Question Period Note: The Online News Act and the Regulations respecting the application of the Act

The Online News Act (the Act) received Royal Assent on June 22, 2023, and will come into effect in its entirety no later than December 19, 2023. The Government will issue regulations to provide clarity on which platforms will be subject to the Act and how they can obtain an exemption from the mandatory bargaining and final offer arbitration provisions under the framework. Proposed regulations were published in the Canada Gazette, Part I on September 2, 2023, for a 30-day consultation period. The Government is currently reviewing the submissions. In a public statement, Google said the government’s proposal has not fixed what it sees as fundamental flaws with the legislation.

• Democracy withers without access to news and information. Canadians expect dominant platforms to contribute their fair share to supporting journalism.

• The Online News Act ensures that the revenue of digital platforms is shared more fairly with Canadian news outlets.

• The Government’s proposed regulations provide a reasonable and viable framework for both news businesses and platforms.

If pressed (Google’s reaction):
• The Government will continue to engage with Google on their concerns, including how they could be addressed in the final regulations.
 

• News and journalism are crucial to democracy as they serve to inform communities, drive civic engagement, and counter the rise of disinformation. The Canadian news sector is under significant financial pressure.
• Digital platforms hold significant reach and influence in Canadian society. A small number of digital platforms derive significant financial benefits from their operations in Canada, including the selling of audiences to advertisers; thereby undermining the traditional revenue model that supports news media. In 2022, online advertising revenues in Canada were over $14 billion, with Google and Facebook receiving nearly 75% percent of these revenues. Meta and Google have reached commercial agreements to fund certain Canadian news media businesses directly and are building partnerships with several news organizations. These contributions have been made on a voluntary basis without regulatory oversight. Meta has since announced that it is terminating its agreements both in Canada, as well as in other countries.
• Beginning in April 2021, the Department of Canadian Heritage engaged with a variety of stakeholders in the sector on how platforms should support the news sector, from which key policy considerations regarding fair revenue sharing between digital platforms and news media were developed.
• The Minister of Canadian Heritage’s 2021 mandate letter requested a bill be introduced as soon as possible to enact a bargaining framework. Bill C-18, the Online News Act, was tabled on April 5, 2022. The Bill received Royal Assent on June 22, 2023.
• This new legislation will promote a level playing field between news media and large digital platforms when negotiating fair commercial deals. The proposed approach is flexible, market-based, and will lead to increased bargaining power for Canadian news outlets vis-à-vis large digital platforms.
• The key objective of the Act is to encourage platforms and news businesses to reach voluntary agreements. Failing that, it provides for mandatory negotiation, backstopped by final offer arbitration. Large platforms that have a significant bargaining power imbalance with news businesses are subject to this legislation. A platform is considered to have a significant bargaining power imbalance if it is large and occupies a prominent position in a Canadian market (e.g., social media, search) that gives them a strategic advantage over news businesses.
• The Act does not set a price for creating hyperlinks, nor does it set a cost for clicking on these hyperlinks. The Act is triggered when news content is made available to users. This includes reproducing, indexing, aggregating, or ranking the content.
• There are four ways for news businesses to be eligible under the Act: as a Qualified Canadian Journalism Organization under the Income Tax Act or a licensed campus, community or Indigenous broadcaster, as a Canadian organization covering news of general interest, and as an Indigenous news outlet.
• The Act also defines the role and tools of the Canadian Radio-television Telecommunications Commission (CRTC) as the regulator that will administer the framework. The 2022 federal budget allocated $8.5 million over two years to help the CRTC establish a new regulatory framework to carry out the implementation of Bill C-18. The CRTC plans to begin consulting about the eligibility criteria for news organizations, the bargaining and arbitration process, and the code of conduct in the fall of 2023.
• In response to the Act, both Google and Meta have threatened to block access to Canadian news content on their services. One issue the platforms have raised is a lack of clarity about how to meet the requirements for an exemption from mandatory bargaining and final offer arbitration. In August 2023, Meta announced that it was beginning to permanently end the provision of news to Canadians on its platforms. In response, the federal government, as well as some provinces and Canadian companies, have suspended advertising on Meta in protest to the company’s actions.
• The Government has issued regulations to provide clarity on which platforms will be subject to the Act and how they can obtain an exemption from the mandatory bargaining and final offer arbitration provisions under the framework. Proposed regulations were published in the Canada Gazette, Part I on September 2, 2023, for a 30-day consultation period, ending October 2, 2023.
• The proposed regulations establish a formula that would have Google and Facebook inject approximately $230 million into Canada’s news sector. Google has previously expressed concern about the amount it would have to pay under the law. It has said the estimates have gone up since the bill was first discussed. The other issue raised is a lack of clarity about how to meet the requirements for an exemption from mandatory bargaining and final offer arbitration.
• In a public statement, Google said the government’s proposal has not fixed what it sees as fundamental flaws with the legislation. It also warned that making wholesale changes to the text of the Online News Act may be the only way to address its concerns. Google has warned that it could stop Canadians from searching for news on its platforms unless the government makes further changes. In August 2023, Meta announced that it was beginning to permanently end the provision of news to Canadians on its platforms. In response, the federal government, as well as some provinces and Canadian companies, have suspended advertising on Meta in protest to the company’s actions.

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