Stand Google News Initiative by Associação Brasileira de Jornalismo Investigativo (CC BY 2.0)

Stand Google News Initiative by Associação Brasileira de Jornalismo Investigativo (CC BY 2.0)


A 4% Link Tax: Why the Government’s Draft Bill C-18 Regulations Just Increased the Chances of No News on Meta and Google in Canada

The government is releasing its draft regulations for Bill C-18 today and the chances that both Google and Meta will stop linking to news in Canada just increased significantly. In fact, with the government setting an astonishing floor of 4% of revenues for linking to news, the global implications could run into the billions for Google alone. No country in the world has come close to setting this standard and the question the Internet companies will face is whether they are comfortable with the global liability that would see many other countries making similar demands. The implications are therefore pretty clear: there is little likelihood that Meta will restore news links in Canada and Google is more likely to follow the same path as the Canadian government establishes what amounts to 4% link tax from Bill C-18 on top of a 3% digital services tax and millions in Bill C-11 payments. 

The estimated revenues from Bill C-18 or the Online News Act have always been the subject of some debate. The Parliamentary Budget Officer set the number at $329 million, using a metric of 30% of news costs for all news outlets in Canada. Under that approach, over 75% of the revenues would go to broadcasters such as Bell, Rogers, and the CBC. The Canadian Heritage estimates were considerably lower, with officials telling a House of Commons committee last December that they expected about $150 million in revenue:

I won’t speak to the PBO report which is the source of the numbers that you cited. That was not a department-led initiative. The internal modelling that we did when we tabled the bill and mentioned in our technical briefings was more around $150 million impact. That was based again in terms of how this played out in Australia and making some assumptions about how it might play out here. With respect to the PBO report, any questions about that particular number would have to be directed towards them.

By the time the bill reached the Senate several months after that, the number had grown to $215 million.

With the release of the draft regulations, the government has established a formula with an even bigger estimate. The creation of a formula is presumably designed to provide some cost certainty to the companies and represents a change in approach in Bill C-18, given that the government had previously said it would not get involved private sector deals but it is now setting a minimum value of the agreements. Officials told the media this morning that it believes Google’s contribution would be $172 million and Meta’s would be $62 million, for a total of $234 million. However, that may understate the revenues by focusing on search revenues alone. If based on total revenues, with a 4% minimum floor, the requirement would exceed C$300 million for Google. Either way, the number is more than 50% higher than the $150 million estimate the department gave the Heritage committee just eight months ago.

The draft regulations will also provide some additional clarity on several issues. The standard for a digital news intermediary has been fleshed out to include $1 billion in global revenues and 20 million Canadian users. As for the process, those companies subject to the rules are required to conduct a 60 day open call for negotiations. To meet a fairness standard, the resulting deals must be within 20% of the average and cover a wide range of news outlets. Contributions can include non-monetary items but it seems unlikely the resulting deals would grant links significant value. The CRTC would then pass judgment on the deals and determine whether the companies are exempt from a final offer arbitration process. The timing on this includes a 30 day consultation process on the regulations, before they are finalized prior to the December deadline. But with the CRTC not having established a bargaining framework before 2025, the liability issues start arising well before any deals are concluded or approved.

Where does that leave Canada, news and Bill C-18?

The decision to establish what amounts to a 4% link tax moves the law even further away from actual news expenditures and simply creates a significant cost for linking to news in Canada for two companies. There is no magic to the number or correlation to news production costs. Rather, the government is trying to set a new global precedent with enormous implications for the Internet in Canada and worldwide. If there is a 4% tax on news links, why not similar fees for links to health or education information? What are the risks of creating a global news sector dependent on regulated deals with two Internet companies? What response from companies now facing a 4% link tax, 3% digital services tax, and millions in Bill C-11 liability in Canada? What are the competition and access to information risks if Google and Meta will become news deserts in Canada?

The answer to that last question is not in doubt: the loss of links would be devastating for media outlets and have a huge impact on Canadians ability to find and share information. The government had many options to facilitate support for the media sector but has taken the riskiest approach at every turn. Today’s regulatory announcement may have made bad situation even worse as the companies become more likely to comply with the Online News Act by stopping to facilitate access to news in Canada.


  1. As economists have been saying for ages, higher tax *rates* don’t necessarily translate into higher tax *revenues*, for much the same reason. When you raise the rates too much, rich people and corporations move their assets overseas or shift their holdings to assets with lower tax rates, like municipal bonds.

    The government may have thought they were getting 4% of Google/Meta’s billions, but instead they’re going to get 0%.

    Oh well. If only there were someone in this government who had taken an Economics course.

  2. Back of the envelope time… all numbers are rough estimates. (If you have more definitive ones, describe in comments.)

    I found references that Google had $25B of Q1/2021 revenue. That would rough out to $100B annually. If the U.S. adopted this same 4% standard, that would mean $4B in deals to U.S. news companies.

    However – the other factor here is *profit*. I found references that suggest Google had $60B in profit in 2021. That is where the $4B comes from. So, the U.S. alone would be indicating that 6% of profits go to news organizations.

    If we take the final leap, and use the global $280B in revenue, then the 4% becomes about $11B. And that *still* comes out of profits. So the summary at the limit would be that 18% of Googles profits should go to news organizations globally.

    Wow. That’s a really audacious suggestion.

    It may indeed provide “certainty”. It just does not seem likely to provide the certainty the government wants.

    I am having an increasingly hard time thinking that the government actually expects this to work.

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  4. Well, brace yourselves, ladies and gentlemen, because the Canadian government has just unleashed a mind-boggling, awe-inspiring, and absolutely jaw-dropping move! Prepare to witness the sheer audacity of setting a mind-numbing 4% link tax on news! Can you believe it? I sure can’t!

    Forget about access to news, folks. Who needs it anyway? It’s not like it’s a fundamental pillar of democracy or anything like that. No, let’s just slap a hefty tax on those pesky news links and watch the world burn! Because, clearly, Google and Meta haven’t done enough for society. They must be punished for their audacity to provide us with information at the click of a button.

    But wait, it gets even better! Why limit ourselves to news? Let’s tax links to health information, education resources, and even cute cat videos while we’re at it! Because, hey, why should knowledge and entertainment be free when we can milk every last cent out of it?

    Oh, and let’s not forget the global implications of this groundbreaking decision. I can already see countries around the world trembling with excitement, eager to follow in Canada’s footsteps and impose their own exorbitant link taxes. Who needs a free and open internet when we can regulate it to death?

    And the cherry on top of this ludicrous cake? The devastating blow this will deal to media outlets and the average person’s ability to find and share information. Who needs a well-informed society when we can have a desolate wasteland of news deserts, right?

    So, let’s all stand up and give a standing ovation to the Canadian government for their unparalleled genius in making the worst possible decision at every turn. Bravo, Canada. Bravo. You have truly outdone yourselves this time.

    • Maybe it is all just a clever ploy to censor the Internet and ensure that all “proper right news” is provided from regulated “independent” news sources that are trusted and funded by the gov’t.

  5. Using the government’s own formula, here is the other way of looking at this.

    Google has global *profit* of $60B. So, let’s calculate 2% (Canadian GDP fraction) of that, giving us $1200million in profit. But Google’s global revenue is estimated at $280B. That makes the minimum “news number” 4% of 2% of that – so, ending up at $224million.

    When I do it that way, it looks like the government is saying that $224 million of your $1200 million Canadian profit should go to news. Or – over 18% of your profit should go to news. And that is a *minimum*.

    You might think that sounds ok to you. I’m going to guess it does not sound ok to Google.

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  7. Did no-one tell the bureaucrats and Liberals about the global multi-billion dollar market for SEO services to win link ranking on Google? That’s right, almost every business on the planet – except for Canadian news – pays to be found on Google.

    The gross incompetence on this file is embarrassing.

  8. Am I missing something here? If I post a link on my Canadian FB site to points to a CBC news article am I not driving people (click throughs) to the CBC site through FB? Is this not aiding the CBC in possible ad revenue? Is FB actually providing this free service to the CBC by connecting my people to the CBC site.

    Oh but wait you now want to charge them for driving traffic to my site to which they now have stopped doing, thus CBC has lost click throughs because the federal government wants more money.

    Is this all really that dumb?

    • If I understand it correctly, you are mostly, but not completely correct. The money isn’t expected to go to the government but rather to the news media that they have agreements with.

      Of course, for most of the news media corporations this means that the income from the agreements is taxable, so they would pay a portion of it to the federal government in the form of corporate income tax. And for the CBC it would allow the government to reduce the budget allocation by that much if they choose to do so, allowing the government to either reduce expenditures by that much, or more likely, divert it to another vote buying scheme.

      Is it dumb? Yes. Do they care? I don’t think so. It allows the government to claim in news releases that they are supporting the news media with it costing them practically nothing. The news media becomes cheerleaders for the government, since the news media becomes more dependent on government largess (in the form of legislative and direct financial support), reducing the chances that they will be critical of the governing party and more critical of opposition parties who are likely to revoke this legislation. I would say it is Machiavellian, but I am not so sure that they plan that much.

  9. Draft regulations. So this is what the government is looking for right now, at least until the heat dies down. Of course, regulations change, and it could end up being 5 or 15% without going to Parliament.

    If they were willing to enshrine it into the Act, then perhaps Google and Meta may relent, but if they are only putting the stuff into regulation to me this indicates that they want to change the implementation of the Act at a later date. The government knows that this could be done this way; they amended the firearms prohibited under the Firearms Act that way and then tried to enshrine the changes into the Act through C-21 so that it was more difficult for another government to change it.

  10. Hi Michael,

    Can you cite your sources for the 4% minimum? I haven’t found that in the “draft regulations for Bill C-18 today” link you provided earlier.

    Thanks for breaking this story.

  11. Meta blocking news sites affects me…not at all. I suspect this is a non-issue for a majority of Canadians.

    • Alison Malis says:

      It might be a non-issue (and I suspect it isn’t, as I find it irksome that I now cannot access my chosen “news” providers through one app and I suspect millions of other Canadians do as well) at the moment, but wait until you can’t search Google for a news article, any news article. That will make it an issue for you. And wait until the government contribution to legacy media payrolls climbs past the 25 percent it is now because the anticipated extortion payments have not arrived. Your taxpayer dollars (assuming you do pay taxes) will now have to bailout legacy media who have had 30 years to figure out the internet and did not do so. That’s not the fault of those who did figure it out.

  12. The $172 M estimate for Google is based on Google’s global ad revenue including revenue from YouTube. To me, this implies, that the Government feels Canadian news organizations are entitled to a slice of revenue from every ad on Google from anywhere in the world. Search for a restaurant, watch a cat video, look up the hockey standings then Google will have to pay as long as there was an ad.

    I guess that means Google will block news on Search, YouTube, and search within news sites that use Google as their search engine. This will release a financial tsunami that will destroy a number of news organizations and cause our idiot PM and his minions to completely lose their minds (mind you Trudeau doesn’t have much to lose).

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  16. John Tillotson says:

    What does this really prove?

    First, the current government does not tax according to the need to support society and pay for the services that society needs. This current LPC government taxes according to political needs: Taking money from entities and people deemed to be “rich” in the public eye, and giving the money to those entities (the MSM) that can be depended upon to provide political benefit to the current government. Taxation has been turned into a political tool.

    Second, the current LPC government has no respect for Parliament or any laws implemented in accordance with democratic principles: They choose to get broad and vague bills passed, then manipulate the actual rules that affect the citizens through bureaucratic control via a leftist-led bureaucracy. Thus, achieving political ends at the expense of democratic principles. This government wants to make Parliament irrelevant.

    Thirdly, the current LPC government has a fundamental belief that the state has a role in every aspect of the life of a citizen. Government-controlled boards and associations can take over the free speech of citizens, politically-controlled boards can take over the distribution of information to the public, and group rights trump human rights in all cases. This government is obsessed with control of the citizens.

    I really hope a lot of Canadians get a grip on this before the next election.

    • Can’t disagree. Remember what they tried to do in 2020 allowing the budget to be decreed by Cabinet without going through Parliament as part of the pandemic response?

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