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    Canadian Media Production and Music Groups Calls for New Rules for Netflix, Google, ISPs

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    Thursday February 13, 2014
    Canadians love Internet success stories such as Netflix and Google as recent data indicates that millions now subscribe to the online video service and Google is the undisputed leader in search and online advertising. The changing marketplace may be a boon to consumers, but my weekly technology law column (Toronto Star version, homepage version) notes that it also breeds calls for increased Internet regulation. That is particularly true in the content industry, with the film and music sectors recently calling for rules that would target online video services, Internet providers, and search engines.

    The Canadian Media Production Association, which represents independent producers of English films and television shows, recently told a Senate committee that new rules are needed to address the threat posed by popular Internet video services such as Netflix. The CMPA argued that a "level playing field" is needed to ensure that there is "choice, diversity and growth in a more open market place."


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    Canadian Media Production and Music Groups Calls for New Rules for Netflix, Google

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    Thursday February 13, 2014
    Appeared in the Toronto Star on February 8, 2014 as Success of Netflix, Google Leads to Calls for New Rules

    Canadians love Internet success stories such as Netflix and Google as recent data indicates that millions now subscribe to the online video service and Google is the undisputed leader in search and online advertising. The changing marketplace may be a boon to consumers, but it also breeds calls for increased Internet regulation. That is particularly true in the content industry, with the film and music sectors recently calling for rules that would target online video services, Internet providers, and search engines.

    The Canadian Media Production Association, which represents independent producers of English films and television shows, recently told a Senate committee that new rules are needed to address the threat posed by popular Internet video services such as Netflix. The CMPA argued that a "level playing field" is needed to ensure that there is "choice, diversity and growth in a more open market place."

    Consumers could be forgiven for thinking that the entry of Netflix into Canada has increased choice, diversity, and growth, yet the CMPA wants new rules that would raise costs and impose regulatory requirements on online video providers.

    Its recipe for reform includes three specific changes that target Netflix. First, it wants new rules requiring foreign-based content companies to contribute to the creation of new Canadian content. The CMPA has not suggested a formula for contributions nor explained how it would distinguish between online services mandated to contribute and those exempted from such requirements.

    Second, it wants to require Netflix to block the use of proxy services that can be used to disguise the geographic location of a user.  Those services - which are popular with privacy advocates since they allow users to safeguard their personal information - can also be used to access the U.S. services that are otherwise unavailable in Canada such as Hulu or the U.S. version of Netflix.

    Third, it wants Netflix to levy taxes on all subscriptions, raising broader questions about taxation issues for the myriad of online services that challenge conventional notions of jurisdiction.

    The CMPA is not alone in advocating for new Internet-related rules. Music Canada, formerly known as the Canadian Recording Industry Association, has also begun to push for changes that could target Internet providers and search engines.

    Late last year, the organization noted the need for website blocking to combat sites that facilitate infringement. Graham Henderson, the Music Canada president, wrote that government support (which now runs into the tens of millions of dollars in Ontario alone) should be accompanied by "judicious and reasonable regulation of the internet. The actions taken by courts in other jurisdictions have very reasonably required ISPs to block websites that are almost entirely dedicated to the theft of intellectual property." Website blocking has proven highly controversial in many countries, with some courts striking down blocking laws on free speech grounds.

    The blocking requirements would target Internet service providers, but Music Canada has also identified search results as a problem. In a presentation to the Ontario Standing Committee on Finance and Economic Affairs, Henderson claimed "consumers cannot find legal services on Google," adding that "with government support, maybe we can urge intermediaries to actually do something to help consumers find legitimate sources, because I think they’d like to." Whether that means requiring companies like Google to adjust their search results by eliminating some results or by prioritizing industry-friendly websites is unclear, yet the comments suggest the industry would favour some form of intervention or government pressure.

    The Canadian government has to date been reluctant to wade into the Internet regulation debate. Moreover, regulators such as the CRTC have long exempted online services such as Netflix from broadcast-style regulation. Yet as online services continue to reshape the marketplace, the pressure for new rules seems likely to intensify.

    Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.


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    Canadian Regulators Place Google's Business Model Under Microscope

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    Tuesday January 21, 2014
    Among the many Internet success stories of the past two decades, Google stands alone. The undisputed king of search, hundreds of millions rely on it daily, supporting an Internet advertising business model that generates tens of billions of dollars annually.

    My weekly technology law column (Toronto Star version, homepage version) notes that kind of success invariably leads to legal and regulatory issues, though most of Google's legal fights have focused on content, such as the inclusion of controversial websites in its search index, the digitization of millions of books through its book search initiative, and the removal of links that may lead to websites that host infringing content.   


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    Canadian Regulators Place Google's Business Model Under Microscope

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    Tuesday January 21, 2014
    Appeared in the Toronto Star on January 18, 2014 as Canadian Regulators Put Google's Business Model Under Microscope

    Among the many Internet success stories of the past two decades, Google stands alone. The undisputed king of search, hundreds of millions rely on it daily, supporting an Internet advertising business model that generates tens of billions of dollars annually.

    That kind of success invariably leads to legal and regulatory issues, though most of Google's legal fights have focused on content, such as the inclusion of controversial websites in its search index, the digitization of millions of books through its book search initiative, and the removal of links that may lead to websites that host infringing content.   

    Until recently, Google's Internet advertising business model has, with a few notable exceptions (including a large U.S. settlement involving pharmaceutical advertising), been spared much regulatory scrutiny. That has started to change with high profile actions in the U.S. and European Union and the prospect of similar investigations in Canada.  

    In the U.S., the Federal Trade Commission conducted a two-year investigation into Google's business practices that wrapped up last year with a settlement featuring several commitments for business practice changes. The settlement stopped short, however, of finding anti-competitive bias in Google's search results.

    While the U.S. settlement was widely viewed as a win for Google, European regulators are conducting their own investigation and may demand greater concessions. In fact, European officials recently warned the company that time is running out to settle claims of abuse of its dominant position.

    The U.S. and European Union may have been active on the Google front, but Canadian officials have generally remained on the sidelines. The federal privacy commissioner has examined privacy-related issues, with action involving Google Street View (its popular street-level mapping service) and Google Buzz, but broader investigations into the company's business model have been largely absent.

    That too is changing, as in recent months both the Competition Bureau and the federal privacy commissioner have either launched or concluded investigations involving Google's business model. Both investigations were complaint-driven, suggesting that competitors or disgruntled users may increasingly turn to those regulatory bodies to address their concerns.

    The Competition Bureau investigation mirrors the actions in the U.S. and Europe. According to court documents filed in December, the Bureau has worked with Google's competitors to identify the information the company should be ordered to disclose as part of a competition law investigation. Last month, the Federal Court of Canada issued an order mandating disclosure of information related to the company's business activities, which the complainants claim rise to the level of anti-competitive behaviour.

    The investigation remains at an early stage with no indication that the Bureau is close to reaching a conclusion. However, the Bureau's interest in Google indicates that the company is now firmly on the Canadian radar screen and competition watchers will be looking closely to see whether Canada follows the U.S. example or adopts the more aggressive European approach.

    The federal privacy commissioner has also waded into Google's business model. Last week, the office concluded an investigation into online behavioural advertising that arose from a complaint by a Google user who was uncomfortable with health-related targeted advertisements that suggested his Internet usage was being tracked. After he searched for medical devices for sleep apnea, he began receiving advertisements on random sites for the devices.

    The reality is that website usage is tracked, hence the mounting demands for do-not-track legislation that would provide users with greater control over the data generated by their Internet activities. In this case, the privacy commissioner concluded that the advertising breached Canadian privacy law as the tailored advertisements involved sensitive information that required an explicit opt-in consent.

    Google agreed to several changes in response to the finding, including increased monitoring of its advertising programs to ensure compliance with company policies and the law. Given the heightened interest from Canadian regulators, the company is apparently no longer alone in the monitoring of its advertising practices and business activities.

    Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.


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