Where Did Our News Go? A Look at Bill C-18
Cindy Lin, 2L, Volume 82 Executive Editor of Forum Conveniens and Erin Lee, 2L, Volume 82 Forum Editor
Starting August 2023, Facebook and Instagram users in Canada have been unable to view Canadian news content on their social media platforms. This sudden change is due to Meta’s reaction to Parliament’s enactment of Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada, (the “Act”) in June 2023. Known as the Online News Act, the Act imposes a duty on tech companies such as Google and Meta to share online advertising revenues generated from sharing news links with Canadian news companies. Google and Meta have responded by removing Canadian news from their platforms. What does the Act mean for the Canadian news industry, and how will it impact the average social media user in Canada?
The Rationale Behind the Act
The Canadian journalism industry has experienced drastic revenue decline over the past few years. Declining readership and the digitalization of news have culminated in a 21.9 percent drop in operating revenue from 2018 to 2020. The COVID-19 pandemic exacerbated these financial losses; as businesses closed and events were cancelled, the demand for print advertising fell. Since 2020, more than 60 news publishers have discontinued operations, and over 450 have closed since 2008.
The shift from print to digital news has had a particularly injurious impact on news companies. As of 2023, most Canadians consume their news from online sources; over 70 percent of Canadians obtain their news online, and nearly half from social media.[1] Digital platforms have replaced print newspapers as the preferred medium of news consumption; consequently, news companies have become dependent on these platforms to distribute their content. Nearly one third of the Globe and Mail’s traffic comes from Google, which displays links to Canadian news on its Search, News, and Discover products.
Parliament passed the Act in response to the “market imbalance” in advertising revenue between news companies and the tech companies platforming this news. As media outlets have digitized their content, their advertising has gone online as well. Rather than solicit and publish advertisements directly, news companies rely on intermediaries such as Google, which runs auctions where advertisers bid for their advertisements to appear in certain search terms. This system has enabled Google and Meta to virtually monopolize the online advertising market; combined, the two tech companies have over 80 percent market share. The Act represents Parliament’s effort to ensure that Canadian news companies are compensated fairly for their work by forcing tech companies to share the profit from the distribution of Canadian news.
The Act is modelled after Australia’s News Media and Digital Platforms Mandatory Bargaining Code (the “Code”), which also requires digital platforms to compensate news companies for their content. As in Canada, Facebook initially removed all Australian news content from its platform. After the Code was amended, Facebook and Google eventually negotiated profit sharing agreements with news companies. It is estimated that Australian news companies made $200 million AUD from these agreements, and Canada is predicted to make over $300 million CAD annually.
What does the Act do?
The Act creates a bargaining framework for news companies and digital news intermediaries (“DNIs”) to collectively negotiate agreements to share online advertising revenues. Its stated purpose is to regulate DNIs and thereby enhance fairness in the Canadian digital news marketplace. Qualifying DNI operators are required to bargain with eligible Canadian news businesses to reach a monetary agreement regarding the distribution of online advertising revenues generated from reproducing or facilitating access to the business’ news content.
The Act specifies criteria to determine the DNIs and news businesses affected by its regulations. It defines DNIs as online communications platforms that make news content produced by news outlets available to persons in Canada. This definition expressly excludes platforms that are primarily private messaging services, such as Whatsapp. Similarly, not all news businesses are eligible for protection under the Act. Businesses can participate in the bargaining process if they are a Canadian journalism organization that produces original news content of general interest primarily for the Canadian news marketplace.
The framework contemplates up to three steps in the bargaining process. In the first step, DNI operators and Canadian news businesses enter into negotiations over 90 days. If the parties do not reach an agreement regarding the distribution of profit, they enter into mediation sessions for 120 days. The final step is triggered when the parties do not reach an agreement after the mediation period and at least one of the parties wishes to enter into arbitration. The Canadian Radio-television and Telecommunications Commission (the “CRTC”) appoints a panel of three arbitrators that selects a final offer made by one of the negotiating parties having regard to the value added to the news content by each party, their respective benefits from the DNI’s publicization of the content, and their bargaining power imbalance.
Key Sections of the Act
The Act casts a wide net, subjecting a broad scope of activities to the bargaining process. Per section 2(2), DNIs make news content available if they reproduce any portion of it or facilitate access to it “by any means”, including indices, aggregation, or ranking. Under this definition, posting summaries of news articles produced by Canadian news businesses or sharing links could subject DNIs to a duty to bargain.
However, the duty does not automatically apply when DNIs share Canadian news content. Under section 6 of the Act, there must be a significant power imbalance between the DNI and the news business, which depends on three criteria: the DNI’s size, whether the market gives the DNI operator a strategic advantage over news businesses, and whether the DNI occupies a prominent market position. These conditions are consistent with the Act’s purpose of enhancing fairness in the news marketplace.
Furthermore, section 11 provides that DNIs may be exempt from the requirements of the Act if they have already entered into agreements with news businesses that satisfy certain criteria, such as fair compensation and no use of corporate influence. Other helpful sections to note include section 19, which lays out the steps and scope of the bargaining process, and section 25, which governs any mediation or arbitration.
Social Media Company Responses
Numerous social media companies have reacted to the Act by indicating they will block news outlets, as defined under the statute, from their platforms. In particular, Google and Meta view this legislation as an unfair tax on links—links that, arguably, help direct web traffic to news outlets.
Meta plans to block news publishers and broadcasters that meet the criteria set out in section 2 of the statute. This process is currently underway and Facebook and Instagram users in Canada can no longer access news from these agencies. The block will also impact Meta’s platforms, such as reels and stories (temporary photos and videos that disappear after 24 hours), which allow companies to post news links to articles. Users in Canada will no longer be able to share or view news articles and other content. However, Meta is collaborating with a digital literacy expert on a guide to teach users about other ways they can obtain news on the internet.
Like Meta, Google indicated they would remove news links in Canada by the end of the year. This includes removing links to news from search results, news pages, and a curated content feed known as Google Discover. However, Google is actively consulting the government in hopes of finding an alternative solution.
How does the Act impact Canadians?
Research from the Reuters Institute indicates that Google and Meta’s responses to the Act will affect almost one in two Canadians who cite social media as their primary source of news. Social media is the third most-used method to access news in Canada, after the internet (which is the main source of news) and television.
One of the ramifications of this law would mean that the Canadian media ecosystem would become beholden to certain media behemoths that curate and control what people see online, which would reduce independent reportage in Canadian journalism. The federal government says Google and Facebook control 80 per cent of the online ad market in Canada—as such, the impact on certain media companies will be devastating. Companies have been planning alternative methods of sharing their content.
However, Canadians can still go directly to news sites and receive alerts about news content. Although the Act may have the effect of leading users to rely on other unverified stories, making it difficult to decipher fact from fiction, Canadian users relying on social media as their primary source of information can identify other reliable means of obtaining news. Since the block applies to publishers as set out and defined in the legislation, users in Canada can still find news from international outlets.
[1] Nic Newman et al, Reuters Institute Digital News Report 2023 (Oxford: Reuters Institute, 2023) at 115.