Canada’s Big Tech Bill Compels Google, Facebook to Compensate Media Houses

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Under a legislative mandate demanding big tech corporations remunerate media houses for Canadian journalism, the federals intend for Google and Facebook to shell out $172 million and $62 million respectively in annual compensation. This proposal forms a part of the Online News Act, a policy approved during the recent summer, that mandates tech firms to negotiate agreements with media houses whose work they link or repurpose.

For the first time, the government has outlined draft regulations on Friday, aiming to establish equilibrium between Big Tech and Canadian news media sector, and indicating which businesses will be included. Newly appointed Heritage Minister Pascale St-Onge remarked in a post-proposal interview that the Act aims to ensure businesses benefitting most from the Canadian market, are included in the bill.

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Companies with total annual global revenue of $1 billion or above, that operate in search engine or social media market delivering access to news content in Canada, and have 20 million or more Canadian monthly unique or active users will be subjected to this law. Currently, only Google and Meta’s Facebook meet these prerequisites, although Microsoft’s Bing is close, according to officials.

Microsoft’s Head of Communications in Canada, Veronica Langvee, confirmed the company’s intention to abide by the applicable legislation. Instagram and Threads, however, won’t be included as they don’t reach the 20 million or more monthly Canadian user threshold.

Keeping in mind the swift evolution of tech and market dynamics, St-Onge highlighted the need for the bill’s relevance in the next five to ten years. A company may be exempted if it contributes an amount defined by a government formula towards Canadian journalism. This contribution, based on the tech firm’s global revenues and Canada’s portion of global GDP, is thought to be 20 per cent equivalent to the earnings of full-time journalists in a Canadian news organization.

The criteria can be met through monetary and non-monetary compensation, with the latter potentially covering training and advertising.

An ensuing 30-day consultation now awaits the draft regulations. Reacting swiftly to the announcement, Meta, expressed its disappointment with the proposal, as it anticipates the law coming into effect by year-end. Rachel Curran, policy head at Meta Canada, described the draft premise as “fundamentally flawed.”

Similar disdain was expressed by Google, with Google spokesperson Shay Purdy stating that the company is comprehensively examining the proposed regulations to ascertain whether they tackle serious structural issues.

Those opposing the legislation argue that news comprises a minor fraction of their businesses and removing it would barely dent revenue gain. Google’s global affairs head, Kent Walker, stated that “the legislation exposes us to uncapped financial liability,” and criticized the targeting of the company merely for sharing news links.

St-Onge, however, firmly asserts the Act offers “a reasonable, predictable path forward for both media platforms and newsrooms.”

The government endorses the Act, citing Google’s and Meta’s hold over 80 per cent of the $14 billion online ad revenue accrued in 2022. Concurrently, news media is grappling with dwindling ads revenue leading to layoffs, lack of media coverage in smaller and rural Canadian communities, and closedown of 474 news businesses from 2008 to 2023.

With 69 per cent of Canadians consuming news online but only 11 per cent paying for it, the Canadian authorities intend to reveres this worrying trend. After threats of news removal by Meta were realized, the federal government and leading telecommunication businesses withdrew $10 million in annual advertising expenditure from Meta’s platforms.

News Media Canada’s president Paul Deegan praised Minister St-Onge’s skilled handling of the complex issue stating, “No regulatory framework is ever perfect, but clearly she has strived to be extremely fair and balanced to all stakeholders.”