The damage caused by the government’s Bill C-18 continues to grow as Meta has started to cancel its existing agreements with Canadian publishers. The move should not come as a surprise since any deals that involve facilitating access to news content would bring the company into the legislative framework and mandate payments for links. Indeed, Meta said earlier this week that its 18 existing deals “did not have much of a future.” When this is coupled with a reported “impasse” between the government and Google over its approach to Bill C-18, the risks to the Canadian media sector look increasingly dire.
This was entirely foreseeable, yet Canadian Heritage Minister Pablo Rodriguez never seemed to take the risks seriously. It raises the question of whether the government developed estimates of the cost of its legislation if Meta and Google chose to comply by stopping news sharing or linking. While there were estimates for the benefits of new deals that ran into the hundreds of millions of dollars, did it conduct a risk assessment of the economic costs that would come from Internet companies exiting the news market in Canada?
There are obviously costs that extend far beyond the economics that include reduced access to news, increased prominence of low quality news sources, harm to the Canadian Internet, and the reputational damage to a government that handled this about as incompetently as possible. But from a pure economic perspective, the risks were always understated as they extended beyond just the value of increased traffic to publishers from the links they were themselves posting. Both Google and Meta have deals with Canadian publishers reportedly worth millions of dollars. As Meta’s step to begin cancelling deals suggests, those agreements are unlikely to survive the decision to exit news in Canada.
The damage caused by this legislation and the government’s decision to ignore the potential consequences therefore run into the hundreds of millions of dollars for Canadian news outlets, effectively undoing years of public support for the sector. The government heard directly from some publishers who warned that losing the links could force them to shut down their businesses given lost links and cancelled deals. Yet it somehow decided it was comfortable putting those businesses at risk as if tough talk would somehow pay the bills.