in this country.

To be fair to the government, they never made this claim but the expectation is out there in the public debate regardless.

We shouldn’t need Google to remind us that as Canadians we have to come to terms with the options available to us.

Those options are either agreeing upon a coherent public policy in which our new outlets’ loss of advertising revenue is mitigated by private and public subsidies or reject those subsidies and let the market take its course. 

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Published by

Howard Law

I am retired staff of Unifor, the union representing 300,000 Canadians in twenty different sectors of the economy, including 10,000 journalists and media workers. As the former Director of the Media Sector and as an unapologetic cultural nationalist, I have an abiding passion for public policy in Canadian media.

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