Google is at it again. It has confirmed it is temporarily blocking some Canadian users from accessing news content through its online search function. According to the company, this is part of “product testing” in response to the Canadian government’s move to enact legislation, known as the Online News Act (Bill C-18), that would require Google to reach content deals with Canadian news media when it makes their content available on its platform. Facebook is also targeted by the legislation. This is part of Google’s strategy to push back against the impending legislation, which is currently undergoing review in the Senate. Both Heritage Minister Pablo Rodriguez and Prime Minister Trudeau have spoken out against Google’s actions, with Rodriguez saying that Canada will not be “intimidated” and Trudeau calling Google’s actions a “terrible mistake”.
Recall the long saga of Google’s struggle against the Australian government when that country moved to establish its News Media Bargaining Code which would require “designated digital platform services” enjoying “a significant bargaining power imbalance” with respect to news businesses (read, Google and Facebook) to reach agreements with Australian news content providers to compensate them for the inclusion of news on Google’s and Facebook’s platforms and services. Google fought back tenaciously, threatening at one point to leave Australia as part of a lobby campaign to get Australian consumers to pressure their own government to back off. It didn’t work. In the end, in the face of firm resolve from the Australian government, both Google and Facebook managed to reach content deals with Australian media that enabled them to avoid being designated under the Code.
Google has played this game before to stop governments from requiring it to pay for access to news content, starting in Germany and later in France. In Germany, Google removed from Google News the content of German publishers who had sued it for ignoring a new law requiring payment for news content, announcing that it would allow publishers to opt back in only if they waived their right to compensation. The publishers caved in and Google emerged triumphant, wielding its market power like a club. It similarly played tough in Spain when a similar law was passed, simply shutting down Google News in that country. In France, it was not so successful as the French competition authority dug in and issued an order requiring Google to negotiate with French press publishers and news providers for payment for news content appearing in Google search listings in France. Google finally reached agreement with the main French publishers in early 2021 but at the same time continued its threat, first, to block Australian news content in Australia, and then to leave Australia altogether. Australians stood up to this blackmail.
Google hasn’t gone to quite the extent of threatening to pull out of Canada in the face of the Canadian government’s determination to bring in a regime similar to that of Australia’s. It has, however, resorted to some of the same pressure tactics, such as seeking to enlist the services of the US government to lobby on its behalf by having its tech industry proxy group, the Computer & Communications Industry Association (CCIA) argue that C-18 violates the US-Canada-Mexico (USMCA/CUSMA) trade agreement. I examined that allegation here. (Hint: it doesn’t). Not only is C-18 not in violation of the USMCA/CUSMA, there are US industry voices pushing for a similar regime in the US, as expressed in this recent editorial in the Seattle Times.
There are those in Canada, such as University of Ottawa professor and blogger Michael Geist, who seem more than happy to amplify Google’s threats, noting that Google, among others in the tech industry, has been laying off workers and that the cost of reaching content deals with Canadian media is not chump change. I would turn this on its head. Because it is facing some new economic challenges, Google can hardly afford to cede its leading role in internet search because it is reluctant to find a way to strike content deals in Canada when it has been able to do so in Australia and France. Once C-18 becomes law, Google has two options. It can either strike deals with eligible news businesses in Canada (it has already reached agreement with some media outlets, like the Globe and Mail, and if it widens its net by reaching agreement with enough other outlets it could conceivably be granted an exemption), or it could comply by blocking all links to Canadian news content sites, in effect exiting the market for news search in Canada. When users search for Canadian news items, only results for US or other foreign providers would be accessible. As National Post journalist Bryan Passifiume, one of those “randomly” selected by Google to be blocked, has recounted, it is not just Google Search that produces no results. When he searched for specific Canadian news items on various Canadian websites (CBC, National Post, Toronto Star) while in the Chrome browser, he got nil returns. One can’t help but wonder how Google has managed to select journalists working for major Canadian dailies as the victims of its blocking experiment, given that it is apparently targeting just 4% of its Canadian users.
To stick it to Canadians would be a colossal blunder. That is not the way to maintain market share (and brand loyalty) in a G7 country which, while offering nothing like the size of the US market, is nonetheless the world’s 10th largest economy with a growing population approaching 40 million. As one well-known Canadian journalist has observed, Google (which is being sued for anti-competitive behaviour by the US Justice Department and was fined for the same practices in Europe) is doing this “because it can”. However, if Google were to decide to block access to news in Canada as its response to C-18, not only would it backfire in terms of its other business offerings in Canada, but its competitors, notably Microsoft and Apple, would be quick to take advantage of the vacuum.
It is worth recalling that when Google was engaged in its “stoush” with the Australian government, its main competitor in online search, Microsoft, stepped in with Brad Smith, its Vice Chair and President, explicitly endorsing the Australian proposal. Smith stated that should Microsoft achieve the kind of market dominance enjoyed by Google, “we are prepared to sign up for the new law’s obligations, including sharing revenue as proposed with news organizations.” As I wrote at the time (Google’s Tussle Over Payment for News Content in Australia: Microsoft Scrambles the Cards–With Positive Implications for Canada and Others, February 2021), the entry of Microsoft into the fray made it much more difficult for the US government to intervene on Google’s behalf, especially when both Microsoft and Google are large, powerful entities with significant lobbying clout in Washington.
But Google has more to worry about than just Microsoft encroaching on its dominant role in the Canadian market for online search. Microsoft is working to energize its previously lacklustre search engine, Bing, by the addition of AI capabilities through ChatGPT. The fact that Google’s rollout of its competing AI offering, Bard, was somewhat of a flop has given Bing an even greater fillip. It is way too early to predict whether Bing will be able to successfully challenge Google’s dominance in online search but for the first time in years it appears that Google needs to look over its shoulder. Taking on Canadian consumers, Canada’s news media and the Canadian government at the same time that this is happening is not a very good idea.
C-18 is not yet law. It could still undergo some minor tweaks in the Senate before it returns to the House of Commons for final passage. However, given the commitment that the Trudeau government has made to this Bill and to the Canadian news media, backed up by support from two of the three opposition parties, the chances of it going away because of Google’s bully tactics are nil. Google can comply by reaching deals with Canadian media or it can shoot itself in the foot by following through on its implicit threat to block access to Canadian news sites and Canadian news.
© Hugh Stephens, 2023. All Rights Reserved.
