The news that Google and the Government of Canada managed to strike a deal prior to the coming into force later this month of Bill C-18, the Online News Act, was not really a surprise, at least not to me. Both sides had every incentive to find enough common ground to reach an agreement. Google could ill afford to undermine its presence in the Canadian market by blocking access to Canadian news, with its chief competitor Microsoft in the wings ready to swoop in to take up the slack. And then there is reputational damage, although I doubt that Google cared much about this. It has acted as a bully willing to throw its weight around in various markets in the past and has demonstrated that if it can afford to, it will pick up its ball and leave. But with an eager, recently “rejuvenated-by-AI” player like Microsoft’s Bing standing on the sidelines, Google executives decided that getting to “yes” with the Canadian government was something they could live with, although, as always, they played hardball.
The Canadian government, in the person of the new Minister for Canadian Heritage, Pascale Ste. Onge, for its part needed a solution. Bill C-18 did not roll out as anticipated. Initially it was to be an “improvement” on the Australian solution, whereby the Australian government had muscled both Google and Facebook into reaching funding arrangements with Australian media to the tune of (although no one is sure because the details have been kept confidential by both parties) of around AUD200 million, about CAD 180 million. In the end, Australia did not designate the two platforms under its News Media Bargaining Code since, under the threat of compulsory arbitration embedded in the legislation, both Google and Meta (Facebook’s parent company) found it expedient to cut a deal with most of the Australian media players. Some were left out in the cold.
Canada decided that instead of allowing the platforms to strike deals under threat of legislation, it would pass legislation requiring them to self-designate (with consequences if they didn’t), and then allow an exemption if they were able to come up with suitable agreements with media partners. Various amounts of funding were tossed around, from a high of almost $330 million from the Parliamentary Budget Officer (PBO) to $234 million when Meta was part of the calculations, of which $172 million would be from Google. This number came from calculating 4% of Google’s annual Canadian search revenue. The PBO estimate was contained in a report that was focussed on the implementation costs for the government departments involved and the $330 million estimate of revenues to the media sector was almost a throwaway line, not substantiated in the report. To date, Meta has not come onside nor does it look likely that it will do so since it has already complied with the legislation (in legal terms if not in spirit) by blocking any links to Canadian news on Facebook and Instagram. Meta appears to have made a corporate decision that it can live without providing access to news for its users, and not just in Canada. It is retiring its “news tab” in the UK, France and Germany, and will likely not renew the deals it made earlier in Australia, perhaps a case of buyer’s remorse. Unfortunately, the timing of the Canadian legislation gave it the perfect opportunity to walk away from some voluntary content deals it had signed in Canada.
The sum that Google will pay has now shrunk considerably, to $100 million annually, not chump change to be sure but a considerable discount from the numbers that were being bandied about just a few months ago. This money will go into a central fund that one or more media collectives will allocate, through negotiations with Google, all under the watchful eye of the CRTC. The allocation will presumably be done on the basis of costs of maintaining journalists and on the number of journalists employed by media outlets. If the allocation is based exclusively on numbers of journalists, the broadcasters and especially the CBC will reap the lion’s share. The Minister is already musing about a need for “clarification” of guidelines so that the national public broadcaster, which already receives an annual allocation from Parliament of $1.27 billion does not walk off with most of the funding. There are many needs from the national newspapers, which are struggling mightily, to weeklies and bi-weeklies in small towns that are falling by the wayside, to new digital startups that are trying to fill the gap. A couple of small victories are that the funding will be indexed to inflation and the government has the right to re-open the deal if Google reaches a more favourable arrangement in another country. (This almost guarantees that they won’t).
Is anyone really happy with this state of affairs? It appears not. There is some new money for media outlets but not the bonanza that they were led to believe they were going to get. Google’s existing financial support programs for journalism already reached with some media outlets will be folded into the $100 million. One key goal of C-18 was to level the playing field between a giant global corporation like Google and Canada’s relatively small media players by including the threat of compulsory arbitration if Google was not willing to reach fair deals, but now the only negotiation will be how the $100 million pot is to be divided. Google is probably not entirely happy because it will be paying for linking to content, even though it claims its payments are for helping publishers. It is distinction without a difference but is part of Google’s theology that links on the internet are somehow sacrosanct and can’t be touched, removed or blocked (except when Google decides to do it, that is) lest this somehow “break the internet”.
On the other hand, a lot of media outlets that Google probably wouldn’t have bothered to deal with, including equity-seeking outlets, will have a chance to seek some funding. And the funding is assured, protected by this agreement and backstopped by the legislation. Google can’t just walk away or pull funding from certain outlets. Reaction among various media seemed to be one more of relief than delight, although the Toronto Star has called the $100 million cap “disappointing”. As for the opposition Conservative Party, they have criticized the Trudeau government for caving in to big tech, which is a bit rich since the Conservatives spared no opportunity to oppose and obstruct C-18 when it was going through Parliament, and indeed voted against it.
Google will undoubtedly be facing demands in other countries for contributions to news media. While Google News Showcase has been around for a while, it is controlled by Google; they decide who they will deal with how much they will pay. In the US, the Journalism Competition and Preservation Act (JCPA) almost made it through Congress last year, allowing US media to negotiate collectively with Google without running afoul of anti-trust laws. The JCPA, while supported by the US News Media Alliance, is not everyone’s favoured solution. It has notably been opposed by some smaller, local news outlets in the US. Google will now likely try to adopt the Canadian “central fund” model. The rest will be up to arm-twisting and seeing who blinks first.
Canada was too big to ignore but perhaps not big enough to corral Google effectively. The lesson here may be that you don’t want to get too far out in front of market and political developments, or you set yourself up for a fall. The Online News Act was an ambitious piece of legislation designed to try to come to grips with a real problem, the domination of online advertising by monopolistic tech giants to the obvious detriment of a healthy Fourth Estate. What has been salvaged is not nothing, but it is less than hoped for. Was the ultimate goal attainable? We will never know. Neither the Canadian government nor journalism sector wanted to run the risk of seriously calling Google’s bluff. Its hubris knows no bounds, and the game of Russian roulette was not worth the candle. Still half a glass is better than a broken glass. Let’s hope Canadian journalism uses this cash infusion wisely.
© Hugh Stephens, 2023. All Rights Reserved.
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