Canadian publishers call on Ottawa to force Big Tech to pay for news
https://nationalpost.com/news/canada/canadian-publishers-call-on-ottawa-to-force-big-tech-to-pay-for-news
A landmark News Media Canada report says companies such as Google and Facebook 'extract unfair terms from news publishers without offering fair compensation'
Author of the article:Jesse Snyder
Publishing date:Oct 22, 2020
OTTAWA — An alliance of major publishers has united to urge the federal government to effectively force tech giants like Google and Facebook to pay for news content, saying Canadian publishers’ survival is threatened by the firms’ domination of the digital advertising market.
News Media Canada says the publishers — such media companies as the Toronto Star, Glacier Media and Postmedia Network Canada, which owns the National Post – are locked in a permanent state of crisis and fast action is needed.
In a landmark report released Thursday, the alliance lays out a suite of recommendations that would effectively force U.S. tech firms to pay for the news content shared on their platforms. The recommendations include regulatory changes and the introduction of an online media monitoring agency, among other things.
The move comes at a time when both publishers and government are pushing back at the dominance of Facebook and Google. On Tuesday, the U.S. Department of Justice, joined by 11 state attorneys general, launched a sweeping antitrust lawsuit against Google.
France, Spain and Australia have all made moves to regulate the industry. News Media Canada is recommending the Australian model, which once enacted would allow news publishers to bargain collectively against Facebook and Google when negotiating licences to display or reproduce news content.
Google and Facebook’s share of the digital advertising market in Canada is estimated to be more than 75 per cent, the report says, giving the tech giants outsized power.
Andrew MacLeod, chief executive of Postmedia Network Canada, said Ottawa has “dramatically” shifted its posture toward major tech firms in recent months, which he and other publishers welcome. MacLeod said the move fits into a broader trend in which political parties of all stripes have begun to push back against the dominance of major American tech firms.
“I think it’s a sea change around the world,” he said.
Canadian publishers have for years sought compensation for news content shared on major search engines and social media sites. The U.S. firms have strongly opposed attempts in Australia and France to introduce similar policies.
The result has been a dramatic showdown between policymakers and international tech firms, intensified by public anxieties over the growing sway of digital behemoths like Google, Apple, Facebook and Twitter.
In its report, called The Sustainability of Media in Canada, News Media Canada says a regime similar to the Australian one was its “strongest recommendation.”
Heritage Minister Steven Guilbeault has voiced his support for regulatory changes that would rein in major tech firms, saying he would resist their “bullying attitudes.” In a September interview with the National Post, he warned that Facebook’s “business model is going to face some serious challenges” if the company continues to threaten to pull its services in response to regulatory decrees.
Daniel Bernhard, executive director of Friends of Canadian Broadcasting, a public broadcasting advocacy group, said the report on Thursday points to a growing consensus among Canadian media companies to address the matter.
“Publishers are sounding the alarm about a serious problem,” Bernhard said. “Right now, publishers have a choice between giving their content away to direct competitors for free, or disappear from the internet. That’s basically the choice. And that’s not much of a choice at all.”
Bernhard is optimistic that regulatory changes could begin to challenge the dominance of major tech firms but warns that it will be a long, slow climb to untangle the imbalances in the digital marketplace.
“It’s been built up over 15 years of government neglect.”
Jim Balsillie, the philanthropist and onetime Blackberry co-CEO who founded the Centre for International Governance Innovation (CIGI) and several other organizations, identified two issues that demand Ottawa address the challenges posed by big tech.
“First, the nature of the data-driven economy is such that it structurally breaks markets because it features economies of both scale and scope, information asymmetries; and, network effects which subvert both public good and fair market competition.
“Second, by displacing our print and broadcast media in influencing public opinion, Google and Facebook have become the new Fourth Estate. But they are asserting this status and claiming its privileges without the traditions, disciplines, legitimacy or transparency that checks their power like that of traditional media companies,” he said in an email to the Post.
“That’s why it’s critical that our policy makers urgently devise regulations to deal with these two foundational issues; and, as the report shows, there is plenty they can and should do.”
The News Media Canada report focuses exclusively on Google and Facebook, saying the companies “extract unfair terms from news publishers without offering fair compensation for the utilization of the publishers’ news content.” It states that the situation has led to “an effective duopoly over the market for digital advertising in Canada and its peer nations.”
“Their anti-competitive practices have resulted in unfair, non-market, and coercive supply terms to news publishers,” the report says.
The comments come as traditional publishers in Canada continue to bleed advertising revenues on print products, while they meanwhile struggle to replace those earnings online. Facebook and Google alone soak up roughly 75 per cent of digital advertising revenues in Canada, the NMC said.
Internet-based ad revenue in Canada grew from $2.2 billion in 2010 to $8.6 billion in 2019, according to the report, of which Google and Facebook accounted for $7.5 billion last year.
Officials at Facebook Canada, for their part, say the attitudes of Guilbeault and other policymakers overlook crucial details about how news is shared on digital platforms. The Australian model would effectively force Facebook to pay for news shared by its users, rather than ordered by Facebook itself — a model that is entirely unworkable for the company, they said.
News links shared on Facebook take readers back to the publisher’s website, they say, and account for a huge portion of online readers enjoyed by newspapers.
Ottawa has said it would likely introduce legislation to address publisher complaints about news sharing, but has not yet made public what those specific changes might be. It meanwhile says it will ensure the resilience of made-in-Canada media content, also through legislative or regulatory changes.
The News Media Canada report estimates that efforts similar to those proposed in Australia could help publishers recover $620 million in annual revenues, or roughly equal to the income it estimates Canadian firms will lose between 2019 and 2023.
The group recommends — similar to Australia — requiring digital firms to negotiate with a collective of publishers in Canada “within 90 days,” and introduce a “federal digital media regulatory agency” to oversee the new regime.
They also suggest the changes can be brought in without overstepping boundaries agreed upon in the newly signed United States-Mexico-Canada Trade Agreement (USMCA), which sets some provisions around cultural content.
A third-party legal opinion cited in the report finds that Canada “retained an exceedingly wide ambit” in the area of news making under the new agreement, and could likely avoid major implications under the deal due to various exceptions.
“These ‘carveouts’ allow the government policy space for the protection and promotion of Canada’s fragile cultural industries,” Barry Appleton, managing associate of Appleton & Associates International Lawyers, said in the report.
Governments are assuming an increasingly hostile position toward massive digital companies, as their dominance of markets and ubiquity in people’s daily lives becomes better understood.
The U.S. Justice Department on Tuesday filed its long-anticipated antitrust lawsuit against Google, in which it alleges that the firm used anti-competitive tactics to establish a monopoly in its search engine division. The suit largely centres around agreements the company signed with Apple to make it the default search engine on Apple’s Safari browser.
The landmark case marks the most aggressive push in decades by U.S. prosecutors to rein in big tech, and could, according to some observers, lead to a restructuring of the company’s business model if government is successful. American prosecutors are also contemplating a separate lawsuit tied to Google’s online advertising practices.