Canada’s Online News Act was established in response to concerns from the Canadian media industry. The industry expressed that tech giants, specifically Meta Platforms Inc. and Google, are dominating the online advertising space, consequently overshadowing traditional news outlets. This new legislation, passed in June and set to be effective in December, is designed to ensure these tech companies financially support news outlets.
Key Provisions of the Draft Regulations
The Canadian government revealed the draft rules of the legislation on Friday. The main details are:
- Compelling internet giants like Meta and Google to pay news providers.
- The proposed payment would be a minimum of 4% of their annual Canadian revenue.
- According to government estimates, Google would need to pay approximately C$172 million ($126.6 million) and Facebook around C$60 million annually.
- The regulations encourage companies to negotiate payment deals voluntarily with news publishers.
- In the absence of voluntary negotiations, mandatory bargaining may be overseen by the Canadian Radio-television and Telecommunications Commission (CRTC).
Furthermore, any agreements reached by the tech companies should also consider:
- Independent local news providers
- Indigenous news businesses
- Official language minority community news outlets
The Canadian regulator CRTC has indicated it will initiate a framework for these negotiations this fall and looks forward to starting mandatory bargaining by early 2025.
Tech Giants’ Reaction
Despite the proposed regulations:
- Meta’s head of public policy in Canada, Rachel Curran, stated the company would continue its decision to end news availability in the country. She mentioned that the underlying premise of the Online News Act remains flawed from their perspective.
- Meta had already disabled news sharing on its platforms in Canada.
- Alphabet’s Google, while not committing to a similar step, said they were reviewing the regulations to assess if they address the core issues with the law.
- The decision by Meta to block news in Canada did not significantly alter the usage patterns of Canadians on Facebook, data from independent tracking firms suggested.
Government’s Perspective
Heritage Minister Pascale St-Onge emphasized the role of tech platforms in providing news and information to Canadians. She stated that these platforms have a responsibility to both act responsibly and support the mutual benefits of news sharing.
Government officials also highlighted the significant influence of these tech companies as content gatekeepers. There is an expectation for these platforms to engage in fair negotiations.
Financial Implications and Market Reactions
With a combined proposed fee of about $234 million, which might also include non-monetary contributions such as training and advertising credits, reactions have been mixed. Reports have pointed out that Meta, even with the proposed changes, remains less than satisfied.
However, on the stock market side, analysts appear optimistic about both Meta and Google’s trajectories. Both companies are presently deemed “Strong Buys”, showcasing robust growth potential.
Final Remarks
As Canada advances with the Online News Act and related regulations, the global spotlight remains on the evolving dynamics between tech giants and traditional news outlets. The outcomes of Canada’s approach may set precedents for similar global measures in the future. Only time will reveal the broader implications of this act on the global media ecosystem and whether it achieves its intended objectives.
