Canadian Heritage proposes Online News Act regulations, Meta’s not interested

Canadian Heritage announced its proposed regulations to implement the Online News Act, shedding some light on what platforms and news organizations can expect from the legislation once it comes into force on Dec. 19, 2023. The draft regulations, announced during a technical briefing on Friday, define what platforms fall under the scope of the act, include a formula for calculating how much revenue tech giants would be expected to compensate news outlets, and explains the thresholds that must be met in order to be exempt from mandatory bargaining. The act will only apply to search engines and social media platforms providing access to news with total global revenues of at least $1 billion per year and generate an average of at least 20 million unique monthly visitors or active users in Canada. This confirms it will rope in platforms like Alphabet Inc.’s Google and Meta Platforms Inc.’s Facebook, who have both said they intend to block news content in Canada in response. Canadian Heritage’s estimates to rake in approximately $230 million per year in compensation for news agencies from the two tech giants. About $172 million from Google and $62 million from Facebook. The department came to these estimates through a formula that multiplies a platform’s global revenue by Canada’s share of global GDP, which is multiplied again by a four per cent contribution rate. “The challenge the government is up against is that neither of these platforms publish market data for Canada,” said a department spokesperson, “so there's no ability to know publicly how much these businesses earn in Canada.” This formula creates a “proxy” for determining those amounts, they added, noting that the four per cent rate and its expected results are based on what has been seen so far from similar legislation in Australia, the News Media Bargaining Code. Canadian Heritage said that by laying out this formula built to adapt over time, it hopes to address the concerns platforms have of “possible uncapped liability.” “We’re carefully reviewing the proposed regulations to assess whether they resolve the serious structural issues with C-18 that regrettably were not dealt with during the legislative process,” said a Google spokesperson. Although it says the act is deeply flawed and it will take time to determine if the draft regulations address its concerns, Google has held off on cutting Canadian news and appears to be more open to a compromise than Meta, which has already begun blocking news on its platforms and maintains its position. “As we have communicated to the government, the regulatory process is not equipped to address the fundamentally flawed premise of the Online News Act,” said Meta Canada’s head of public policy Rachel Curran. “As the legislation is based on the incorrect assertion that Meta benefits unfairly from the news content shared on our platforms, today’s proposed regulations will not impact our business decision to end news availability in Canada.” Regarding other platforms, officials said it is not clear if Meta’s Instagram or Threads will be subject to the act, as the government’s third-party data does not indicate whether they pass the 20 million active user threshold. According to their data, Microsoft Corp.’s Bing appears to be the next closest platform to pass the proposed threshold. The CRTC will be overseeing the mandatory bargaining process once it is in place and has said it expects bargaining to begin by late 2024, following the end of its upcoming consultations. For platforms to be exempt they must enter into their own agreements supporting Canadian news production and contribute an amount that meets or exceeds the formula. Those agreements must also be within a fair range of each other, said Canadian Heritage, explaining that the average ratio between contributions and the amount of full-time journalists working for a news organization will be measured across all agreements. Every agreement will have to land within 20 per cent of that average relative compensation. “The goal here is to provide flexibility for platforms and businesses to negotiate different kinds of agreements,” said the spokesperson, stating that keeping agreements within this 20 per cent range will ensure fairness between all news businesses. Consultations on the new framework will run until Oct. 2, after which Canadian Heritage will put together a final version for the Governor in Council. – Reporting by Phalen Tynes-MacDonald at pcreed@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca

Canadian Heritage proposes Online News Act regulations, Meta’s not interested

News | September 1, 2023

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Canadian Heritage proposes Online News Act regulations, Meta’s not interested

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