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    Bill C-18 (The Online News Act): Does Flexibility and Dialogue Represent “Compromising” or “Caving”?

    • 20.07.2023
    • By Hugh Stephens
    Hugh Stephens Blogs

    When does “compromising” to find a solution that works for both parties become synonymous with “caving” (in)? Only when you take a perverse delight (one might even call it schadenfreude) in gloating, “I told you so”, when the Canadian government’s policy initiative (C-18, the Online News Act) runs into opposition from the giant internet platforms at which it is aimed. The Online News Act (ONA) requires the behemoth internet platforms Google and Facebook (Meta) to contribute financially to news media organizations when they use (make available) news content on their platforms. To no-one’s surprise (because it will cost them some money), Google and Meta don’t like the legislation and have pulled out all the stops to oppose it, as they did with similar legislation in Australia. This includes threatening to block Canadian news content on their platforms, including already taking preliminary steps to test blocking processes for a random selection of Canadian consumers.

    A compromise involves making mutual concessions to reach an agreement between two parties. Caving (in) usually means abject surrender. It is clear that the current standoff between the government and the platforms will only be resolved through compromise on both sides, as I pointed out in a recent blog posting. (When the Irresistible Force of the Canadian Government Meets the Immovable Object of Meet and Google: What Happens Next for the Online News Act?).

    To recall, for those who have not been following all the permutations of a government’s attempts to corral these two internet giants and encourage them to negotiate “fair compensation” for their use of news content produced by others, there are several possible outcomes. One is that the platforms fail to bargain with news providers in good faith, using their massive economic leverage to dictate terms. In that event, the legislation will be triggered and “final offer arbitration” will be invoked through the establishment of an arbitral panel. Under final offer arbitration, the panel (which will be selected by the two parties based on a roster provided by the CRTC) will select one of the two final offers put forward by the opposing parties. The intent of this process is to level the playing field between the internet giants and small media players, and encourage negotiation of balanced agreements, since absent good faith negotiations the ultimate step could be arbitration.

    A second outcome is that the platforms and news media organizations reach agreements that both sides consider fair. That is what happened in Australia. This outcome is truly win-win and is the whole point of the legislation. The platforms have already reached agreements with some media organizations, although they are now threatening to terminate these agreements because they don’t like the way the Online News Act is framed, just as they did as part of their pressure tactics in Australia. (Google in Australia: Dangle the Carrot and then Yank it Away).

    A third outcome, and the one that is currently being brandished by the platforms, is to comply with the ONA by opting out, that is, not using, or making available, any news content on their platforms. If they are not using news content, there is no legal obligation to pay for it. Since the Act only applies to “designated news intermediaries” (all of which are Canadian), the platforms can, in theory, comply with the Act by ensuring that consumers in Canada are unable to access Canadian news content. For example, when consumers search “Forest fire warnings” on Google, no Canadian news sources will come up. Canadians might be able to find some news on Google about forest fires in their region from US sources (although this is unlikely), but local news will be blocked, and the utility of the search engine will be compromised. What will consumers do? They will have to access another search engine, such as Bing, Yahoo or DuckDuckGo, or go directly to trusted news sources. These alternative search engines may not be the first choice of consumers, but they will produce the information needed, in the process familiarizing users with products other than those produced and controlled by Google. Moreover, by selectively blocking a range of search requests from users in just one (fairly large) country, Google will be compromising the algorithmic settings it uses to rank search requests. What a triumph for Google! It will have alienated a large consumer base, damaged both its reputation and technology, put the public potentially at risk and entered into headbutting with a G7 government that has various means to deal with recalcitrant companies (such as a Digital Services Tax, long under discussion). Why not find a solution that avoids all this? It is called “compromise”. Google and Meta need to compromise, just as the Canadian government needs to demonstrate some flexibility if both sides want to reach a win-win outcome.

    Google has concerns about what they consider to be potential unlimited liability. They also want to be able to include in the calculation of compensation the agreements they have already reached with media organizations. They would like some assurances that if they bargain in good faith, they will be exempted from the application of the legislation. (They achieved the same outcome in Australia, earning de facto exemption because they were able to reach sufficient agreements with Australian media outlets). This strikes me as not unreasonable. In response, the government, in preparing for the drafting of regulations under the Act, has moved to clarify various issues through the recent release of a bulletin (The Online News Act: Next Steps). In this document, the Heritage Department clarifies that it will establish a threshold for contributions to the sustainability of the Canadian news marketplace, based on a platform’s estimated Canadian revenues, (i.e. no unlimited liability), reaffirm language already in the Act that non-monetary offerings to news organizations such as training be included and that existing agreements with news businesses can be included in the determination of fair compensation, and to clarify the definition of what constitutes a “significant portion” in terms of the number of agreements the platforms are required to reach with various categories of news organizations in order to gain an exemption. These are reasonable steps to address concerns expressed by the platforms, while maintaining the policy objectives of the legislation. For the record, this is called compromise, not caving.

    As for Meta (Facebook and Instagram), judging by its confrontational rhetoric, this company may have decided that it is going to be an outlier, taking the news blocking route rather than being willing to compromise. Meta claims, correctly, that some news organizations post their own material to the platform and argues that it should not have to compensate news organizations when the post is at the initiative of the news organization doing the posting. This, however, is a red herring and has been seized upon by opponents of the legislation to try to discredit it. There is no provision in the legislation for compensation based on a specific number of links or clicks on links. Rather it is an overall process that takes into account the respective benefit enjoyed by news organizations from having their content on Facebook (and Google) and the offsetting benefit derived by the platforms from using news content to attract and retain viewers (thus increasing their exposure to online ads). If Facebook blocks users from posting news items, it will make itself a less valuable platform and forum for consumers. Ultimately there will be market consequences. Reaching reasonable agreements with news providers would be the logical way to proceed, but ultimately if Meta wants to shoot itself in the foot, it has the ability to do so. In Australia, after doing exactly that (Facebook in Australia—READY, FIRE, AIM), it decided that a wiser course of action would be to negotiate with news providers, thus avoiding designation under the Australian legislation.

    I still believe there is time (around six months), the will (on the part of the government and possibly both platforms), and the means (drafting, consulting on and clarifying regulations) to reach a solution that will work for the platforms, the government and news media. Canada will not be the last country to try to ensure that the big platforms make a reasonable contribution to the news content that they freely use. The parlous state of journalism, one of the pillars of any functioning democracy, is a primary reason why several similar initiatives are taking place in various countries. The platforms would do well to come to an agreement with the Canadian government that they can live with–even though it means drawing on their resources to some extent beyond their present “voluntary” commitments–in order to show that reasonable compromise is possible. If the platforms get to “yes” under the Canadian legislation, they will not have “caved” any more than the Canadian government has caved; rather they will have found a way to meet their objectives (and maintain their business models) through dialogue and a dose of compromise. Wine with a little water in it is better than no wine at all, for both parties.

    This article was first published on Hugh Stephens Blog