After months of urging Heritage Ministers Pascale St-Onge and Pablo Rodriguez to stand up to Google and Meta’s response to Bill C-18, News Media Canada – the lead lobbyist for the legislation – appears to have waved the surrender flag as it is now urging the government to accommodate Google’s concerns with draft regulations. The shift in approach unquestionably marks a retreat for the group, which literally drafted a version of the bill for the government and wielded the power of major media outlets to skew national coverage in favour of the legislation. While it insisted that the companies were bluffing when they said they would block news links if a mandated payments for links approach were adopted, it is now readily apparent that they were mistaken. Meta has blocked news links on its Facebook and Instagram platforms for more than two months and shows no sign of changing its approach. Given that Google appears to be moving in the same direction, News Media Canada’s decision to toss the government under the bus reeks of desperation as its members recognize that blocked news links on both Meta and Google would create enormous harm in lost traffic, cancelled deals, and an Online News Act that generates no revenues.
Bill C-18 stands as epic policy blunder by the government, which ignored recommendations for reforms during the legislative process and now finds itself stuck with a law that has become a model for what not to do. The key question, however, is whether the latest concession will be enough to convince Google to spend hundreds of millions on links and establish a precedent that could result in billions in liability worldwide. While News Media Canada has identified several issues where it supports Google’s request for regulatory change, the challenge is that Google’s regulatory response appears to arrive at the same conclusion as Meta, namely that regulations alone cannot save a fundamentally flawed piece of legislation. Google states:
While the Government has publicly indicated its confidence that our concerns can be resolved through the regulatory process, unfortunately the Regulations fail to sufficiently address the critical structural problems with the Act that regrettably were not dealt with during the legislative process. We continue to have serious concerns that the core issues ultimately may not be solvable through regulation and that legislative changes may be necessary.
The Google regulatory response is comprised of three sections: the economic and business case against Bill C-18, recommendations for regulatory reform, and proposals for legislative change. The economic and business case is pretty straightforward: on top of concerns of the implications for expression and an open Internet that would come with mandated payments for links, the company argues that it provides enormous value in free links to publisher websites, which it values at $250 million per year. Moreover, it notes that the value of news for advertising purposes in search is limited, since news queries are a small part of search activity (Google says only 2%) and advertisers are far more interested in advertising against searches for products or services, rather than searches for the latest news. In other words, as with Meta, news may be valuable, but it has limited value to the platforms.
The regulatory reform suggestions flow from Google’s analysis of the legislation and regulations that it believes are unworkable (I posted analysis on the regulations here, here, here, and here). The company identifies concerns such as unlimited liability (the 4% figure of search revenues, itself a fabricated number, is a floor not a cap), the likelihood that a small number of outlets can hold out by demanding bigger deals and effectively stop the CRTC from granting an exemption, concerns about news outlets that don’t actually produce news qualifying for deals, questions about what counts as support under the law, and doubts about how the timing will work given the CRTC’s parallel approach that could run until 2025.
What is notable about the News Media Canada reversal is that is appears the organization now supports changes on many of these issues. The Globe reports it now says:
“We are aligned that there should be a firm ceiling, rather than a floor on financial liability. We also agree that eligible publishers must have an online presence, non-monetary measures such as training and product can be part of the remuneration, and parties need incentives to enter into negotiation, rather than holding out.”
While this doesn’t address all the regulatory concerns, it hits some key ones.
But the problem is that regulations can only do much. As I wrote months ago, “there are no regulations to be discussed that change the core elements of the law. It’s been decided, has received royal assent, and kicks in anytime within the next 120 days.” Indeed, Google’s response identifies numerous changes to the law itself. Those changes are far more extensive and include removing links as a source of mandated payments (replaced by “displaying news content”), restoration of copyright limitations and exceptions (ie. fair dealing applies), removing broadcasters such as the CBC from the scope of the law by using the government’s own Qualified Canadian Journalism Organization standard, and adjusting the rules on what is considered news content (alpha-numeric text), exemption criteria, and the definitions around digital news intermediaries. Further, it wants to ensure it can elevate high quality news and demote low quality sources in search results and seeks a more balanced approach to arbitration.
These are significant changes that go to the heart of the problem with the law. Even if there was an openness to reform, they would need to be implemented before December 19th. That seems very unlikely given that the government has shown little interest in changes, which suggests that tinkering with the regulation may be insufficient to address a deeply flawed bill. In other words, the biggest problem with Bill C-18 isn’t the regulations, it is Bill C-18.