THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Wednesday, June 16, 2021
The Standing Senate Committee on Transport and Communications met by videoconference this day at 6:30 p.m. [ET] in consideration of Bill S-225, An Act to amend the Copyright Act (remuneration for journalistic works); and, in camera, in consideration of a draft agenda (future business).
Senator Michael L. MacDonald (Chair) in the chair.
[English]
The Chair: My name is Michael MacDonald. I’m a senator from Cape Breton, Nova Scotia and chair of the committee. Today, we are conducting this meeting of the Standing Senate Committee on Transport and Communications by video conference. Participants are asked to have their microphones muted at all times unless recognized by name by the chair and will be responsible for turning their microphones on and off during the meeting.
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Today, we are continuing our examination of Bill S-225, An Act to amend the Copyright Act (remuneration for journalistic works). We have with us Professor Michael Geist, Canada Research Chair in Internet and E-commerce Law; Jamie Irving, Chair of News Media Canada; and Kevin Chan, Director of Policy, Canada, with Facebook.
I would like to thank all of our witnesses for joining us this evening. I invite Mr. Geist, Mr. Irving, and Mr. Chan to give their opening remarks, followed by questions from the committee members.
Professor Geist, we begin by opening the floor to you. You have the floor, sir.
Dr. Michael A. Geist, Canada Research Chair in Internet and E-commerce Law, Faculty of Law, Common Law Section, University of Ottawa, as an individual: Thank you very much. Thank you to the committee for the invitation. Good evening. As you heard, my name is Michael Geist. I’m a law professor at the University of Ottawa where I hold the Canada Research Chair in Internet and E-commerce Law, and I’m a member of the Centre for Law, Technology and Society. I appear in a personal capacity representing only my own views.
I would like to thank the committee for the invitation to appear on Bill S-225, which both raises some critically important national policy issues and gives me the opportunity to talk about something other than a certain Broadcasting Act reform bill.
Senator Simons appears on my podcast this week, and she rightly notes that no matter one’s view of the bill, it has sparked discussion and public debate on the future of the media and journalism in Canada, which is something we all should welcome.
That said, I come today with criticism of the bill, which I respectfully think is an ill-advised foray into copyright reform. First, I think it misunderstands the technology and doesn’t address the actual issue at all. Platforms such as Facebook and Google include hyperlinks, sometimes accompanied by the headline or a short blurb from the underlying article. Bill S-225 would seemingly not touch those actual uses on the services since it excludes hyperlinks and is limited to the work or a substantial portion thereof. I should caution that the solution is not to expand the scope of the bill by covering hyperlinks, which would run counter not only to established law, but create a risk to freedom of expression by limiting the ability to cite other works.
Second, even if a blurb were viewed as a substantial portion of the work, copyright law would address this already and require either a licence or that the work be covered by an exception such as “fair dealing” which, as I’m sure you know, the Supreme Court of Canada views as a user’s right. In this instance, I think there is a strong argument it would qualify as fair dealing, which the Copyright Board would be required to consider as part of its assessment, leaving little for which to actually compensate.
Third, the proposal does not address the fact that many of the articles on platforms are posted by news organizations themselves. To compensate those organizations for articles they post would create an odd dynamic where they could effectively guarantee payment through their own social media posts. Those posts, which are subject to a licence agreement that the organization itself agree to, should not be compensated and would also require exclusion by the board.
Fourth, the Copyright Board is known for many things but speed of process is not one of them. Giving the board a new tariff to address will take years of hearings and litigation, providing little, if any, remuneration until the latter half of the current decade.
Beyond my concerns about Bill S-225, I have a broader concern with government intervention into this issue. This is not to say that there should not be government support for the sector. I believe there should. The sector lobbied heavily for government support and got it, with hundreds of millions of tax dollars poured into programs and tax breaks. The programs we’ve seen introduced — the Local Journalism Initiative, the Canadian journalism labour tax credit and the digital news subscription tax credit — offer some hope, provided they maintain a neutral implementation that does not favour legacy companies over new, innovative services.
However, the new demands for further government intervention, whether by way of legislation or intervening in negotiated licensing, has to date caused more harm than good. When Canadian Heritage Minister Steven Guilbeault calls linking to social media stories “immoral” even as he advertises on those services and regularly links to online stories, the message is that government intervention is on the way.
This creates harms in several ways: First, there have been numerous deals in Canada, including with some members of News Media Canada. The suggestion that Le Devoir can strike a deal but the Toronto Star can’t is absurd. As some organizations hold out hope for government intervention in the hope of getting a better deal, the delays become an own goal and hurt the sector at a difficult time.
Second, the threat of government intervention runs the risk of self-censorship by Canadian media organizations. Indeed, I know of instances over the past year where organizations decided against running approved opinion pieces critical of Minister Guilbeault, leaving the unmistakable sense that criticizing the minister who was most likely to intervene on behalf of the sector was not good for business.
Third, this blurring of editorial and business occurs in other ways. I believe the lobbying campaigns have hurt the credibility of Canadian media organizations by devoting front pages to self-interested lobbying efforts that don’t provide value for subscribers but do call into question the credibility and impartiality of the publications themselves.
Fourth, the policies invariably seek to protect legacy companies at the expense of innovative start-ups that are finding alternative ways to cover the news and develop new business models. Support for the sector is one thing, but creating barriers to innovation is entirely another. We must be careful that in the rush to help the sector — and I again emphasize, help is a good thing — we do not ultimately harm the long-term health of the future of journalism in Canada. I look forward to your questions.
The Chair: Thank you, Mr. Geist. Next, we’ll hear from Mr. Irving.
Jamie Irving, Chair, News Media Canada: Thank you for inviting me to appear this evening.
Our view at News Media Canada is that Facebook’s and Google’s monopoly practises have resulted in a market failure for news media in Canada and abroad. Facebook and Google recorded global revenues of C$108 billion and C$230 billion respectively in 2020. In Canada, Facebook had revenues of $3 billion; Google had revenues of $5 billion. Yet they refuse to fairly pay news publishers for news content.
Over 80% of online advertising revenue in Canada has been swept up by two companies, Facebook and Google. Local news and journalism jobs are disappearing due to the monopolistic practices of Google and Facebook.
The role of journalism in Canada is under threat. Local news and journalism jobs are disappearing. News Media Canada’s members employ well over two thirds of Canada’s journalists. Without an increased access to online advertising revenue, publishers estimate losses of $5 million to $600 million a year, with publisher revenues declining from $5 billion in 2008 to $1.7 billion in 2020. Our industry has declined from a $5-billion industry to a $1.7-billion industry, and we’re forecasting annual losses as an industry of about $500 million a year.
News Media Canada is advocating for a policy solution that does not require funds from the government or consumers. Governments, businesses and the public are seized with the negative actions of the global web giants, with the public strongly supporting government action. The objective is to fix market failures caused by Facebook and Google and to support journalist jobs.
Canada and other countries have examined several options, which include legislation to enforce collective bargaining and market-based negotiations, copyright legislation, creation of a new fund to support journalism and taxation of the global tech and web platforms.
News Media Canada organizations examined numerous policy models and recommended the best approach for publishers of all sizes and regions. One long-term fix identified is the creation of a digital platform act to enforce collective bargaining and market-based negotiations directly between publishers and the web giants.
Legislation will create a licensing regime where publishers can negotiate fair compensation with binding arbitration between publishers and the web giants.
Daily, regional, community and ethnocultural news publishers account for more than 90% of news readership, and all are recommending a digital platform act.
Broadcasters, both private and public, recommend legislation and prefer this approach to the creation of a fund. Unifor and tech innovators such as Microsoft also support the legislative approach.
The governments of Australia, the United Kingdom, the European Union and France all endorse legislation. Australia adopted a licensing regime allowing publishers to negotiate directly with Facebook and Google. The Australian competition chair has called the legislation a success. Publishers have negotiated long-term contracts of substantial size for their content. The Financial Times was reporting it is roughly as US$200 million a year, for a country that is about two thirds the size of Canada in terms of population. Australia’s government passed legislation requiring the web platforms to negotiate compensation arrangements and they complied. These arrangements are tied to the number of full-time journalists employed by the organization.
If adopted in Canada, our recommendation will help reverse the decline of journalism jobs and ensure news content is available online. News Media Canada’s members are prepared to commit that any remuneration received from the platforms will be used for newsroom funding only.
Just one final remark, I’d like to point out that the new media is not thriving in this ecosystem either. We saw HuffPost Canada recently shut down. New media companies like Vox Media and Buzzfeed are all struggling under the current environment. We feel strongly that there is a lot that can be done to regulate the platforms, but it has to begin with access to digital advertising markets and fair market access. We think that is the fundamental problem.
Thank you very much for your time this evening.
The Chair: Thank you, Mr. Irving.
Finally, Mr. Chan, you may proceed.
Kevin Chan, Director of Policy, Canada, Facebook: Thank you, Mr. Chair and honourable senators, for inviting me to your meeting. I apologize that I was unable to appear last week, but we had a long-standing commitment to host some of our News Innovation Test partners at the Canadian Journalism Foundation, or CJF, gala and also to celebrate Indiegraf, which won this year’s CJF-Facebook Journalism Project Digital News Innovation Award.
[Translation]
It is important to make clear that Facebook recognizes that these difficult times are having a very negative impact on the Canadian media industry. The last two decades, as consumers have shifted from print to the Internet, have been very tough on the media.
[English]
On a personal note, I appreciate the tremendous value of newspapers. Many years ago and before I worked at Facebook, I was a freelance writer who contributed op-eds, essays and book reviews to The Globe and Mail and the Ottawa Citizen. I have many happy memories of doing that.
Facebook works directly with Canadian news publishers, large and small, to help them maximize the value that free Facebook tools provide for their businesses. This includes free distribution of the news links they share on Facebook, which sends people directly to their websites, a value we estimate to be in the hundreds of millions of dollars per year for the Canadian news industry alone. Jeff Elgie, the CEO of Village Media based in Sault Ste. Marie and a member of News Media Canada, estimates that in the month of January 2021 alone, Facebook and Google generated 24 million page views for Village Media for free, which he calculates is worth about $480,000 to his news business.
We have gone further by directly investing $18 million over seven years in partnerships and programs to support the development of sustainable business models for Canadian news organizations. I would like to take you through three examples of our investments.
First, one of our signature investments is the Facebook-Canadian Press News Fellowship, which began in 2020 as a $1-million program to create eight new local journalism positions across Canada. CP publishes their stories to its wire service, making the fellows’ work available for distribution to more than 1,000 Canadian news outlets in the CP network and in both official languages. We announced back in March a three-year renewal of this program. Just yesterday, during National Indigenous History Month, we were delighted to introduce two new Indigenous news fellows at CP, who will bring new diversity to the newsroom and bring the total number of news fellows to 10.
Second is Facebook’s local grants to publishers. For COVID, we announced in April 2020 a total of $1 million in grants to support Canadian and U.S. local news organizations covering the coronavirus. Eighty-one Canadian publishers each received a $5,000 grant to cover unexpected costs associated with reporting on the crisis in their communities, including The Coast, Halifax’s Weekly; Temiskaming Printing from New Liskeard Ontario; La Gazette de la Mauricie from Trois-Rivières; Autour de l’ile from St-Pierre Ile d’Orléans; Clark’s Crossing Gazette in Warman, Saskatchewan; Le Franco from Edmonton, and the Medicine Hat News.
Third and final is the Facebook Accelerator Program, which helps news publishers navigate the digital transition to build sustainable businesses. Since May 2019, 18 Canadian publishers have participated in the Facebook Accelerator Program, including Postmedia Network Inc., The Globe and Mail Inc., La Presse, Northern News Services Ltd., and Brunswick News Publishing Co.
We announced earlier this month paid commercial deals with 14 news publishers for our Facebook News Innovation Test, a new initiative over and above the $18 million in news investments I referred to earlier. The participating publishers represent a broad cross-section of Canadian media, spanning all regions of the country, including digital-first and traditional newspapers in both official languages. They include Le Devoir, the publisher of the Winnipeg Free Press and the former chair of News Media Canada, La Coopérative nationale de l’information indépendante, the publisher of Le Soleil and Le Droit, and Canada’s National Observer.
As part of this test, we will pay participating publishers for the ability to link to additional news stories that are not already posted on Facebook, helping us experiment with ways to enhance the experience for publishers and Canadians on the platform. This could mean adding new news links to places on Facebook like the Coronavirus (COVID-19) Information Center or the Climate Science Information Center or for an entirely new surface or use case, over time.
It is important for me to be clear what these types of paid partnerships are not. Currently, when Canadians on Facebook see news content in their feeds, they typically see a short preview text generated by the publishers themselves and then a link to take the user from Facebook to the publisher’s own website. We do not pay publishers for sharing this kind of content on Facebook, and this does not change under the News Innovation Test. They choose to do so because it drives value to them.
As noted earlier, Village Media assesses the value of this kind of free traffic to be close to half a million dollars in one month alone. Another example is The Globe and Mail, which achieved record digital subscription growth in 2020, in part, by combining its AI platform and publishing strategies with Facebook’s tools.
Senators, I would be pleased to share with you a case study that we have publicly published with The Globe and Mail, if you would like to see it afterwards.
With respect to Bill S-225, I believe that some senators and earlier witnesses have already been quite thorough in pointing out and assessing its weaknesses. I would simply add that Facebook takes intellectual property rights very seriously. Copyright-infringing articles are violations of our community standards, and we remove them from our platform when we are in receipt of a valid report from a rights holder.
[Translation]
In conclusion, finding a sustainable and equitable way to foster a robust media ecosystem in Canada requires goodwill and co-operation from publishers of all sizes, digital platforms, government, and people who value news and are willing to pay for it. Facebook can play a role in this, but it cannot do it alone. It’s time to come together to ensure that we can set journalism on a long-term sustainable path.
[English]
With that, Mr. Chair, I am happy to answer any questions from the committee.
The Chair: Thank you, Mr. Chan. We will now proceed to questions.
Senator Dawson: Since we don’t have time, I will shorten my history.
Mr. Irving, I remember when Irving was the target of being too big when it came before parliamentary committees 30 years ago, so times have changed.
That being said, can you provide the committee with background on why some publishers have signed agreements with Facebook for content compensation? And to your knowledge, have any other Canadian publishers signed compensation agreements with Google or other organizations and have not made them public?
Mr. Irving: I can’t speak for some of the other members on why they signed those deals. I wouldn’t want to speculate as to what their motives are. In terms of total number of journalists, they represent a very small number of our actual membership. There are some bigger titles. They were also approached by Google, I think, to sign deals, and I’m not aware that anyone signed a deal with Google.
A year ago, we were told that Facebook wouldn’t entertain any sort of deals of this nature. This was a new program that was revised, since information about the Australian settlement started to come forward. It’s our understanding that after legislation, the settlements in Australia were substantially larger than the ones being offered in Canada. That’s why most of the publishers feel strongly that we would be in a much better position to negotiate something collectively with legislation from the Government of Canada than doing individual deals on our own. We’re big proponents of the Australian model, if you will.
Senator Dawson: Thank you.
Senator Carignan: I listened to you and you explained what you wanted. You explained that you need to have a collective agreement with Facebook like they have in Australia, and that’s exactly my intention with this bill. That’s exactly what the bill is doing, actually, forcing a negotiation for a collective agreement, and if we don’t come to an agreement, we get a mediator or an arbitrator. In this case, it’s the Commission on Intellectual Property Rights that would impose a tariff.
That’s exactly the same goal you want to achieve. I need to understand why you think this bill is not enough for your intentions because I think we are very close.
Mr. Irving: Thank you for the question. I started lobbying for some kind of change five or six years ago, and I thought that the copyright way was the way to go. I think there are a number of issues with the way the platforms are organized, not being taxed properly. They are not accountable for the content they publish, so they get the benefits of being a publisher, but they don’t have the burdens of being a publisher so they’re not accountable. They’re not liable for anything they publish, the same as a publisher would be. That’s why we hire journalists and editors, because of potential lawsuits.
There are a number of problems, and I think that copyright ranks up in one of those areas as well. It’s my understanding that the French government took the approach of trying to put some legislation or regulations in place through the copyright channel. I would actually agree with Professor Geist in that trying to reform copyright law is extremely cumbersome, time-consuming and very complicated.
When the Australians looked at this, they have a different competition bureau than we do in Canada, but I do think there is some merit in reforming copyright laws. Those laws, as I understand them in Canada, predate the modern internet, so I think they should absolutely be updated to accommodate the technological changes that have taken place. With the technology they describe, they say it’s a lot like World War I, where we’re using 19th century rules of engagement with 20th-century weapons. This wasn’t disruptive technology; it’s destructive technology.
I’m just not sure that copyright is the easiest or most efficient way to achieve the goals of reform, and right now time is of the essence. What we really need is speed and clarity.
If you look at the approach that has been taken with the Australians, it has been incredibly efficient and very effective, and it’s providing material settlements that are far greater than the French achieved with their copyright approach, probably about five times greater than going the copyright route in France.
To me, you’re on the right track. I would just use a different department, the department of ISED rather than, say, heritage.
Senator Cormier: Excuse me, I need to interrupt. Can you confirm to me that the witnesses have access to interpretation?
Mr. Irving: I apologize. There seems to be an issue with interpretation for me.
Ericka Dupont, Clerk of the Committee: Mr. Chair, if our witness is not getting interpretation, I would recommend that we confirm and address it.
The Chair: Certainly. Senators, we will attempt to resolve the interpretation issue.
We are now prepared to continue. Senator Simons, please go ahead with your question.
Senator Simons: Thank you for being here, witnesses.
I spent 23 years working for Postmedia, Mr. Irving, so I’m intimately familiar with the plight of the newspaper industry. But it seems to me that, as you outlined, the newspaper industry has lost billions and billions of dollars in advertising. What Mr. Chan is talking about is giving back some millions of dollars. It doesn’t seem to me that you could hope to receive back from Google, Facebook, Workopolis, Kijiji and all the others that have taken the advertising, anything like the amount of money that would be required to restore newspapers to the condition they were in, in the past.
When you talk about the Australian model, which very much privileged Rupert Murdoch’s media organizations, how do you imagine that you would have a collective agreement that would in any way restore the kinds of revenues that newspapers always relied upon, especially newspapers like yours, which had geographic monopolies in the places where they operated?
Then I would like to ask Dr. Geist the following: What are the consequences to the evolution of new media forms if we prop up old models?
Mr. Irving: The economics of the business have changed a lot. The billions of dollars that we used to generate from advertising went toward subsidizing printing and distribution costs. It takes a huge amount of fixed costs to run a newspaper.
In the digital world, we don’t need nearly the same revenue that we once required, but there are really only two ways in that digital world to generate revenue to support journalists. All you need to do is pay for your IT costs and your journalists, so it’s a much different structure to operate under. As an industry, we have spent the last 10 years taking out fixed costs, outsourcing distribution, rationalizing our printing operations and investing heavily in digital transformation.
The kind of settlement we’re talking about in Australia is generating, from my understanding, close to 30% of the newsroom costs. Most of them are signing between three- and five-year deals. Those are material revenue streams that are actually having a huge impact on journalism and bringing journalists back to life. This is based on the head count of journalists.
In our view, there are only two companies here that are taking the advertising dollars: Google and Facebook. They’re not hiring any journalists. With all due respect to Mr. Chan, 10 reporters in CP does not cut it in terms of Canadian journalism. There are programs they have put out to use tools better — and those are great; we appreciate those — but we’re talking about a lack of access to the digital advertising market because of two companies. This is really a monopoly situation.
We’ve seen a lot of small community publishers out west, not even bother to transition from print to digital because they couldn’t see a path to a future; they couldn’t see any access to the digital advertising market to make a go of it. So they’ve been slow.
That’s the reality of it.
There are no new journalists coming onside, except for the 14 organizations that signed up with the Facebook deal, but that would be a fraction of the 3,100 members. I would bet you it’d be fewer than 100 journalists, and currently, there are about 3,100 journalists in the news media environment.
One final point is that News Corp. did do well by that deal. They made a separate deal that was on a global basis for their U.S. and U.K. properties, as well as their Australian properties. However, it’s our understanding that, right now, there are 150 small- and medium-sized publishers in Australia, of all shapes and sizes, that are collectively negotiating an equivalent deal with Google. I’m not sure where that stands. I think they have been talking to Facebook as well.
I would encourage the committee to talk to some of the Australians, if you get a chance, as well as some of the Americans on this. There’s a fantastic guy by the name of Robert Whitehead who has been advising us on their progress in Australia. The results they are having and how they’re dealing with this are quite telling.
The market access problem is the number one problem. Two weeks ago, Google was levied a fine of C$330 million in France for antitrust violations. The U.S. government is actively pursuing legislation in terms of antitrust. Amy Klobuchar and Maria Cantwell are both pushing hard on antitrust legislation in the U.S. Senate.
I think you have to identify what the problem is with clarity and focus, and then figure out what the meaningful remedy is for that, which can be implemented in an efficient time frame. I hope that answers your question.
Dr. Geist: Thanks for that, Senator Simons. It’s easy to beat up on Google and Facebook. The fundamental issue with those companies — and this responds to Senator Carignan as well — is that there isn’t a compensable use here. The reason copyright doesn’t work is because they’re not using this in the way that copyright would typically recognize. But I think Mr. Irving’s response does really highlight the risk of going down the path he is suggesting. He told us that we’re cutting to the bone and we’re down to just IT and journalists.
You could bring in all sorts of independent media companies right now who are digital-only who would tell you the exact same thing. The Logic, Village Media, The Tyee, Narcity, The Athletic and CARD — they are doing the same thing. I would suggest to you that it is entirely possible that they do it better. They are finding ways to compete based largely on IT and hiring journalists. They’re finding ways to provide value to subscribers so that people are willing to pay. There’s been a problem with many of the legacy businesses as they wait for the government to step in. We heard that they don’t want to strike deals. They think they’ll get a better deal if government intervenes. Their subscribers are leaving based on stuff that just isn’t worth paying for in many instances, and independent media is finding a way to make a go of it.
If we intervene and step in, what we are doing is not solving the fundamental problem, we are solving the problem that some legacy companies face, and in doing so risk dramatically harming those who are actually trying to find ways to innovate in this space.
Senator Simons: Thank you very much.
[Translation]
Senator Miville-Dechêne: Having been a journalist for some 30 years, I believe this is a very difficult debate and there’s no easy fix. Mr. Chan, I’ve followed everything you’ve been doing in the Canadian market, and it’s been quite focused and very specific.
Some might accuse you of acting to divide and conquer, in that your latest deal was with about 18 media outlets and it’s totally confidential. We don’t know what you negotiated. If you can tell us, that’s great. Why choose those 18 outlets and not others? Le Devoir said it was very pleased to have been considered, but is completely in the dark on that.
Will people be forced to negotiate individually with you in the future? Obviously, you’re a little stronger than the media you are negotiating with. Otherwise, do you accept the fact that legislation will eventually be passed, but that the various things you’ve done are slowing down the development of a bill? That’s a lot of questions at once, but it’s a fascinating topic.
Mr. Chan, you may respond in the language of your choice. Since you seem to be fluent in French, I took the liberty of asking you my questions in French.
Mr. Chan: Thank you very much, senator. My in-laws are from Quebec City, so I often have the opportunity to practise my French. I will try to answer in French, but if that doesn’t work, I will answer in English.
We have agreements with 14 publications and the agreements are commercial in nature. That means that, like any agreement with any business, they will be confidential. I don’t think that’s a bad thing. You will forgive me, but that’s the way the market and the private sector work.
To answer another question you did not fully ask, we didn’t pick any specific publications to hold discussions or negotiate with. We said several times over that we were willing to talk with any publication that wanted to explore how a partnership with us would work.
I can also tell you, senator, that we are still in discussions with several publications. So I’m keeping my fingers crossed. In early June, we made an announcement to 14 publications and we hope that this is not the end of the journey with them. We hope to have more good news to share in the weeks and months ahead.
Senator Miville-Dechêne: So if a future Canadian government comes up with legislation, are you going to happily comply or are you going to challenge it like you did in Australia?
Mr. Chan: Once again, obviously we will abide by the law. A sovereign government decides, but let’s be clear.
[English]
In Australia, it’s not so much a question of whether or not we were going to submit to a framework. In fact, the very framework in Australia allows for the exiting of the market. I want to be clear, despite how it’s been portrayed publicly, that the reality is — and the new amended version of the Australian framework further clarifies — that should there be a situation where there is a binding arbitration process under way, that, in fact, a designated entity or a platform that the government wishes to designate has two months to decide whether or not it wishes to be part of that market.
Again, I know that this is the chamber of sober second thought, and I want to be thoughtful about how I communicate this. I want to be clear that, in fact, the framework in Australia allows for the exiting of the market and further clarified it upon amendment.
[Translation]
Senator Miville-Dechêne: Thank you.
Senator Cormier: I had some questions for Mr. Irving, but he has already answered them.
[English]
Mr. Irving from New Brunswick, I just want to say hello to you. My question is for Mr. Geist.
[Translation]
I will ask my question in French. Towards the end of your speech, you spoke a lot about the need to not block innovation by young people. We know that businesses don’t all start with the same conditions, depending on whether they operate in urban or rural environments. The capacity to innovate is human, it’s everywhere, but not all businesses have the same amount of resources available to them.
My question to you is this: How can we best protect the identity and culture of journalism in Canada? My question may be too broad, but in the absence of regulation, how do we ensure that Canadian content and innovation are at the fore?
[English]
Dr. Geist: Thank you for that question, senator. I’ll focus on the journalism side as opposed to the broader cultural questions that have been much discussed over the last number of weeks with another piece of legislation.
I think that the starting point is not to ask how we protect this but how we enable the flourishing of this.
This notion that we’ve got to either set up walls or batten down the hatches and find a way to safeguard all this I don’t think is the way to do it. What we ought to be exploring and continuing to work toward is how to provide opportunities for these kinds of businesses to flourish from a journalism perspective.
I find it unfortunate that the sector spent the better part of a couple of years lobbying very heavily for an assortment of government programs, which were fairly controversial at the time. They were successful in doing so with things like the Local Journalism Initiative, tax credits from the labour perspective and a digital subscription tax credit — all of the kinds of things that are precisely designed to allow for that flourishing, and then we turn around and say: Well, forget it. We’re not asking for more money. We’re now asking for money from this other pot that we think might be out there to allow us to get there.
First, I think we need to allow the kinds of programs that we’ve seen to be given a chance, because I do think that they are in the early days. I don’t think they were all necessarily rolled out as effectively as they could have been, but there are real opportunities if our goal is how we ensure, especially at a local level, that journalists are employed while the LJI, the Local Journalism Initiative, ensures there are well over 100 journalists who are employed to do precisely that.
The other thing that we have to recognize is that there is a “do no harm” principle here. When I hear Facebook say, “Listen, the Australian rules said we can exit or anybody can exit if they see fit,” I don’t think he’s wrong. That’s a reflection of where things are.
I do think that there are serious risks in following through with the kinds of demands that we’ve seen from some of the legacy publishers — as I talked about earlier; damaging their credibility and the self-censorship taking place — not just in terms of Facebook potentially exiting the market, but even beyond that. The fact is that many of these more emerging kinds of innovative companies don’t see this in the way that Mr. Irving does. They actually see the benefits of these platforms. That’s how they go from small to big.
We need to be cautious about grouping everybody together and saying what we really need is the government to step in to get us a better deal.
If you speak to many of the innovative, smaller players, they will tell you that’s not what we need. We’d like government to get out of the way when it comes to some of those issues, but we are grateful for the support around the financial programs we’ve seen emerge over the last couple of years.
Senator Dasko: Most of my questions have been more or less answered. But I wanted to ask Professor Geist more directly.
You think that there should not be any government supports for the media. Are you saying that we should just have the market do whatever the market would do? Is that what I’m reading from you?
Dr. Geist: No. That’s not at all what I said, with respect, Senator Dasko. It’s hard to emphatically support the kinds of programs that we’ve seen come from the government that are direct support for this sector. The Local Journalism Initiative, tax credits, both for journalists, for the labour from the journalist side, tax credits for subscriptions are government support for this. I think that’s exceptionally important.
I’m saying that I’ve yet to see a compelling case for why we need government to step in and effectively mandate compensation for something that, in my view, is not being taken in a manner we would typically recognize from a legal perspective.
From a copyright perspective and how this bill comes out, the simple reality is that the way these companies engage and interact with this content, they are not using it in a way that copyright would typically recognize. It’s a hyperlink or it’s fair dealing. If it’s about negotiation, we are seeing the prospect of negotiation. It’s one thing for large players to say: Well, Le Devoir doesn’t count or some of these other players don’t count. I suspect that will be news to people in those communities, sometimes very large communities, where they are thriving. I don’t think you have to see the deals to know that it was in their interests to do so. They could have easily just hung with Torstar and with Postmedia and decided not to do so. It’s pretty clear that they found something compelling as have, quite frankly, if we take a look at this on a global scale, hundreds of large organizations around the world that have signed up for things like Google showcase or perhaps some of the deals with Facebook. They do so not on the basis of links, because that’s not a compensable act, but on the basis that people are willing to pay for value — I pay for it as a subscriber to certain publications — and Facebook and Google will pay, it appears, for value as well. But step up with something worth paying for, and there’s a deal to be had.
Senator Dasko: What do you think about the antitrust case that came forward in France against Google? What do you think about those developments?
Dr. Geist: Sometimes I’m accused of not wanting to regulate these companies. I think that we need to be very aggressive on a number of fronts with respect to these companies, from privacy, tax and antitrust competition-related perspectives. Without doubt, there is room and a need in Canada to be more aggressive on some of those kinds of issues. I think those have been neglected. One of my concerns with the kind of policy dialogue that we have seen to date is that it has not focused on where the real potential problems lie with these companies. I think it is on those kinds of issues.
Rather than looking at these companies as a sort of ATM — where wouldn’t it be great to withdraw money from them for whatever your favourite cause happens to be — why don’t we address the areas where they may be competing in an unfair manner or have an unfair advantage and address those concerns, because I’ve no doubt that Canadian entities are fully capable of competing if given the chance?
Senator Dasko: Thank you.
The Chair: Mr. Chan, did you want to respond?
Senator Dasko: Yes, Kevin.
Mr. Chan: Yes, Mr. Chair. Hello, senator, good to see you.
I would just simply echo what Michael was saying. I don’t want to leave the committee with the impression that we do not desire regulation. In fact, Richard Stursberg and I wrote an op-ed in The Globe and Mail back in November which very much made that point. We support privacy legislation and stronger privacy legislation, if you will. We support Bill C-11. We also, of course, support the OECD process to reform global taxation. We understand very clearly that at the end of that process, it may very well mean that we pay more taxes in different places than we do today. I think we are very pleased to live with that kind of outcome.
The Chair: Thank you. On second round, I want to go to Senator Dawson and then Senator Carignan.
Senator Dawson: What about the bill? We’ve talked about the issue, but how would you address the issue of this bill? Should it continue being debated? It will not be passed, obviously, in the next few days. If you were to improve it, what would you recommend? All three of you have been following it. So I look forward to your comments.
Dr. Geist: I’m happy to start and then throw it to Mr. Chan and Mr. Irving. Just to note, as I did off the top, that, candidly, I think these kinds of debates have been a valuable experience. I, of course, read the Hansard from the earlier meetings. This is the kind of discussion that is absolutely necessary, so the bill has done an exceptionally good service in that regard. But, with respect, I think it is the wrong solution.
I think it’s great to continue to be able to study these kinds of issues, and it would be good to be able to do so hearing from some of those kinds of independent players, as we talked about, but I don’t, frankly, have a fix for the bill because I think it is fundamentally flawed from a copyright law perspective.
Mr. Chan: I would just repeat the point that from a copyright point of view, Facebook is a very strict with respect to copyright. That’s not just with publications or articles but a full range of content, including audio and video content.
I can perhaps illustrate this. We actually have in the past — it’s not common. You can see all of our takedowns for violations of IP rights in our Community Standards Enforcement Report. We publish it quarterly. We break it down. We show you how much we remove every quarter and for what category of infringement. I can also speak from personal experience in the work that I do, I oftentimes am in receipt of content violations or potential content violations. We have actually received one — and this doesn’t happen often but I do recall we received one from The Brunswick News. There was apparently some individual who shared a full article onto Facebook. Of course, as you know, The Brunswick News is completely behind a paywall, and that was very clearly a violation of copyright. Upon receipt of that we promptly removed the content that was shared on Facebook.
We’re proud of our stance to be tough on copyright infringement, and you can expect us to continue to be so.
The Chair: Senator Carignan, we’ll give you the last questions.
[Translation]
Senator Carignan: My question is for Mr. Chan. On March 29, 2021, you testified before the House of Commons committee and the member Anthony Housefather asked you a fairly simple question, “How much is your ad revenue in Canada on an annual basis?” You replied, “I’m not aware of that number.”
I’m guessing that two and a half months later, you’ve had time to get that information. How much annual ad revenue do you make in Canada?
[English]
Mr. Chan: Senator, I have to tell you that is certainly not something that I was privy to at the time. It remains the case today. But I can share with you, senator, if I may, that coming July 1, we will convert Facebook Canada into what we call a local seller model, which means that Facebook Canada will become the invoicing entity for Canadian advertisers. At that point, senator, the CRA will be fully aware of the revenue we book in Canada.
[Translation]
Senator Carignan: So far, what are the numbers you have?
[English]
Mr. Chan: Again, senator, I don’t have that number. I’m the public policy guy, if you will excuse me. I have to be honest here; I don’t have that number. I think the important thing is that policy-makers and regulatory authorities like our tax agency will be in receipt of that number. We look forward to doing that to address, I think, senator, the concern about transparency that, if I may read into it a bit, I think you are expressing. We hear that. We are moving unilaterally, not because there is legislation or regulation or any other requirement, but at Facebook we are moving unilaterally to convert Facebook Canada into a local seller such that our revenue booked by our sales team in Canada will be known to the CRA for tax purposes. We’re very pleased to be able to do that unilaterally to increase transparency for policy-makers with respect to the revenue that we book in Canada.
The Chair: Before we finish, I believe, Mr. Irving, you may have wanted to respond last time and I cut you off.
Mr. Irving: There were a couple of things I wanted to say. First of all, I just want to clarify Mr. Geist’s remarks. At no point did I say that Le Devoir or Le Droit don’t matter. In fact, they also ran a recent letter from News Media Canada lobbying — even though they did sign the deal — the government for the market failure sort of legislation.
On the point about how to improve the current legislation, I wouldn’t know where to start on the specifics. At a broad level, it’s my understanding that you will get much more traction if you focus on the market failure issues and the antitrust problems than trying to come at it from the copyright route.
One of the lawyers who was on the Yale commission, Peter Grant, a retired McCarthy lawyer, has been volunteering to do analysis on the Australian legislation. He created a very detailed memo on how to actually implement something like that effectively in Canada and how to adopt and implement to the Canadian legislature.
I would be happy to provide that memo to the committee if you’re looking for a detailed, technical analysis of where the bill could be improved, but that would be my recommendation for a starting point.
The Chair: Thank you, Mr. Irving.
[Translation]
Senator Carignan: I would love to have a copy of the brief.
[English]
The Chair: Yes. Mr. Irving, if you could get it to us, we would certainly appreciate it.
Mr. Irving: Absolutely.
The Chair: Thank you.
This brings us to the end of the panel. I would like to thank our witnesses for taking the time to meet with us and for the valuable information you have shared as we examine Bill S-225.
Honourable senators, we will now proceed in camera for the remainder of today’s meeting.
(The committee continued in camera.)