Little bit more Canadian content for you all!
Right now, my Prime Minister is in a running gun battle with Meta (Facebook and Instagram) over Bill C-18. If you have no idea what that means, that’s OK… I had no idea before I started digging into it.
So What Is It?
C-18 is short titled The Online News Act, and the government explains it as follows:
The purpose of this Act is to regulate digital news intermediaries with a view to enhancing fairness in the Canadian digital news marketplace and contributing to its sustainability, including the sustainability of news businesses in Canada, in both the non-profit and for-profits sectors, including independent local ones.
My take on this is that Canadian Media organizations, like all news organizations, are struggling and this act is an attempt by the Trudeau government to subsidize media outlets with someone else’s money.
Note the words written in the act: “fairness”, “marketplace”, “sustainability”.
This will be important later: Note the word not written anywhere in the act: “democracy”. They mention “democratic” twice, but only in the context of “democratic institutions” being reported on for the purpose of determining who is a news organization.
Why is that bad?
Aside from the obvious that the government ought to be a little less blatant in their transferring of wealth around from people they don’t like to people they do, there’s also the question of what makes sense here.
Facebook in particular does not make their money off of News Articles being posted to Facebook. They allow people to interact with each other, posting comments, pictures, videos and, yes, links… But a news link is not in any way more lucrative to Facebook than a link to a wedding site. Facebook makes most of their money off of advertisements that are inserted into your feed, paid for by people who believe that inserting those advertisements into your Facebook feed constitutes a benefit to them.
Let me repeat that, it’s important: Companies are paying to advertise because they believe that posting links to their sites are a benefit to them.
So why would Facebook pay companies to link to their sites? And even if you want to make the argument that they should… Why just Canadian Media?
What kind of numbers are we talking about?
Full disclosure: I have no idea what kind of revenue Meta or Google see from ads. Meta as a company pulled in revenue of about $116 billion, Google pulled in $280 billion, but those are global numbers across all sections of their businesses. I have even less of an idea of what Meta and Google see as revenue from media links. I have even less of an idea than that of what Meta and Google see as revenue from Canadian media links. Honestly… The intricacies this kind of tech finance elude me. It wouldn’t surprise me if the number was greater than zero, but it also wouldn’t surprise me if the number was zero. While I don’t preclude the possibility of there being a monetization vehicle, I am struggling to imagine what monetization would even look like… Who would be paying, and what would they be paying for?
But that’s largely irrelevant, because the people who wrote this bill ostensibly have some kind of idea what the outcome of this bill would be, and the estimates are that the “link tax” (as Google referred to it) would end up costing tech companies about $330 million dollars annually, which Yves Giroux (The Parliamentary Budget Officer) estimated would account for the cost of about 30% of Canadian newsrooms.
Regardless of exactly what tech companies make off Canadian Media links, I can’t imagine it’s anything close to that much.
What Has The Response Been?
Poor. Both Google and Meta have signaled that they will be blocking links to Canadian media outlets as the law takes effect. In fact, Facebook has already started to do so.
Which started a near panic from Canadian Media outlets. Not appearing on Facebook had an immediate and negative impact on their traffic, which makes it even harder to get the online ad revenue that probably makes up the lion’s share of their current revenue. That’s the business case for panic, the more personal case for panic is that we’re already an incredibly uninformed population, and losing what little news we get in the form of linked stories on social media is going to be debilitating for the average Canadian’s media appetite. There are still forest fires burning merrily along, there are current events that effect people (like the joke of a Food Assistance program the Liberals just trotted out) and every now and again we have elections that some people might not know about unless it appeared in their feeds. Sad but true.
The response from the Canadian government to that has been to throw a bitch-fit, pulling all their ads off Facebook and saying that Meta is a threat to democracy. I wish I were kidding. From Justin Trudeau:
Canada and allies around the world are going to stand strong and demonstrate that we will not flinch in our defence of fundamental, foundational principles of democracy like a free, quality, informed press.
Despite these dire words, the Liberals themselves aren’t taking this quite that seriously, and have opted to continue advertising on Meta platforms. Yes, you read that correctly: “We view these guys as actively undermining Democracy… Please don’t notice the money we’re still giving them.”
Regardless, the Canadian Government did pull adds, and that amounts to approximately $10 million dollars a year. Which isn’t chump change… Unless you’re Meta. I don’t know how exactly hot much of the $330 million this program was supposed to cost was attributable to Meta, but I have the impression from that PBO link that it’s about 1/3. I’m just saying: If I had the option to forgo $10 million in revenues or get that $10 million but pay $110 million in contract expenses, I would forgo the $10 million. Obviously, because Facebook is already blocking Canadian News media even before they’d have to for the sake of compliance, they don’t think whatever the links are worth is worth the hassle.
I don’t know why the Liberals thought anything else was going to happen.
Wrapping All That Up
I don’t think that the tech companies should be forced into these contracts. I do not understand the justification here. Why should media companies have special treatment? What is the argument that a media company should be paid for the privilege of linking to their paywall-locked content? And if there is a justification there, why would it only apply to media companies?
Like I said, my impression is that this is a cash grab untethered to any real justification to subsidize a failing market. Meta and Google see no reason to participate in the Liberals wealth-relief program, and are signaling that they may pick up their toys and go home if the issue is truly forced. Frankly, they probably don’t get as much out of the relationship as is being asked of them. The government is sticking to their guns, perhaps because they see a necessity to prop up media, and don’t see another avenue to pillage loot out of.
But eventually, rubber has to hit the road. I don’t think that Meta and Google will actually shutter their Canadian operations. Google has significantly more skin in the game than Meta, and is negotiating with the government of Canada on what might be a more reasonable compromise. But that last sentence is bizarre: Normally, these kind of negotiations happen before the law receives royal assent, but the Liberals were so sure that they could push this through and continue on as if nothing had happened that they blasted through the consultation process, often ending proceedings early. They seem legitimately confused and flat-footed right now. Which is concerning, the clock is ticking, and in six months, the law takes effect.
Things like this tend to get sorted before they come to a head, but we’re talking about a lot of money, the government doesn’t have a whole lot of leverage, and they seem really dug in here. I’d put a pin in this one and say it’s 50/50 that we’re talking about this more urgently around Christmas.