Summary

Canada's attempt to compel Meta and Google to pay for news content through the Online News Act (Bill C-18) has backfired, leading to the removal of Canadian news from their platforms and potentially causing more harm than good to the Canadian media industry.

Abstract

The Canadian government's initiative, known as the Online News Act (Bill C-18), aims to support the struggling Canadian news media by requiring Meta and Google to compensate for sharing Canadian news links. However, the tech giants' response has been to cease sharing Canadian news content, which could further weaken the media industry by depriving it of traffic and associated ad revenue. While the act is intended to generate revenue for Canadian newsrooms, the immediate effect is a significant loss of visibility and financial support. The government's approach has been criticized for potentially benefiting publishers over journalists and for ignoring the tech companies' suggestions for alternative solutions, such as an independent fund for Canadian journalism. The situation highlights the complex interplay between government regulation, media sustainability, and the economic power of tech giants.

Opinions

The author believes that Bill C-18, while intended to bolster Canadian journalism, may inadvertently lead to its further decline.
There is skepticism about how much of the potential revenue from Bill C-18 would actually support newsrooms and journalism, as opposed to going to executive bonuses and shareholders.
The author suggests that the Canadian government lacks the bargaining power to force Meta and Google to comply with the act and that this stance could result in a loss for Canadian media.
The author points out that the tech companies have offered compromises, such as an independent fund for journalism, which have been rejected by the Canadian government.
The author is critical of the government's "tough guy" attitude, stating that it is not conducive to reaching a mutually beneficial agreement and that the government should consider the broader implications for Canadian news.

Canada is Fighting a Losing War Against Meta and Google

The ‘Online News Act’ (Bill C-18) will cause much more harm than good to Canadian news media

Meta and Google have called Canada’s bluff: they are no longer sharing the country’s news on their platforms after Canada demanded the two tech giants pay up. The result will likely be a weakening Canadian media — the opposite of the intended goal.

If you’re new to the party, Canada is trying to get the two companies to pay for each Canadian news link they share across their platforms. The hope is that it will boost Canadian news publishers, and support journalism.

Some Canadian media figures have cited the very real decline of Canadian news media, as newspaper ad revenue dwindles. It’s overall a bleak outlook for national newspapers in Canada, with closures affecting many journalists.

The act itself is worded in a way that seems reasonable on the surface. I couldn’t find an exact amount the country is asking for in relation to sharing Canadian news, but an article says that Google and Meta (Facebook) could foot 30% of the costs of Canadian news gathering.

Canada stands to lose more money than Meta

Yes, Meta and Google make good money from sharing Canadian links. However, you have to consider how much Canadian media will be losing in the meantime — potentially more than 3 billion links to its news content, which will eliminate associated ad revenue and subscriptions.

While C-18 is said to have generated $329 million in annual revenue across Canadian newsrooms, it is dwindled by the loss of revenue from being blocked.

Google values the revenue generated from its links to Canadian content at $250 million (that doesn’t include an estimated $230 million in value generated through Meta links.)

Instead, the tech giants have simply removed their links from their pages, meaning Canadian news is possibly $250 million or more in the hole from lost web traffic.

“The unprecedented decision to put a price on links (a so-called “link tax”) creates uncertainty for our products and exposes us to uncapped financial liability simply for facilitating Canadians’ access to news from Canadian publishers,” reads a post from Google’s President of Global Affairs, Google & Alphabet, Kent Walker. “We have been saying for over a year that this is the wrong approach to supporting journalism in Canada and may result in significant changes to our products.”

For its part, Google says it has been trying to find a resolution that works for both parties, suggesting “an independent fund for Canadian journalism supported by both platforms and the Government, an approach that’s worked elsewhere.”

However, it claims all of its suggestions for a compromise were shot down by the Canadian government.

Publishers, not journalists, would benefit most from C-18

There’s another aspect to the deal the Canadian government is trying to secure that bothers me. While it’s trying to generate millions of dollars for news publishers, I can’t help but wonder how much of that money will go toward supporting newsrooms.

From my own experience working in newspapers, editorial is often the first department to see cuts. Gathering original news is obviously an essential part of a newspaper business, but I’ve seen how publishers trim news staff when revenues dip.

That means outsourcing editing, asking reporters to take their own photos (instead of employing photojournalists), and consolidating roles. This kind of stuff was already happening around the mid-aughts when Canadian print news was still relatively healthy despite electronic media changing the game.

So my concern here is, how much of the (theoretical) cash generated from Bill C-18 would actually go to news production? My somewhat pessimistic view is that most of it would go to executive bonuses and shareholders. I don’t think newsrooms would see a sudden influx of new staff or hefty raises outside of their collective agreements.

I get it — the Canadian government is trying to inject some more cash into its dying news industry by getting the big guys to pay for access. However, while I’m usually on the side of the journalists, this is a good example of shooting oneself in the foot.

Canada stands to lose more in this standoff, and the big newspapers supporting C-18 may change their tune when they see their quarterly earnings drop. I don’t think the big publishers or the Canadian media expected the tech companies to follow through on their warnings, but here we are.

Canada is not in a position to demand

The longer Canada holds this stance, the more it stands to lose. It does not have the bargaining power in this situation to make Google or Meta bend to their will. They have many other models of revenue — they stand to lose some cash too, but they’re not going to fold as a result. Canadian newspapers? Well, I can’t say the same for them.

Canada is essentially trying to strong-arm two massive companies into paying for links that they provide to the public for free. That’s not really how capitalism works, and the Canadian government should know better.

Hopefully, the lawmakers see the light and realize this is not the hill to die on. I am confident the three entities can reach a deal, but Canada needs to drop the “tough guy” attitude and consider the bigger picture — which could spell doom for Canadian news.