The Canadian federal government has stipulated the financial expectations it has for tech giants Google and Facebook, as part of a journalist compensation procedure. This is following legislation that mandates these companies to pay media groups for their journalism in Canada.
Under the proposed regulations of the Online News Act, federal officials anticipate that Google and Facebook would need to present around $172 million and $62 million respectively on a yearly basis. The Act, passed earlier this year, requires these internet firms to engage in negotiations with news media companies whose content they display or reuse on their platforms.
These drafts of regulations released by the government offer the first detailed proposals on how to balance the dynamic between the tech behemoths and Canada’s news media industry and determine which entities are liable under this act. “The aim is to ensure those who gain the most from the Canadian market are subject to this bill,” stated Pascale St-Onge, the recently appointed Heritage Minister, post the release of the proposal.
The proposition points out that companies with annual global revenue exceeding $1 billion, functioning in the search engine or social media sectors, distributing and providing news content access in Canada, and having over 20 million Canadian average monthly users will fall under the legislation. Google and Meta’s Facebook are currently the only brands that meet these criteria, with Microsoft’s Bing search engine being the potential third candidate.
Microsoft Corporation’s head of communications in Canada, Veronica Langvee, stated that the firm plans to abide by the legislation. The act will not encompass Instagram and Threads since they do not yet have over 20 million monthly Canadian users.
St-Onge emphasized the need for the bill to remain relevant even after five to ten years, given the swift technological advancements and market shifts. Companies can be exempt from the regulations if they already contribute to Canadian journalism in accordance with a government-determined formula. This formula takes into account the global revenues of the tech company and Canada’s share of global GDP.
Companies can meet the criteria through monetary and non-monetary contributions, including training and advertising initiatives. The draft regulations are subject to further consultation over the next 30 days.
However, it has not been well-received by Meta, which promptly voiced its disappointment with the proposal. Google, too, has threatened to remove Canadian news from its platforms. Both tech giants have vigorously opposed the legislation, with Meta arguing that news constitutes a minuscule part of its business, and its removal would result in minor revenue loss.
Despite this backlash, St-Onge asserts that the legislation offers a “reasonable and predictable path forward for both media platforms and newsrooms” and should ideally satisfy all parties.
Canadian news outlets have experienced a significant decrease in their advertising revenues, resulting in job cuts and a decline in media coverage, particularly in smaller, rural areas. With online news consumption standing at 69% and only 11% of consumers paying for it, the Canadian government believes it necessary to proceed with the act. Google and Meta collectively control an 80% share of the $14 billion online ad revenue reported in Canada in 2022.
Following Meta’s removal of Canadian news, the federal authorities withdrew their annual advertising expenditure of $10 million from Meta’s platforms. Several news and telecom networks also followed suit. Paul Deegan, CEO of News Media Canada, lauded St-Onge’s adept handling of these complex issues, deriving “clarity and predictability” from her approach.
