Link Taxes (Canada’s Version): How the Online News Act Embodies the Struggle to Regulate Media Reliance on Big Tech

By: Michael Borell

Digital access to the news has changed more than just availability to willing consumers. Rather than relying on print subscriptions as the main source for revenue, newspapers view digital advertisements and online subscription as the main sources of revenue. The more consumers that access news websites, rather than prints, can lead to more sustainability for the news company.  The ability to attract a consumer to a news website then, makes news companies reliant on digital platforms, such as a search engine, in order to find the website. The issue then, is that the news companies rely on these platforms to host the news sites in the hopes that potential consumers will go to that news site, but if not, the platform still has the advantage of hosting that site. But is that the best solution, or is relying on digital platforms merely the price to pay in order to participate in the digital market?

In an effort to counter this reliance and attempt to support journalism, some governments have introduced legislature to try and place the news companies and digital platforms on a more equal level. Canada has recently passed bill C-18, otherwise known as the Online News Act, on June 22, 2023. The goal of the act was to require “digital news intermediaries” to carry Canadian news, pay Canadian news organizations for that carriage or invocate mandatory bargaining, and to provide a mechanism to set a rate that the Canadian news organizations can force the intermediaries to accept through mandatory arbitration. A “digital news intermediary” is defined as “online communications platform, including a search engine or social media service . . . that makes news content produced by news outlets available to persons in Canada.” However, the Online News Act only applies to dominant digital news intermediaries that meet certain requirements. The only intermediaries that meet the requirements are Google and Meta, the parent company of Facebook. Essentially, the bill would require that every time Google or Facebook links to a Canadian news site, they would have to pay. Estimates from the government have the companies paying at least 4% of search or social media revenues, nearly $234 million. Google and Facebook have both put out messages announcing that they would comply with the bill, in that they would cease linking to Canadian news sites. This is not the first time a country has introduced legislation regarding payment for news sites, nor is it the first time that Google and Facebook have taken action to avoid payment.

The Online News Act is largely similar to Australia’s 2021 News Media Bargaining Code. The Australian bill required digital platforms to pay news sites in order to link content in news feeds and search results, with government-appointed arbitrators intervening if a price could not be decided. Google and Facebook took issue, saying that the bill would “create an incentive for media companies to jack up prices, sending cases to an arbiter who will determine final payment.” They pointed to an official Australian report which estimated 75 percent of negotiations would likely depend on these Australian appointed arbitrators. At first, the tech companies threatened to remove Australian news sites, with Facebook actually doing so. Australia would later amend the bill, taking into account agreements already made with local news media before the government decides if the bill applies to the companies. Additionally, a two-month mediation period would be included for the news agencies and digital platform companies to make deals before entering arbitration. Following the amendments, Google and Facebook announced they would return to linking Australian news sites.

Spain had also tackled the tech companies in 2014. Nicknamed the “Google Tax,” the Spanish government required platforms that post links and excerpts from news sites to pay a fee to the Association of Editors of Spanish Dailies. In response, Google shut down the Google News service in Spain. Eight years later, Spain overturned the Google Tax, instead joining the European Union copyright directive. Under these new laws, news publishers could charge for digital platform holders to use their links or let them be used for free. Being able to more freely negotiate with news media, Google re-opened Google News in the country.

            Google and Facebook’s responses to the Online News Act were predictable. Every time a country has instituted a similar law, the digital platform holders threaten and follow through in removing links to the news sites. On August 1, 2023, Facebook announced that they have begun the process of ending news availability in Canada. In a statement by Meta, the Online News Act was called unworkable, and that the basic premise that they unfairly benefit from sharing news media sites was incorrect. Google has also called the law unworkable, stating “[f]ree linking is the foundation of the open web, and . . . is essential to communication online.” 

            Criticism from tech companies aside, Canada’s Online News Act still brings with it many issues. Smaller news media companies face the brunt of the damage, being taken off of the largest search engine and social media websites when they rely on this exposure the most. Larger legacy news organizations are expected to take priority in negotiations with the digital platforms, with the smaller outlets left to fight for the scraps. The Computer & Communications Industry Association, an international advocacy organization, has also highlighted issues with the Online News Act’s framework. One such issue is the premise of news organizations being owed for their access. If the bill is a result of the market’s failure to properly compensate news sites, then all “digital news intermediaries” should be liable for compensation agreements. Yet, only two intermediaries, Google and Meta, are targeted. Both being American corporations, Canada may open itself to legal battles based on compliance with the United States-Mexico-Canada Agreement.

            The Online News Act will come into effect on December 19, 2023. The Federal Heritage Minister, Pascale St-Onge has described it as not perfect, but necessary to address the issue of reliance on digital platforms.  It may be too late to make adjustments that bring back Google and Facebook, to give back some bargaining power in the same way Australia, Spain, and other countries have done. Already, the absence of the digital platform owners have hit smaller news sites, with website traffic being cut in half, as well as layoffs and hiring ceasing. University of Ottawa professor Michael Geist has referred to the bill as a disaster, and that “[a]voiding the Canadian outcome” is a top priority for countries looking into incorporating similar media regulations. California and the United States federal government are now taking the first steps in creating their own news media regulatory laws.  U.S. Lawmakers should avoid the same mistakes as Canada and look to prior examples of similar link tax laws being implemented. They should analyze the impact these laws have on both large and small news agencies and consider whether leaving the negotiations in the hands of the news sites may be the best course of action.

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