La_Fête_à_Macron,_5_mai_2018_—_74 by Jules Xénard [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)]

La_Fête_à_Macron,_5_mai_2018_—_74 by Jules Xénard [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)]

Columns

From Innovation to Regulation: Why the Liberals Have Lost Their Way on Digital Policy

The 2015 Liberal campaign platform that vaulted the party from third place to a majority government made a big economic bet that focusing on innovation would resonate with voters and address mounting concern over Canadian competitiveness. Innovation would serve as a guiding principle over the years that followed: The Minister of Industry was reframed as Minister of Innovation, Science and Economic Development, millions were invested in innovation superclusters and global leadership on artificial intelligence was touted as a national priority.

My Globe and Mail op-ed notes that four years later, the 2019 Liberal party platform does not include a single mention of innovation or AI. Instead, it is relying heavily on ill-fitting European policies to turn the Canadian digital space into one of the most heavily regulated in the world. Rather than positioning itself as the party of innovation, the Liberals are now the party of digital regulation with plans for new taxes, content regulation, takedown requirements, labour rules and a new layer of enforcement commissioners.

Some of the new positions are not particularly surprising. The spring release of Canada’s Digital Charter by Innovation, Science and Economic Development Minister Navdeep Bains foreshadowed a commitment to new privacy rules and the implementation of a national sales tax on digital services was only a matter of time.

However, the platform extends far beyond those measures. For example, the Liberals’ plan to implement a 3-per-cent corporate tax on revenue generated in Canada, mirrors the approach adopted in France. The measure would bring new tax dollars for advertising revenues generated by Google and Facebook, but how to implement a tax policy that envisions taxing revenues from data remains somewhat uncertain.

The Liberal platform also calls for new rules regulating online content and the role played by large Internet companies in addressing content posted on their sites. Borrowing from Germany, the plan calls for significant penalties for social-media companies that fail to address online harms within 24 hours. Moreover, the Liberals plan to mandate that internet content providers feature Canadian content, support its creation and actively promote it on their services.

The shift toward greater content regulation marks a dramatic change in policy. Given the emphasis on freedom of expression in the Charter of Rights and Freedoms, Canada has traditionally tread lightly with respect to internet content regulation. There have been long-standing efforts to combat child pornography, but most other content regulation has been left to the courts to ensure due process and free speech safeguards.

The content regulation proposals raise several concerns, not the least of which is that they are likely to strengthen, not weaken, the large internet companies. By vesting responsibility for third-party content posted on their sites, those companies are likely to err on the side of removing controversial content without court oversight. Leaving content removal to Internet companies runs the risk of limiting future competition by creating barriers to entry for new companies and increasing reliance on private, largely foreign organizations for activities that are typically overseen by courts and regulators.

Moreover, the plans may run afoul of the yet-to-be-ratified Canada-U.S.-Mexico Trade Agreement, which features a safe-harbour provision that promises internet platforms that they will not face liability for failing to take down third-party content or for pro-actively taking action against content considered harmful or objectionable. Squaring Canada’s trade obligations on content removal against the Liberal proposals will not be easy.

Perhaps most troubling is that content-regulation proposals ignore the policy-development process that the Liberals themselves put in place. The government’s own Broadcasting and Telecommunications Legislative Review Panel isn’t scheduled to release its report on reforms to Canada’s communications laws until 2020. However, the Liberals have effectively pre-empted the entire process by predetermining the outcome with respect to mandated Canadian content requirements even as companies such as Netflix report spending hundreds of millions on film and television production in Canada without legislative requirements to do so.

The Liberal digital-policy platform does not end there. It ventures into traditional provincial territory with a promise to develop federal labour protections for workers at digital platforms and commits to a bigger bureaucracy to address the digital world. For example, it calls for a new data commissioner, effectively sidelining the current privacy commissioner. It also envisions a new Canadian Consumer Advocate, throwing into doubt the relevance of the Commission for Complaints for Telecom-television Services and the Financial Consumer Agency of Canada.

For a party focused on innovation, the Liberal digital policy proposals suffer from a lack of imagination, relying instead on untested European policies. Given constitutional safeguards, trade obligations and market size, many of those rules will not translate well to Canada. And while there is a need to recalibrate the digital regulatory environment, there are better ways to do it than compiling a veritable laundry list of grievances against internet companies and abandoning innovative policy measures that reflect Canadian law, priorities and values.

3 Comments

  1. Hi Michael, thanks for the write up on the Liberal platform. What would be good policy in your view given Canada’s unique position?

  2. Fortinbras says:

    Once again, this column suffers from the lack of imagination that Michael Geist displays when he writes about digital cultural policy. In place of the equitable treatment of Canadian and non-Canadian companies, he proposes a laisser-faire attitude toward the activities of digital media giants in Canada. The unstated corollary of his argument is that the Canadian government should abandon Canadian content regulation and allow U.S. companies to dominate Canadian cultural space. Initially, the Liberal Government endeavoured to remove these issues from the current electoral debate by inviting the Broadcasting and Telecommunications Legislative Review Panel to present its report in January 2020. The Canadian cultural community did not buy into this subterfuge and is asking the all of the political parties to respond to its concerns. This helps to explain the Liberal Party’s new direction on Canadian content requirements. In fact, none of the Liberals proposals requires changes to existing broadcasting and telecommunications legislation (which may not be renewed for several years to come). As has often been pointed out in the past, Netflix is spending most of its hundreds of millions of dollars on US film and television shoots located in Canada to take advantage of federal and provincial tax incentives. Its contribution to Canadian content is minimal.

  3. Pingback: News of the Week; October 2, 2019 – Communications Law at Allard Hall

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