How the Brits are going to do Canada one better on Bill C-18

August 17, 2024

Whenever MediaPolicy posts about mandatory digital news licensing payments —my description of the Online News Act Bill C-18 — I situate the Canadian narrative in the story of Google and Meta resisting similar regulatory schemes around the globe. 

Canada was not the first to hang a price tag on Big Tech exploiting its market power over news publishers. Featherweight Australia (population 26 million) did it in 2021 and recently news organizations renewed their agreements with Google. The European Union (450 million) broke ground a few years earlier with a scheme of mandatory copyright payments. A Senate bill modelled on Australia’s code failed in US Congress in 2022 (340M), but the Californian (40M) state legislature is considering a version of our C-18 right now.

What about in the United Kingdom (70M)?

In June the British parliament passed the Digital Markets, Competition and Consumer Act (DMCC). The bill is designed to give the Competition and Markets Authority (CMA) better police powers over Big Tech.

The CMA’s priority issues in digital are those you frequently hear about from the American and European jurisdictions: the phone app environment, digital advertising and most recently the Google monopoly in Search.

However the CMA now says it is going to get around to mandatory news licensing payments in due course. An analysis of the potential CMA approach to that issue was released July 31st by the British media consulting firm Enders and appears to speak in the voice of the public regulator.

Alas the Report is paywalled, so I offer some of its observations.

The backstory of the Australian and Canadian regulatory efforts is described much in the terms that MediaPolicy has told it previously: 

“Google undoubtedly gets value out of publisher content, but quantifying this is very difficult, as so much is indirect (with news queries not monetised). Regimes in Australia and Canada have in practice avoided direct quantification of a ‘fair’ value exchange even though that was their original intention. In Canada, Google ended up agreeing to a set payment amount annually.” 

In fact the report has nice things to say about how Canada handled the news licensing problem. It comments that “the ‘exception’ route of Canada involves some uncoupling of payments from a direct value exchange [pricing of news] —this seems like a fudge but in fact is more sensible in practice and principle, given the challenges of that direct calculation.”

I think that’s a good description of how initially both Australia and Canada designed “market correction” legislation for news payments, using binding arbitration as an enforcement backstop, with unpredictable pricing outcomes. But in the end Google and Meta just cut a deal with Australian news organizations and Google came to terms with the Canadian government at a fixed price they could live with. The lower, the better.

And then Meta walked away from news. First in Canada, probably soon in Australia. Since 2018, Meta has been degrading and down ranking news on its platforms and their news consumption in all countries has plummeted. So it looks like regulating them hastened the inevitable. 

Enders thinks the UK can do a better job regulating news licensing payments.

The availability and prominence of news on platforms is the prime directive of any public policy, says the report, “even if it isn’t directly legislated for.” That phrasing ought to tip you off.

Enders then lionizes Google’s various donations and collaborations with the news industry, geared towards staving off regulation, and concludes “any regime should incentivize —and must not disincentivize— such effective collaboration….The Act does not directly set out a news publisher bargaining regime [like Australia or Canada] and the UK may not end up with a dedicated news bargaining code at all if the CMA decides that existing [voluntary] deals [between platforms and publishers] and its own other interventions are sufficient.”

As for Meta, the Enders report appears to write off Facebook and Instagram.

The underlying assumption in the report is that it’s too hard to make Big Tech play nice if government is making the prescriptive rules on how they must pay for news. You have to find a “participative approach” they like better, at a price they are willing to pay. 

Now that might strike you as defeatist, but Enders (and British Parliament) would see it as pragmatic.

Here’s a chart Enders prepared which does a pro and con summary of the Australian, Canadian and EU regulatory efforts:

The bottom line in the report is its suggestion of a made-in-Britain approach with these features:

• News licensing payments aren’t the top CMA priority under the DMCC, so while the regulatory body concentrates on digital advertising and mobile applications this gives Google and news publishers a window to come to terms that everyone can live with. It also leaves time to observe what kind of impact AI large language models are making on search engines and the news content that feeds them.

• If that voluntary approach doesn’t work then the CMA may move. The DMCC already includes binding arbitration as the toughest measure on Google, but there would be alternatives.

• Those alternative funding mechanisms —both are familiar to Canadians— might include a digital levy on Big Tech that is distributed directly to news organizations, or perhaps a direct government subsidy from a treasury increased by taxing Big Tech. 

• Another potential policy move is to regulate news prominence on Big Tech platforms, although Enders flinches at the idea of a “must carry” rule for news on the platforms.

Throughout the report, its clear Enders believes that any price Big Tech pays for news must be fixed, not driven one arbitration outcome at a time, and (although Enders avoids saying so) low enough for Big Tech.

How the news journalism industry in the UK, Canada and around the world sorts this out will be the key to its financial sustainability. As this graphic in the Enders Report demonstrates, the digital news audience is declining not only on legacy platforms but on direct visits to owned and operated digital news sites, while rising on links through social media and search:

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MediaPolicy wrote last month about the stunning Rogers scoop of high-margin programming licensed in Canada by Warner Brothers Discovery to Bell and Corus when those deals expire at the end of 2024.

Bell filed in Ontario court for an injunction against Rogers and WBD on the grounds of a two-year post-termination non-compete clause in the Bell-WBD licensing agreement. 

Rogers has filed its response and claims ignorance of the Bell-WBD non-compete, holding the US studio responsible and liable for any damages to Rogers. 

The drama has many more acts (I haven’t seen the WBD filing as yet). But if Bell is right about its non-compete protection, you have to wonder about the due diligence process just completed by Skydance Studios in its purchase of WBD. 

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The recommended podcast experience for the week is cravenly self serving. Broadcast Dialogue has a 27-minute interview with the author of Canada vs California: How Ottawa took on Netflix and the streaming giants.

An amazingly urbane and sensible commentary on the continuing saga of the Online Streaming Act,  if I may so say so.

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