Standing Senate Committee on Transport and Communications (44th Parliament, 1st Session)

THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS

EVIDENCE

OTTAWA, Tuesday, May 2, 2023

The Standing Senate Committee on Transport and Communications met with videoconference this day at 9 a.m. [ET] to study Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada.

Senator Leo Housakos (Chair) in the chair.

[English]

The Chair: Honourable senators, we are meeting to continue our examination of Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada.

On our first panel, joining us by video conference, we are pleased to welcome before the committee, from the Macdonald-Laurier Institute, Peter Menzies, Senior Fellow; and, from an organization called FRIENDS, Marla Boltman, Executive Director; and Sarah Andrews, Director, Government and Media Relations.

Here, in person, we have as well with us Michael Geist, Canada Research Chair in Internet and E-commerce Law, Faculty of Law, University of Ottawa. Mr. Geist needs no introduction. Welcome all to the committee. Mr. Geist is a regular on this committee.

We’ll begin with opening remarks from Mr. Menzies, followed by Ms. Boltman and then, Mr. Geist. You will each have five minutes for opening remarks and then we will turn it over to question and answers.

Mr. Menzies, you have the floor.

Peter Menzies, Senior Fellow, Macdonald-Laurier Institute: Honourable senators, thank you for this opportunity.

There are a great many problems with Bill C-18. Those include its constitutional legitimacy, its possible impact on trade agreements, its bias toward the status quo at the expense of the future and the lack of evidence to support its economic rationale.

To many people, forcing social media to subsidize news organizations makes no more sense than forcing Amazon to subsidize The Bay. But, here we are. I will try to focus on Bill C-18’s inappropriate outcomes.

Whereas a quarter of a century ago a person had to buy a newspaper to find out about practically anything, these days completely new entities such as social media platforms and Kijiji have captured audiences and advertisers while saving consumers billions of dollars. As a result, however, about 473 newspapers have died. Up to 700 websites owned by licensed commercial broadcasters, many of which look very much like an online newspaper, have launched. The CBC has created what amounts to a national chain of online newspapers that competes for readers and advertisers while giving away for free, that which others are trying to sell through subscription news.

Without subsidy, 216 web-based news and commentary platforms have been launched by innovators and entrepreneurs. Just last week, a legacy news company, Black Press Media, announced a new partnership with one of those innovators, Village Media, to, as they said, “enhance the delivery of news in over 120 communities.”

Bill C-18 ultimately helps neither those that are struggling to survive nor those looking to enter the market, according to estimates by Canadian Heritage and the Parliamentary Budget Officer.

According to the testimony of Canadian Heritage’s Owen Ripley last week, Bill C-18 will generate around $215 million for government-approved news producers. According to the Parliamentary Budget Officer, Yves Giroux, it will create $320 million. About $240 million of that will go to Broadcasters, with CBC, Bell Media and Rogers being the largest beneficiaries.

Using Mr. Ripley’s total and Mr. Giroux’s breakdown means that Bill C-18 will generate roughly $54 million a year — about what The Calgary Herald made in annual profit 20 years ago — for the entire non-broadcast news industry. If we use Mr. Giroux’s total, about $80 million will be available to the non-broadcast world. Both of those figures fall far, far short of the $500 million Jamie Irving, Executive Chair, Postmedia, indicated was needed to survive when he spoke to the Commons Finance Committee last year.

Meanwhile, both the Canadian journalism labour tax credit — worth up to $119 million and exclusively available to newspapers for five years — and the Local Journalism Initiative — this year worth $20 million — are scheduled to end. That means news companies that are losing money — legacy newspapers for the most part — will be worse off financially in 2025 after Bill C-18 is passed, than they are now. Meanwhile, financially sound companies such as the CBC and Bell will have more resources which they can then use to improve their market share at the expense of, for instance, the Toronto Star, likely killing it and others.

The end result is that those most in need get the least, those least in need get the most and those who on principle refuse to submit to government approval will be punished by having to compete against subsidized competitors willing to submit.

So much for supporting a free press.

Then there is the likelihood that Bill C-18, due to its global repercussions, will convince Meta, and perhaps Google, and its parent company, Alphabet, to stop carrying news links.

None of these outcomes reflect good public policy.

For these and other reasons such as its impact on public trust in news, you must decline to pass Bill C-18 and advise the government instead to develop a coherent policy framework for the news industry that is based on rational economics, independence, innovation and a level playing field.

I also recognize, with respect, that you probably won’t do that. So, honourable senators, I ask that you at least amend Bill C-18 so that it only applies to companies whose primary business is news; that you limit the role of the Canadian Radio-television and Telecommunications Commission, or CRTC, to ensuring there is no abuse of market power in negotiations between tech companies and news providers, and that you amend Bill C-18 further — which, let’s face it, is a subsidy hiding behind the beard of a dubious commercial agreement — to ensure that the CBC is ineligible.

Thank you for your time.

The Chair: Thank you, Mr. Menzies. I now turn the floor over to Ms. Marla Boltman.

Marla Boltman, Executive Director, FRIENDS: I will be presenting both myself and my colleague in our opening remarks.

Good morning, Mr. Chair and honourable members of the committee. On behalf of FRIENDS, and the tens of thousands of Canadians who have entrusted us to be their voice in Ottawa on Bill C-18, we are very pleased to speak with you today. We also ook forward to the day where, like Mr. Geist, we need no introduction.

In preparing to be here, we spent a lot of time revisiting what has been said about the Canadian news sector over the past several years. Not surprisingly, the same words have been used over and over. You’ve all heard them before; they bear repeating: extinction, bloodbath, hemorrhaging, critical condition, life support.

But now the Canadian news sector has been given the gift of hope in the form of the proposed online news act, ably crafted by the House in its capacity as emergency room physician. You, the Senate, can provide key surgical interventions by introducing thoughtful and precise amendments to not only ensure that Canadian news media outlets are properly compensated for their work, but that the framework to achieve that objective prioritizes public trust and confidence.

Let’s face it. The defining issue of our time is trust — specifically, the lack of it in news media. This mistrust is cultivated nearly every day, often for harmful reasons through the deliberate spread of misinformation and disinformation. It is a divisive and destructive trend — one that corrodes our ability to embrace shared truths and agree on fundamental facts. It is one that undermines a civil society and a fully functioning democracy.

An independent and authoritative news media will help to offset this trend by serving as a check on those who traffic in misinformation and by challenging those in positions of power. But to play this role, news media organizations must be strong and sustainable. Bill C-18 can help with that, but they must also be transparent.

Our proposed three-part amendment addresses a theme throughout the bill that seems to favour privacy over disclosure when it comes to deals between online platforms and news outlets. We feel very strongly that it should be the other way around.

Public disclosure is the best safeguard to prevent undue influence over the journalistic and editorial independence of our news. Canadians have a right to know which online platforms compensate which news outlets, to what extent and in what way.

[Translation]

Sarah Andrews, Director, Government and Media Relations, FRIENDS: Thanks to changes made at the Heritage Committee, enhanced transparency is now required of CBC/Radio-Canada. Canadians have the right to know how their national public broadcaster is funded and where and how that money is spent. Taxpayers have a legitimate interest in ensuring the value of CBC/Radio-Canada’s news content is recognized and compensated under the act so that revenues generated from this regulatory regime can be reinvested, particularly in regional and local news content, something that CBC/Radio-Canada is uniquely positioned to provide.

While we are fully aware of the arguments of those who feel that CBC/Radio-Canada should be excluded from this legislation, time and time again the polls and ratings show that it remains one of the most reliable upon and trusted sources of news and information for Canadians.

It is our sincere hope that the urgent need to resuscitate the Canadian news sector, which undeniably includes CBC/Radio-Canada, will prove more powerful than the lure of using this bill as a forum to fight other battles.

Before we conclude, we would like to draw your attention to the “Guiding Principles on Diversity of Content Online” published by the government in June 2021. Its purpose was to guide actions and measures that would foster greater exposure to diverse cultural content, information and news online in order to contribute to a healthier public discourse, greater social inclusion, bolster resilience to disinformation and misinformation, and increase citizens’ ability to participate in democratic processes.

These are ambitious and admirable goals, all of which are achievable, in part through the passing of Bill C-18. And with a few key amendments that favour transparency over privacy, the Online News Act can breathe life back into our news outlets, in such a way that five years from now, when Parliament revisits legislation, the words we will use to describe the Canadian news ecosystem will be resilient, credible, independent, diverse and healthy.

[English]

Ms. Boltman: Mr. Chair and honourable members of the committee, we thank you for your time and consideration on this incredibly important matter. We are happy to answer any questions you may have.

The Chair: Thank you. I turn the floor over to Mr. Geist.

Michael Geist, Canada Research Chair in Internet and E-commerce Law, Faculty of Law, University of Ottawa, as an individual: Thank you very much, and good morning.

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 have been quite critical of Bill C-18, but that criticism does not stem from doubts about the importance of a robust, diverse news sector. However, the bill as currently constructed raises significant concerns involving the free flow of information online, freedom of expression and Canada’s international copyright and trade obligations. If left unchanged, I believe it is likely to cause far more harm than good, including the possibility of blocked news sharing or indexing on internet platforms.

There is so much discuss, including the bill’s implications for an independent press, the distortion of competition, the dependence on foreign internet companies, the suitability of CRTC administration and how the emergence of generative AI renders the bill, which does not cover services like ChatGPT, already outdated. But with limited time, I’d like to focus on five issues and propose some fixes.

First, the bill is fundamentally about mandated payments for links. Indeed, last week Mr. Ripley acknowledged to this committee that without linking, companies like Google and Facebook are not digital news intermediaries under the bill and therefore fall outside of it.

The Supreme Court of Canada has warned that creating liability for links could impair the way the internet functions. Yet payments for links are at the core of this bill, and it doesn’t matter if it is an aggregate charge for all links, or a per link fee. The harmful impact is the same including the prospect that the same link payment principle be applied to other policy objectives and the entire foundation for sharing information online placed at risk.

The solution is clause 2(2) should be removed and the definition of “making available of news content” — which is a requirement to be a digital news intermediary, or DNI — be limited to reproduction, which is how most Canadians would understand the use of news content. If Google or Facebook publish full text of articles and run ads against them, let’s talk about ensuring fair compensation. But if it is just links — often posted by media companies themselves — it should fall outside of the framework.

Second, the definition of eligible news businesses in clause 27 should be revisited by limiting it to the outlets that actually produce news. The government started with supporting the sector several years ago with tax measures based on the creation of qualified Canadian journalism organizations, which were defined by detailed CRA criteria. Bill C-18 expanded that approach to include broadcasters, whom the PBO estimates will receive 75% of the revenues from the bill, as Mr. Menzies mentioned.

But the House committee added another eligibility criteria based solely on holding a CRTC licence. This expansion raises trade concerns — given that only Canadians can obtain these licences — and turns the bill into a subsidy program without regard for the production of actual news.

Third, Bill C-18 violates copyright norms by suspending limitations and exceptions from the bargaining process in clause 24. This runs counter to the foundation of Canadian copyright law and may violate Article 10(1) of the Berne Convention, which has a mandatory right of quotation that expressly includes newspaper articles. The provision should be removed.

Fourth, my friends won’t like this much, but the inclusion of the CBC within the Bill C-18 framework is a mistake. In a world where Canadians often encounter either paywalls or increased misinformation when seeking out reliable news, the CBC should welcome anyone who extends the reach and accessibility of its news content for which the public has already paid. Indeed, given concerns about public broadcasters competing with the private sector for ad dollars, to have it also compete for DNI money makes matters worse. Section 28 should be amended to make all public broadcasters — federal and provincial — only eligible upon the enactment of relevant regulations.

Fifth, there are better ways to do this, including a funding model that served as the basis for the Shattered Mirror report that launched much of this public policy debate. A fund based on the Canada Media Fund model to support actual journalism with mandated contributions based on ad revenues by large internet companies would address concerns about mandated payments for links, the independence of the press and a myriad of eligibility concerns. Perhaps a way to do that would be in the clause 11 exemption order provision in the bill, which could be expanded to give the CRTC the power to exempt based on contributions to the fund.

There is much more to discuss, but I’ll stop there. I look forward to your questions.

The Chair: Thank you. It seems our witnesses have created a lot of interest, because I have a very long list. I want to remind colleagues that everyone will have five minutes for questions and that includes the answer. I call upon my colleagues to be precise in their questioning, and the witnesses can be precise in their response.

Senator Simons: Professor Geist, I’d like to start with you. I would like to give you a chance to drill down on a couple of points that you passed over. One is about the Berne Convention and the right of citation. Can you tell me in a bit more detail, how you think Bill C-18 may be in violation of the Berne Convention?

Mr. Geist: Thank you for the question. At clause 24, there are copyright-related provisions in this bill; and in particular, the provision states that for greater certainty, limitations and exceptions to copyright under the Copyright Act do not limit the scope of the bargaining process.

In other words, the ability for DNIs in particular to cite the fact that where they are making use of these materials — because it’s really just linking or indexes in some instances — all they’re doing is exercising fair dealing rights. Arguably you don’t even have to get to fair dealing, you can argue this is de minimus.

The fact that they can’t even raise that fair dealing right, which is a user’s right as defined by the Supreme Court of Canada, I think runs afoul of the basic principle that you find in the Berne Convention that you have a positive right of quotation. Particularly to note that, under the Berne Convention, this is one of the rare instances where it is a positive right. This is an obligation to have the right of quotation effectively to say that you can’t cite that right as part of this, I believe may infringe those rights.

Senator Simons: You then said that you thought the CBC and provincial organizations like TVO should openly be included if there were an enactment of relevant regulations. What would those relevant regulations look like to you?

Mr. Geist: Candidly, they simply should not be included at all, but if there is a way to formulate it in a manner that one doesn’t harm the desire to create a robust private sector in the news sector, it would be part of it. I’ve talked to a number of independent players who have deep concern where they say the CBC is their primary competitor in their small, local news market, and the idea that they would have to compete not just with public tax dollars from the CBC, but also Google and Facebook money, has effectively forced many of those independents to participate in the system, they have had no choice to be part of it.

My broader view is that I don’t think it is appropriate here. If you are a supporter of the CBC, your goal is to make it relevant and different from what we get in the private sector, and the way we do that is to ensure that it is the home of access for all Canadians who don’t have to surmount a paywall and don’t have to be concerned about misinformation. The way you do that is encouraging access and not say, “No, these are all the same and you have to pay to try to facilitate that kind of access.”

Senator Simons: Finally, using your expertise on the international business side of things, what remedies might the Canadian government have, should Google and Facebook cease to display or index Canadian news sites? Are there any remedies in law that we could take as a nation to countervail that?

Mr. Geist: That is an interesting question. Obviously, we’re part of a trade agreement, and so directly targeting companies from the United States may raise trade-related implications.

First off, Google and Facebook are slightly different in this context. I know you’ll be hearing from both of these companies. Facebook is about sharing of links posted by users, often by the media companies themselves, to require a company to continue that part of the service if it’s uneconomic. I must admit, it’s unsurprising that they may react in this way, and I’m not sure there is some sort of power to force someone to do that.

In the context of Google and indexing, I’m also unconvinced there is something in international law which can force someone to index. That said, I think we would be looking at whether competition laws apply, and whether the ways in which those get implemented raise potential competition concerns. In Google’s context, if they were to stop indexing and linking to news, it would depend upon how they would go about doing that, what other content remains available and whether that raises anti‑competitive-type considerations.

[Translation]

Senator Miville-Dechêne: I have a question in French for Ms. Maria Boltman from FRIENDS. As you know, Radio‑Canada programming has to fulfill three criteria pursuant to the Broadcasting Act, which are “inform, enlighten and entertain,” in that order.

However, if we don’t have enough funds for journalism, and you did say that local news was underfunded at Radio-Canada, is it not because we are spending too much on entertainment? How can we explain that no public affairs television series has been developed since “Enquête” in 2005, whereas there are too many drama series being produced in Quebec, so many that some don’t even get noticed? I am not the one saying this, it’s Denis Dubois, one of the most influential people in television right now.

Would there be a balance to be struck with the public broadcaster, rather than only counting on payments from Google and Facebook?

[English]

Ms. Boltman: I’m going to give you the courtesy of us responding in French, so I’m going to hand this question to my colleague Sarah Andrews.

[Translation]

Ms. Andrews: Thank you, Mr. Chair, and senator, for the question.

FRIENDS have been requesting a review of Radio-Canada’s mandate for a long time, because Radio-Canada has been commercialized. We are asking for a mandate review in order to bring Radio-Canada back to its public mandate. The news is definitely an important part of this public mandate. You are probably aware that the CRTC is reviewing the licence conditions that were proposed last summer. We are still waiting for the CRTC to hold a hearing.

However, one of FRIENDS’ requests was to bring Radio-Canada back to local news, because local news is not considered a priority in the licencing terms that were proposed last summer by the CRTC. That’s why FRIENDS sought to remind Radio-Canada of the importance of local news and of independent productions. This is obviously a very important discussion that FRIENDS want to have.

The government, during the last election and also in the Minister of Canadian Heritage’s mandate letter, made a commitment to discuss Radio-Canada’s mandate. We are still waiting. We thought that this would be a possibility with the review of the Broadcasting Act. Unfortunately, it did not happen. We are still waiting for an opportunity to discuss the mandate.

Senator Miville-Dechêne: If we could go back to Bill C-18. You heard Mr. Michael Geist say that CBC/Radio-Canada should not be included and he provided some arguments, such as the question why would a public broadcaster make itself dependent on Google and Facebook in terms of funding? Shouldn’t it remain fully at arm’s length? Do you see a problem there, especially as Radio-Canada is already subsidized?

[English]

Ms. Boltman: We understand this issue of public and private dollars, and we understand why the issue has been raised, but we don’t think it’s appropriate to link the parliamentary appropriation in the public dollars to the CBC’s participation in this framework. The bill really has nothing to do with public dollars; the purpose of the legislation, as we know, is to create a compensation framework whereby private online platforms are compensating news outlets for the benefits they’re deriving from their news, those benefits being private advertising dollars, which have traditionally helped pay for news but are now being gobbled up by the digital duopoly that is Google and Facebook.

When it comes to the CBC, yes, in a perfect world, we would have a national public broadcaster that is not reliant on advertising dollars, but our world is not perfect. While we continue to advocate for long-term sustainable public funding for the CBC — we are very well known for that FRIENDS — that funding has yet to materialize. Until it does, having the CBC compensated under the act will allow revenues generated from this regime to be reinvested, particularly in local and regional content, which is something we’ll continue to strongly advocate for.

[Translation]

Senator Cormier: My questions are for Ms. Andrews and Ms. Boltman. Like you, I am most concerned with the issue of transparency. In your presentation, you proposed an amendment on public disclosure, as follows:

The Commission must make available for public inspection any information submitted to the Commission by an operator, eligible news business or group of eligible news businesses to the extent that the information is not designated as confidential.

I think this is extremely restrictive as a proposal, even if I do approve of the idea of more transparency. Have you thought about amending section 86, which provides for a report from an independent auditor who could offer transparency on the content of these agreements? Have you looked at this, because that is already included in Bill C-18, this idea of disclosure through an independent auditor’s report as long as certain criteria are met?

[English]

Ms. Boltman: Thank you, Senator Cormier. We have thought about that.

We feel that the auditor’s report is helpful, but relying upon it alone has two main drawbacks: First, it’s only annual, and second, it takes its lead from the act. So if the rest of the act has no bias in favour of public disclosure, that will inform the degree of disclosure in the auditor’s report itself.

For example, take subclause 29(1). If it were to continue to specify that an eligible news business is only included on the commission’s public list if that news outset gives consent, it is highly unlikely that the auditor’s report would provide the identities of news businesses that have benefited from the act, other than those that consented. Even if it did, that disclosure could come one year to 18 months after the fact.

Just to be clear, between what we propose to the House and what we have brought here to the Senate, our initial amendments were rejected out of concerns for private information between private organizations. We get that concern, but we’re not talking about widgets here; we’re talking about commercial deals relating to public news that has the power to influence the hearts and minds of Canadians. We feel very strongly that, under these circumstances, we need to prioritize public trust and confidence in the news media, and the best way to do that is with more transparency than we’re currently seeing.

So I feel it’s worth noting that the revised proposed amendments that you see in front of you represent a compromise between the stated concern for privacy and the public’s right to know.

[Translation]

Senator Cormier: Thank you.

My next question is on subsection 32(1), agreement with group. As you say, it seems that there is something missing. This subsection indicates that a group of eligible news businesses that enters into an agreement with an operator must file a copy of the agreement with the commission.

However, what about an agreement signed with a sole news outlet that is not part of the group? I asked the question last week, and I think it is an important one when we think of the smaller news outlets, for example. They don’t seem to have to file a copy of their negotiation documents with the CRTC when there is mediation.

What can you tell us about this? I believe you are proposing something.

[English]

Ms. Boltman: That’s a great question: What does happen to them? That’s why we like to see them all treated the same.

To your point, clause 32 requires only those agreements that have been negotiated by groups engaging in collective bargaining to file. Those become covered agreements, but there are other agreements that are covered by individual parties who have chosen to use the bargaining process. Also, to your point, what about those who haven’t chosen to use the bargaining process?

We have three sets of agreements that all deserve to be treated equally. Because we are favouring a bias toward disclosure and filing, we feel that all of those agreements should be filing. That’s what part B of our amendment does. Part B is that we suggest that we add a clause 32.1 that says:

An eligible news business shall file with the commission any agreement with operators respecting news content that is primarily available for the Canadian news marketplace within 30 days of the conclusion of the agreement or from a date of an arbitration panel’s decision.

We’re suggesting that all agreements be filed. The point of that is that it expressly mandates the filing of all relevant agreements, turning a discretionary power that currently exists in the act into a mandatory one.

[Translation]

Senator Cormier: Thank you.

[English]

Senator Harder: Thank you to our panellists.

My question is for Professor Geist, and it tries to go back to first principles about what the government is trying to do. You have suggested that there might be another policy option available to the government — the fund model. Is this simply a dispute between a professor and the government with respect to the policy approach?

Australia has adopted a model not unlike the Government of Canada’s proposal, and it has not experienced some of the concerns you expressed with respect to treaties, competition law or the Berne Convention. Are you raising concerns — which are legitimate concerns, by the way; I’m not disputing that — to reinforce your policy preference. How do you weigh the right of Parliament to make a policy choice that you may not agree with but nonetheless move forward despite the concerns you have expressed?

Mr. Geist: Thank you for that, Senator Harder. First of all, with respect to Australia, you cited — for example — international conventions. Australia doesn’t reference the limitations and exceptions, so there’s a reason there are copyright concerns in the Canadian bill that aren’t found in Australia. Australia doesn’t include that kind of provision. Australia’s bill has also had the effect where the code actually hasn’t taken effect, as you know.

There are differences of opinion as to how effective it has been. Certainly, if you hear from Mr. Sims at some point, I’m sure he’ll tell you how great it is. Others who have looked at it have expressed some concerns. To FRIENDS’ point around transparency, the Australian model has been even further lacking in transparency. It’s primarily speculation around this.

As for difference of opinion, in some instances, I have experienced first-hand some of the kinds of concerns that I’ve raised. For example, I have written op-eds that were critical of the relevant minister of this bill, and they were approved internally and then killed by one of the large papers because they weren’t consistent with the kind of messaging they wanted to have. When I say there are concerns around press independence, I think this is very real. When I see the government say they are concerned about ensuring press independence, ensuring the CRTC isn’t overly involved in this and ensuring that there’s a sustainable approach to this but at the same time not create some of these harms and raise the linking issues that I’ve raised, I’m suggesting the fund model because I think that actually solves some of these questions.

You can make the case that there are still other ways, but if there is the view that we have to find a mechanism to get these large companies to contribute, a fund actually goes a long way to creating a bit more arm’s length. As well, it addresses the transparency-related concerns because now we’re not focused on these secret deals. We have, up front, what is being contributed, and we have money going to actual journalism and not to executives, hedge funds and companies that may not even produce news. Rather, the money is going to those, regardless of size, scope or where they are in Canada, who are producing journalism.

Senator Harder: Professor Geist, we’ve all experienced what we thought were excellent articles that haven’t passed the editor’s screen despite the encouragement of others.

How do you look at what the U.K. is contemplating and how Europe has approached this? Indeed, the Journalism Competition and Preservation Act in the United States is very much in this space as well. How do you judge their approaches?

Mr. Geist: The U.S. approach, as we know, started to move in a certain direction and then obviously did not go forward. Perhaps they’ll revisit that, and find a mechanism to move forward.

It’s clear that many countries are experiencing these same issues. We’re obviously not alone. People are looking for solutions. Australia was a certain first mover, and so when people are looking for something, we find them following that Australian approach.

Frankly, I think we have an opportunity here to put forward something that is more effective and that deals with some of the negative implications of that Australian model — or now the Bill C-18 model, which may well prove to be a more popular approach around the world. If the goal is to fund journalism, let’s find a way to fund journalism but not have the kind of intervention-type issues this creates.

Senator Harder: Within the policy choice that the government and the House of Commons has now agreed on, would you not say that Bill C-18 is, in fact, an improvement on the Australian model — in part for reasons of transparency that you already cited?

Mr. Geist: I think there are some elements of transparency, but we just heard witnesses talk specifically about all the problems with transparency. I’m not convinced that the government gets to claim this was a great victory for transparency when we’ve just heard some very strong submissions saying that transparency is still severely lacking in this bill.

Fundamentally, my view is that some of the negative implications here are so significant that it’s hard to say this is an improvement on that bill.

The Chair: Thank you, Mr. Geist.

Senator Wallin: Thank you very much and welcome to you all. My first question is to Mr. Menzies and Professor Geist. I’d like to hear from both of you, generally, about the role of government and its impact and control over access to information. Given my professional history, I’m a believer in free speech and free expression. However, that is a two-way street. It’s not just about what we get to say, it’s about what we get to hear.

This bill troubles me because I believe it has great potential to restrict our access, as citizens, to information if the streaming services stop carrying news because of this link taxation system.

My question is for both of you. Professor Geist, we’ll go to you first and then to Mr. Menzies. Are you concerned about the reduction or the constraint and restraint on the exchange of ideas and information?

Mr. Geist: Thank you for the question, Senator Wallin. I am concerned about what I think is a fairly likely outcome of this bill, which is that large platforms directly affected by this will stop or find ways to stop the news sharing so that they extricate themselves from being defined as digital news intermediaries or DNIs. I think Facebook has been entirely consistent since this bill was introduced in saying that it’s just not a significant part of their platform and so they would stop doing that. Clearly, there are people who use Facebook for news. I think the concerns are even greater with respect to Google, were they to move forward, because I think people do rely on it.

I also want to highlight — I made a brief reference to it — that we are clearly moving toward more and more generative AI-type systems. If you compare, for example, what you get on ChatGPT versus what you would get on the Bing platform, where there are some citations and links back to some of the underlying sources, the idea that we would have a bill that, first of all, doesn’t even include generative AI because it’s not indexing and not linking and, further, that we would actually encourage not providing citations — because once you start providing those citations and those links, you potentially wrap yourself in this bill if you were to be included as DNI — strikes me as so counterproductive. We want to ensure people get both reliable information and ways to counter misinformation and that they can find those reliable sources. Once you start saying that there has to be mandated payment for links, you’re actually driving in precisely the opposite direction.

Mr. Menzies: It’s difficult to see how Meta would come to any other conclusion. The only rational thing for them to do is to exit. You don’t have to like that, but it’s just the sensible thing for them to do from a business perspective. It’s a small portion of their business. It’s not like Twitter. Most people don’t go to Facebook to fight about politics with people. You go there to share pictures of your grandchildren and that sort of stuff.

The impact of that would most likely be on innovation and start-ups. I don’t think there would be a huge impact on the existing products. However, if you’re a start-up, Facebook was always sort of a free or very inexpensive way to introduce yourself to your local market through targeted advertising and that sort of stuff. So that would be too bad. I think in that sense, Bill C-18 would have a negative impact on that.

In terms of the longer term, I think Dr. Geist made the point earlier that in five years, there may not be any more links. We might have an entirely different technology behind search engines and that sort of thing. Therefore, Bill C-18 is almost largely redundant already if its purpose is to be based on links. There’s an unfortunate consistency here.

I have sympathy for the people trying to build policies around it, but if you were to just keep it simple and look for a different way of compensating things, you might get much better outcomes in the long term. As I pointed out, right now, people will go out of business because other people are getting subsidized and that’s distorting the market. So the government really needs to sit back and rethink this whole thing and have a proper national news industry policy.

The Chair: You have 30 seconds, Senator Wallin.

Senator Wallin: We heard from Senator Harder that this is always about policy choices, and the policy choice seems to be to subsidize a failing industry, not journalism. But it also puts every journalistic organization in this country in a conflict of interest, because they’re dependent upon this income to do their job. Dr. Geist cited an example in his own case. Are both of you concerned? Perhaps you can weave your answer into another answer, thank you.

Senator Dasko: Thank you to everyone for being here.

I have a question for Mr. Menzies. You said you felt that if this bill were to go ahead, that the only companies whose primary business is news should be included in this. What does that mean? Does that mean we’re just down to news radio being the only ones that are supposed to be benefiting from this?

I’d like you to clarify that.

It would exclude many organizations, obviously. Could you just elaborate on that, please?

Mr. Menzies: The problem we’re experiencing right now is that the technological shift or revolution we are going through, has undermined the platforms that were able to support journalism. Journalism never really supported itself. Journalism was always subsidized by classified advertising or some other form of advertising. Journalists hate to hear this, but there’s no money in journalism. It can play a very important part of the newspaper or any other sort of platform, but it needs some sort of subsidy.

What you need to be working toward here is making sure you have platforms that are capable of supporting news as it is. I would suggest that platforms, such as CTV, make a lot of money in areas other than news, and the CRTC has always expected them to use some of that profit to subsidize news. It is the same with Global and others.

This is the way you would go with it. If you’re going to sustain a viable news industry, you have to have an incentive for people to get into what is primarily a news business. You won’t do that by giving Bell Media or the CBC more money, because the CBC is already the biggest competitor for digital advertising revenue out there. God bless the CBC. As a public broadcaster, it has a vital role to play, but it’s not a public broadcaster right now; it’s a publicly funded commercial broadcaster, and that is distorting the marketplace.

Senator Dasko: If you look at the data in terms of where Canadians get their news — and Reuters did a survey last year, I think, and found that the top sources of news for English Canadians are CTV, CBC and Global. Whether online or offline, it’s the same three top sources. For French Canadians, it’s Radio‑Canada and TVA.

That says quite clearly that those are vital sources of news for Canadians. Professor Geist and Mr. Menzies, how can we remove CBC, just as one example, when we’re looking at the most important sources of news for Canadians? Even though those broadcasters obviously do other things, news is one of the things that Canadians are using those networks for. Therefore, it would seem that a bill that is supposed to be directed at giving news organizations compensation would have to include these organizations under its reach, including CBC.

Mr. Geist: I am reminded of the song “One of These Things” in that one of these things is not like the others; one doesn’t belong, and that’s the public broadcaster. They’re not the same. When I hear FRIENDS, for example, say that, in an ideal world, it would be fully publicly funded and then it wouldn’t need to rely on those kinds of other sources, in my view, you never get there if you don’t provide a rationale for the CBC to exist where it is different and it meets certain public interest goals.

I agree with you: Your data highlights that people do rely on it for news. That’s a very good thing, but I don’t think that means that it should be included here. I think it’s the opposite in that I think it highlights that there is now a powerful rationale for why we should be funding a public broadcaster that makes it different from some of those other private broadcasters and private sources.

Then it would be essential to ensure that as many Canadians as possible have access to and awareness of that information. We shouldn’t be throwing up barriers to be able to access information that we view as reliable and credible, and it is publicly funded. We have already paid for it.

Mr. Menzies: With the CBC, if you want a good public broadcaster, have a good public broadcaster. The problem is that, right now, the CBC is running newspapers out of business. Most of the newspaper industry appeared before the House of Commons Standing Committee on Canadian Heritage, in 2016 to caution the government against giving the CBC additional funding, because they were —

The Chair: I hate interrupting, Mr. Menzies, but Senator Dasko’s time is up, and I have to move on to the next senator.

Senator Cardozo: I want to carry on that precise discussion but ask the representatives of FRIENDS, Marla Boltman and Sarah Andrews, if they can comment on the role of the public broadcaster. You’ve talked about it, and I wonder if you can drill down a bit deeper.

What is the particular role of the public broadcaster in terms of news? Why does it need this subsidy? Is there something about the current times where we have a massive growth of misinformation and disinformation — is there a possibility for the public broadcaster to be playing a more important role with regard to that?

Mr. Menzies, I will ask you my second question to be answered after the others. It is a pleasure to meet you online, sir. We both served as the CRTC as commissioners, although at different times, so we haven’t met before. That said, I find we sometimes have different views on these things, which only highlights that the CRTC has had people of all different views.

I wanted to ask your thoughts about the funding model. You mentioned the idea of a national industry news policy, so I’d like to get more thoughts from you on that.

I will ask the representatives of FRIENDS to speak first, though.

Ms. Boltman: I’d like to take the second part of your question first, which is tackling misinformation. Then we’ll come back to the CBC.

We believe very strongly that the best antidote to misinformation is the rigorous and credible journalism provided by both independent and public media news, which includes the CBC. They ask uncomfortable questions, they hold leaders to account and they provide a check on those who traffic in misinformation.

So if done correctly, Bill C-18 will go a long way to ensure we have a healthy Canadian news ecosystem that exposes us to information from diverse and pluralistic sources that, again, include private and public sources of media, including the CBC, all of which will help build trust and resilience in our news media and help battle misinformation.

I would like to turn to Sarah Andrews for any additional comments on what Senator Cardozo said about the CBC and the role of public broadcasting.

Ms. Andrews: Thank you very much.

As was mentioned earlier in our opening remarks, the CBC remains a vital source of information. As Senator Dasko pointed out, it is one of the most consulted sources of news information online and on television.

There’s a conversation that we’re having about the CBC being included in the framework. As it stands, as you are all very well aware, the CBC is not publicly funded 100%. It does use advertising dollars to top up its budget. In the current circumstances, it’s in the taxpayers’ best interests that CBC’s news content is valued and recognized within the framework of Bill C-18. FRIENDS is on the record as asking for an increase to the parliamentary appropriation that the CBC gets so that it should become less reliant on advertising dollars. It’s a commitment that’s been made by the government, and it’s in the minister’s mandate letter. That conversation around the appropriation has not yet happened. The way it stands today, the CBC absolutely should be part of the Bill C-18 framework.

Senator Cardozo: Mr. Menzies, your thoughts on the question I had for you?

Mr. Menzies: One of the big problems you’re dealing with here is the CBC’s role in the marketplace. The CBC should be a public broadcaster. It should not be competing for commercial revenue with the rest of the industry. It is using their tax dollars and revenue that is more helpful overall to go to the private sector. You can add funding to the CBC if you want to do that. That’s probably the easiest way to solve that problem.

In terms of the funding model and a national news policy, I’ll try to be as brief as I can. It has to be multi-faceted. Right now, we have a system where we’re creating a long-term dependency for the news industry which will only be trusted — if it is trusted by the public — and useful if it’s viewed as independent. Right now, we’re creating a long-term dependency on the good graces of government and the outrageous profits of big tech. I don’t think that the average person on the street trusts either of those. Associating strongly with both of those are not going to build trust in the news industry, which is not helpful.

You need to build a national news policy that values independence, the innovation that is going to be needed to get us through a difficult time and trust.

The Chair: Thank you, Mr. Menzies.

Senator Manning: Welcome to our guests, and thank you very much.

My first question is for Mr. Geist. We’ve been hearing about the demise of local news for years. Again this morning, large news rooms have been closing or amalgamating. We’ve seen that a lot with Bell Media and Rogers buying up all the outlets. In many markets, they own all the radio and TV outlets between the two of them. How much of the responsibility for the demise of traditional news is because of Facebook and Google? How much is it the doing of the very corporations who will now receive more money to provide less? I question that and I ask you this: Is there any guarantee that the money that they will be receiving will be reinvested into news?

Mr. Geist: Thank you, Senator Manning. You’ve raised several issues. First — and I think even Mr. Ripley acknowledged it during his appearance — the challenge is that the sector has failed is multi-faceted. It’s not just about platforms. We could go back to Craigslist and a range of different things that have impacted revenues. The notion that the success of those companies is built upon news is an obvious fallacy. News just isn’t that important to these services. While they have captured ad revenues to be sure, it’s because they offered a better ad model and not because they’re offering news on those platforms. That’s the reality of the economics behind this.

We have seen these closures. The same studies that point to the 400-odd closures over the last decade or so highlight at least a couple hundred start-ups that have entered into this space. We must recognize that innovation is taking place here. This doesn’t mean that government can’t act, but we are seeing newer players coming into the marketplace. Quite frankly, I think this legislation harms their ability to be competitive. Many of them didn’t want this. They’ve had little choice but to participate in it because they say, “How are we going to compete if our main competitor is the CBC in a local market and suddenly we’re in an environment where the CBC is not only publicly funded but also now Google and Facebook funded?” So they’re participating in this. Frankly, I think the government came up with some pretty innovative approaches with things like local journalism funding and the tax credit systems. However, we didn’t really allow that to play out in the way that it might have. I worry that by trying to steer the majority of this money toward some of these large legacy players, notably large companies like Bell and Rogers, we will end up with an environment where some of those innovative players are not going to survive just because the deck is even further stacked against them.

Senator Manning: Thank you. A lot of discussion in today’s world is about trust in the media. We hear comments about fake news. It’s constant. When I talk to ordinary people they say, “I don’t believe a thing I hear on the news anymore.” I wonder about Bill C-18 and governments trying to restore that trust, or at least trying to cement it.

How do you see Bill C-18? I ask this to any of the other witnesses who want to answer: How will that strengthen Canadians’ trust in news? Do you see Bill C-18 doing any of that?

Mr. Geist: I’ll try to go quickly to make sure everyone has a chance. I think it does the opposite. I think it undermines trust in a couple of important ways. One, it undermines trust because I think it skews coverage. It may be the case that people have had op-eds cancelled. Anyone who fairly looks at the coverage of this bill within mainstream media will acknowledge that there’s been a blurring of editorial and business interests of many of these entities which ultimately undermine trust in those entities because they put their business interests on the front page as an editorial. Further, by invoking, essentially, Google and Facebook say, “We want, perhaps, as much as 35% of news outlets’ costs funded by these two companies.” How can we trust the coverage of those companies when they’re so dependent on it?

I’ve put forward the fund model because I think we need to create a system whereby it is an arm’s length between where the funding is coming from and who directly benefits. With what we’ve established now companies can survive, but I’m not so sure they’re going to be trusted when people know two thirds of their finding come from either Silicon Valley or from the federal government.

Mr. Menzies: If I might add, the entire news industry depends on trust. That’s its primary commodity. Without trust, it has no hope. It’s always advertised itself — you know, this evening, watch Senator Manning’s most trusted news. That’s always been the platform behind it. Anything that undermines trust, even if it’s 10 or 20% of the population and even if you don’t agree with it, is going to kill the business. This bill undermines trust.

Ms. Boltman: If I may add, that’s exactly why FRIENDS is calling for more transparency in this bill, because lack of funding transparency will only further feed this distrust. Canadians have a right to be able to measure the influence in their news ecosystem. If it’s 30% or 35%, Canadians need to know about that. We need to look no further than the recent outcry that followed Twitter’s mislabeling of English CBC’s news to show us how much Canadians appreciate and value the independence of their news media. A bit more transparency in this bill will help accomplish that and will help accomplish trust.

The Chair: Thank you for the compelling testimony here today. The message is crystal clear from all three of our witnesses that we have a government pumping in more than $1.2 billion into a broadcaster. They allow them to compete in the marketplace and to soak up a lot of revenue at the expense of independent news media outlets.

I’m concerned that we’ve been allowing and perpetuating this now for a number of years with this government, supported by Parliament, and we’re doing it without any hesitation. We’re encouraging them to compete, and we’re consumed by it. However, look at the ratings. No one has touched upon that.

Can somebody explain to me how a government can give so much to a news outlet that has so little in terms of ratings compared to other independent news outlets across the country? Does anyone want to comment on that?

Ms. Boltman: We can comment on some stats about CBC News. Ms. Andrews?

Ms. Andrews: To Senator Dasko’s point earlier, multiple polls exist that show the CBC remains one of the top consulted platforms both online and in television.

With regards to FRIENDS’ own polling — and, we would be happy to provide the Senate a copy of it after this — the CBC remains one of the most trusted news sources. We did a poll during the early days of the pandemic that showed Canadians had a high level of trust in the CBC for providing news around the pandemic. The numbers do show that Canadians consult the CBC a lot. They trust the CBC in terms of news. However, to the point you were making earlier, there is a conversation to have around the CBC. FRIENDS is ready to have that conversation. We’ve consistently advocated for a conversation around the mandate so that the CBC’s mandate can be recentred around the public service value. It’s also something that was raised during the Yale report. We’re ready to have that conversation when Parliament is ready.

Mr. Menzies: I would suggest that where CBC is purely public experiences some success. I would say that both the English and French-language radio services, which are not commercial, tend to do very well in their markets. They tend to be market leaders. That said, radio markets are 9% or 10%. That’s huge to be a market leader.

Where they’re failing is where they are commercial in terms of that, because this is how the commercial nature distorts your view. You then aim your programming at advertising markets like the GTA and Montréal. So you then aim your editorial approach to serving those markets. And you serve those markets well and generate revenue from those markets, but you abandon the rest of the country and your mandate because your approach has been distorted by your commercial nature.

If you want a purely public radio that is less political, less ideological — I mean, people will have different views about radio and that sort of stuff — but it seems to experience higher levels of trust than where it’s commercialized.

Mr. Geist: I will respond very briefly — and in some ways I’ve already made the point — that I think we put a lot of money into this. There have been promises for more. The mistake is to say that, rather than the public dollars putting in more money, let’s get Google and Facebook to fund it.

At the end of the day, it undermines the whole rationale for a public broadcaster. I listen to CBC Radio. A lot of people do. People do value this and value it as a potential source of reliable and credible information. But it’s hard to be that when you’re turning over a bunch of your funding to a couple of U.S.-based tech giants, and it’s hard to do that when you become indistinguishable from other sources.

Instead, we ought to ask how do we leverage that $1 billion or $1.2 billion? One of the ways to do that is to make sure it is as broadly and readily accessible as possible. And it’s not the same as what you find on a Global TV or CTV or some of the other media markets. What this bill does is it says that there is no difference, we just want to see these guys pay up.

The Chair: Thank you for the answers. We are out of time. The only thing I want to clarify to our audience and our members, my question was about ratings, not about polling and trusting the CBC. I’m not questioning people trusting the CBC.

No one is questioning the $1.2 billion subvention that they get every year. What no one can question is the ratings of CBC that come out every quarter. I do want to make a distinction that they are significantly different between Radio-Canada French and CBC English. I will give the brief last word to my deputy chair who is dying to get in before we adjourn this section.

[Translation]

Senator Miville-Dechêne: Radio-Canada has indeed enjoyed high ratings in certain areas, so distinctions have to be made. I don’t think that there is a consensus here on Radio-Canada. You said that there are opposing viewpoints, but we don’t have a consensus here on CBC/Radio-Canada.

The Chair: There is obviously no consensus and that’s the reason we have a Parliament and a democracy.

Senator Miville-Dechêne: I simply wanted to say that we were not all in agreement on the subject.

The Chair: Yes, of course.

[English]

I’d like to thank our guests for being here today and for a very thoughtful exchange. As you see, I have tonnes of questions for a second hour, so I think we should have this panel back for a second hour in the near future. It is a proposal I make to this committee because you were all outstanding. I thank you very much.

We are now resuming our meeting in public to continue our examination of Bill C-18, the online news Act. For our second panel, from the Canadian Radio-television and Telecommunications Commission, we have before us Scott Shortliffe, Executive Director, Broadcasting; Daniel Pye, Director, News Remuneration; and Adam Balkovec, Legal Counsel, Legal Sector. Welcome to the committee. The person we don’t have is the Chairperson and CEO of the CRTC. I must express on my behalf and on behalf of the deputy chair of this committee our displeasure of the fact that she didn’t have the time to come before the committee to address some important questions, but we hope that will be addressed in the near future as well. We thank all of you here for taking the time to be with us.

We will have this panel up until 10 minutes to 11, because the committee has expressed a desire to spend a few minutes to address some management issues. I will try to organize myself accordingly, as per the wishes of the members of this committee.

So you have seven minutes for presentations, and then I will turn it over to questions and answers. Mr. Shortliffe, you have the floor.

[Translation]

Scott Shortliffe, Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission: Good afternoon. Thank you for inviting us to appear before you today.

As the chair has said, I’m joined today by my colleagues, Daniel Pye, Director of News Remuneration, and Adam Balkovec, Legal Counsel.

If it receives Royal Assent, Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada, would establish a framework for digital platforms and news businesses to enter into agreements regarding news content that is made available online.

Those agreements will also need to respect journalistic independence and provide for investments in a diversity of Canadian news outlets.

Should parties be unable to reach such an agreement on their own, they may turn to mediation or binding arbitration to solve the impasse.

Under the scope of the proposed legislation, the CRTC would perform several functions.

[English]

Specifically, we would develop, implement and oversee the regulatory framework under which the new commercial agreements would be negotiated. We would also assess which online platforms the online news act would apply to and which news businesses are eligible to negotiate under the act. We would oversee negotiations and mediations, and create a roster of qualified external arbiters for final-offer arbitration. We would also establish a code of conduct to support fairness and transparency in bargaining, and we would deal with complaints relating to unjust discrimination, undue preference or undue disadvantage as it relates to the bill.

Finally, we would engage an independent auditor to publish an annual report on the act’s impacts on the Canadian digital news market.

[Translation]

The CRTC has been preparing for the coming into force of this legislation, should Parliament decide to enact it. We are ready to respond. We have significant and extensive experience overseeing dispute resolution processes, assessing complaints and enforcing codes of conduct.

Mr. Pye, as Director of News Remuneration, is setting up a structure to allow us to perform this work. Dedicated resources from our Legal Services and other areas of the CRTC have been assigned to this project.

However, it is important to understand that successfully negotiated agreements won’t happen overnight.

[English]

The CRTC has a legal duty to gather input from news businesses, platforms and Canadians on how to create this new regime. The CRTC will base its decisions and regulations on the evidence it gathers through public consultations, and that will take time. We will work diligently and quickly while respecting these obligations.

I would note that in the specific case of Bill C-18, we are being asked to administer a process to help parties reach commercial agreements; we are not being asked to regulate the news industry, or to determine what news Canadians receive or how they receive it.

The CRTC stands ready to move quickly should Bill C-18 receive Royal Assent and proceed with the public consultations we will need to hold in order to set up the framework and implement the legislation.

Mr. Chair and honourable committee members, my colleagues and I would now be pleased to answer your questions.

[Translation]

Senator Miville-Dechêne: Thank you for being here with us today.

You said that you are ready to react. Once Royal Assent has been given, at what point will you be ready to arbitrate? We are talking about approximately 650 news outlets that have been identified in the bill. Approximately 400 of those are very small news outlets. As far as I know, you do not have any experience in arbitration per se. You do have experience in other fields, but not that one.

What can we expect in terms of timelines? Some of the small news outlets could disappear before having even been heard by the CRTC which, in the past, has taken a lot of time to render its decisions.

Mr. Shortliffe: That is a good question. I could ask Mr. Pye to describe the steps. You should know that before getting to arbitration, we have to hold a public hearing in order to establish definitions. That can take some time. I cannot provide any precise timelines. Afterwards, we can start the process. There will be certain steps to follow, however. As I said, this will not happen overnight.

Mr. Pye, can you describe the steps between now and arbitration?

Daniel Pye, Director, News Remuneration, Canadian Radio-television and Telecommunications Commission: First of all, as Mr. Shortliffe has mentioned, there are steps to be taken, including a public consultation. Once that public consultation has taken place, it is obvious that the commission will render decisions on certain aspects over which it has jurisdiction under the bill.

Once those decisions are published, the bill will be enacted. That will either be done through regulations or by an order —

Senator Miville-Dechêne: Are we talking about months or years? Please give us a ballpark figure.

Mr. Pye: Whether it’s in months or years, I would say that usually, the process to be followed is that we hold public consultations and render our decisions. Afterwards, there are the regulations, so we are probably looking at one or two years, at a minimum.

Adam Balkovec, Legal Counsel, Legal Sector, Canadian Radio-television and Telecommunications Commission: If I may add something, senator.

I would direct you to section 93 of the bill. The process for enacting the bill is complex. We will have to wait for the Governor-in-Council, which will establish a regulatory framework, before we can draw up our own regulations.

I think there’s an opportunity to perhaps simplify the coming into force of the bill, to provide a bit more flexibility to the commission in enacting the bill, and we could —

Senator Miville-Dechêne: Could you suggest an amendment? I have read section 93 10 times now and I’m still having trouble. Could you suggest an amendment that would make things simpler for you?

Mr. Balkovec: Absolutely. We could get back to you with a written proposal in order to describe how the enactment could be more flexible and simple for the commission.

Senator Miville-Dechêne: Thank you.

[English]

Senator Simons: Mr. Shortliffe, you said that it will not be the CRTC’s job to regulate the news itself but only to supervise the negotiations. However, I want to turn to paragraph 27(1)(iv) of the bill, which says that the commission will decide who is an eligible news organization, and that will be based in part on them having a code of ethics and standards of professional conduct. I know to my colleagues in broadcasting, that might seem normative, but it is anathema to a lot of print journalists, who do not believe the government, the state or the Crown should in any way be regulating the ethics of newspapers.

How do you square that part of clause 27 with your previous comments?

Mr. Shortliffe: Our interpretation of clause 27 — and I’m assuming, of course, that it passes as written — is that we are meant to ensure it is a viable journalistic organization. We will have to get precise on that as part of our public consultations. Our understanding of the intent of the bill, though, is that we should not be interpreting that in such a way that it limits news from applying or that it limits applications. The point you’ve raised, where news organizations may come to us and say, “This would be a limiter to us being able to apply to the bill,” I think that’s a valid point. It could be raised in front of us and I assume will be raised in front of this august body by people testifying before it.

But our understanding is that there should be clear definitions. They should be neutral in how they apply. They should not be written in such a way that they include or exclude a particular kind of news organization as long as that news organization can show that it is a viable news organization.

We will also have to wait to —

Senator Simons: Viability is different than credibility.

Mr. Shortliffe: Sorry, I apologize for that, a credible news organization, that’s a much better word. I apologize for misusing the word; a credible news organization.

Again, our understanding of the intent of the bill is that a credible news organization is most clearly defined by clause (a). The government’s decided to bring in clause (b) which puts, frankly, a bit of an onus on us to then define that.

Because our understanding of this bill is that our role is to administer — which is very different from Bill C-11 where we’re interpreting a policy — frankly, the more concrete measures we have in a bill, the less we want to interpret or we are required to interpret the better from our perspective because this is not a bill that is designed to ask us to administer a policy. It’s asking us to administer a process.

Senator Simons: I have a question about algorithmic analysis. Meta and Google have indicated very clearly publicly their displeasure with this bill. There are parts of the bill that you have to make sure there is fair dealing and that the content is not being down voted on the basis of whether or not it makes Google and Facebook happy. I’m wondering what you can tell me about how you’re going to conduct that algorithmic analysis to see whether news content is being suppressed improperly, and is there going to be enough independence and transparency in figuring that out?

Mr. Balkovec: I would point you, senator, to clause 52 of the bill, the undue preference provision. That would be the tool that the commission would envision using to deal with that sort of problem.

I point out that the complainant, the news business, will need to demonstrate a prima facie case of some kind of preference. From there, the onus would shift to the platform, to then demonstrate that the preference was not undue. We think that would allow that sort of analysis to take place, rather than the commission attempting to tinker with an algorithm, so to speak. It would really be up to the platform to demonstrate, in the context of a public proceeding, that what they’re doing is not retaliatory, is part of the normal course of business, et cetera.

Senator Simons: This will be entirely complaints-driven and there wouldn’t be an onus on the CRTC to monitor algorithmic buying of results.

Mr. Balkovec: To turn to something I mentioned to Senator Miville-Dechêne, as it’s written, the commission does not have the ability to inquire into this sort of thing on its own motion. That’s an example of the type of flexibility that we think would assist in the implementation of the bill to allow the commission, of its own motion, to look into matters within its jurisdiction such as undue preference.

Senator Simons: I can imagine for a smaller news organization in particular, it would be difficult to make that prima facie case. They don’t have access to the back end of the algorithm. How do you know if you’re being — I feel like it’s the scene in Monty Python, “Help, help, I’m being suppressed!” How do you know you’re being suppressed if you don’t have the analytical tools to discover?

Mr. Balkovec: It would be consistent with the commission’s mandates, under the Telecommunications Act and Broadcasting Act, to be able to do that sort of thing on its own motion as well. And we could, perhaps, then assist Dennis the peasant in the example you’ve given.

[Translation]

Senator Cormier: I wanted to ask you about sections 6 and 51 in light of Mr. von Finckenstein’s testimony last week, when he expressed his concerns about these two sections.

Since we’re talking about algorithms, let’s look at section 51 that allows eligible news businesses to make a complaint with the CRTC if they have reason to believe that an intermediary is discriminating against them or is subjecting them to a disadvantage. As intermediaries do offer content based on algorithms, there is a certain form of discrimination to be found in what the algorithm is proposing.

Do you have any concerns as to the number of complaints that the CRTC could receive on this issue? What is your point of view on the possible volume of complaints?

I think that was also a concern for Mr. von Finckenstein, and it is for me, too.

Mr. Shortliffe: It is difficult to predict because we only have experience in one part of the industry, that is to say broadcasting, but not the other, which is the written press.

However, we do now have a lot of experience in terms of undue preference. There have not been a great number of cases, because one party has to present a case whereby a certain body of evidence allows us to say that it wasn’t enough to have a preference. There’s nothing wrong with having a preference. However, undue preference is another matter.

We will therefore have to create a framework that explains what is not undue preference and we will have to enforce it. It is really difficult to predict because honestly, this is a new bill. We have internal resources and we are ready, I believe, to react on this issue.

Senator Cormier: What is the process you follow to determine if it is undue or not?

Mr. Shortliffe: I couldn’t tell you exactly how, because that is what will be determined at a public hearing.

Senator Cormier: All right, go ahead, sir.

Mr. Balkovec: I could give you an example in the context of telecommunications.

In the 2010s, the commission held a public hearing in order to develop a regulatory framework that would explain how certain practices that we call throttling constitute a violation of a similar section of the Telecommunications Act. We have therefore reviewed an example of the practice of throttling in the industry.

We now have a policy that takes into account this type of situation and we could do something similar in the context of the bill.

Senator Cormier: All right, thank you.

Section 6 is the area of application that sets out what criteria should be followed so that the bill applies to a news intermediary. Do you think the criteria should be more precise?

I believe it was Mr. von Finckenstein who said that there should be a revenue threshold here to determine if a news intermediary meets certain criteria. What do you think?

Mr. Shortliffe: As I’ve said already, I could accept the current bill, but I would prefer to have a lot more detailed information, because we are still unsure as to what wiggle room we will have. When there are lots of requests for explanations or the bill contains new definitions, this means that there will be more questions at public hearings and that pushes back negotiations. Consequently, the more detailed the information, the better.

Heritage Canada could make regulations. I have not seen the regulations proposed by Heritage Canada, but that could provide more detail at section 6. If there are more details, that will help the CRTC in its work.

Senator Cormier: Thank you.

[English]

Senator Wallin: One of the concerns raised by our discussions about Bill C-11 was the power of the government to direct the CRTC as opposed to the CRTC being an arm’s-length body as it was originally conceived.

I am told by sources close to the matter — I don’t expect you to confirm or deny, but I would like an answer to this question. There is almost daily contact between the leadership of the CRTC and the minister’s office about this bill and about how it’s proceeding. That troubles me greatly. If that’s true, are you at least having the same kind of contact with the streaming services and with others that are impacted in this field directly, on an ongoing basis? I then have a follow up to that question.

Mr. Shortliffe: Absolutely; I can address both parts of that. First, I’ll mention one thing that occurred to me when I saw the testimony last week in terms of framing. It’s interesting that in Bill C-18, unlike both the Broadcasting Act and the Telecommunications Act, there’s no policy direction power for the government. That’s a substantive change.

As to contact between our various offices, I can’t speak to the chair’s office. I don’t believe she’s in either daily or regular contact with the minister’s office. Obviously, I’m not the chair; I can’t speak for her. At our level, however, we have ongoing contact mostly on technical issues. As Mr. Balkovec indicated, we’ll provide an undertaking with our concerns about the bill. We’ve provided that to our colleagues at Canadian Heritage. However, we don’t engage in trying to tell them what the policy should be because that’s their business. We don’t allow them to tell us how the commission should approach it. We do have contacts.

In terms of news media, I’ve met with broadcasters and newspaper publishers. Until this bill becomes law and we start public consultations, we’ve taken an open door approach. If someone wants to tell us their view on the bill, we’re very happy to hear it. We won’t necessarily tell them what we’re planning to do, but they’re free to come in and tell us what their views of the bill are and what potential issues they see.

So, yes, we’ve had ongoing contact with Canadian Heritage, but at a fully appropriate level and respecting our individual responsibilities. We have also had contact with parts of the news media, where they have expressed their concerns and hopes for the bill.

Senator Wallin: What about the streaming services?

Mr. Shortliffe: I have not engaged in conversations with the streaming services. It’s interesting because I appeared on a panel with them at a conference last year. I was there to describe how this bill was different from Australia. My discussions with them were limited to hello, how are you and nice to meet you? We did not have any substantive discussions.

They haven’t approached us. That would be an interesting discussion to have, but they have not asked me for a detailed discussion of this bill and we have not had one.

Senator Wallin: I ask that because when these bills arrive in front of us, they’re in need of dozens and dozens of amendments. Perhaps we would have a better process if some of that were involved before bills were drafted.

As we heard from Mr. von Finckenstein, and others, the CRTC does not at present have the capability to deal with these two massive bills in whatever form this one comes out as, so there will be contracting out to build internal infrastructure. Have you started any of those contracts? Do you have a McKinsey around building this? What stage are you at?

Mr. Shortliffe: I must with great respect disagree with the former chairperson. In fact, we’re not anticipating any contracting around Bill C-18 except for the two parts that are required in the structure of the bill, namely that we must have outside adjudicators and an outside auditor at the end. Otherwise, Mr. Pye is building a team. We have started. We’ve done work on all the pieces of work required in the bill, and we believe we can do this with staff and resources assigned to us. We don’t anticipate any contracting around this bill.

Senator Wallin: No additional hiring at the CRTC to deal with Bill C-11 and Bill C-18?

Mr. Shortliffe: There’s been additional hiring. In fact, federal Budget 2022 gave us $8.5 million over two years in order to set up Bill C-18. That is how — once I signed into this — Mr. Pye was able to start building a team.

The idea is that eventually this will be replaced by fee recovery. There is also some additional hiring around Bill C-11, but no contracting out on Bill C-18 at the moment.

Senator Wallin: Thank you.

Senator Cardozo: Thank you for being here. I have a few questions on how things would roll out. First, I want to build on Senator Wallin’s question.

As I would expect at this stage of this bill, there should be some contact between the government, the minister’s office and the CRTC to make sure you can do what they’re expecting you to do. I expect they will come to you and say, “This is what we want to do. Can you do it,” or you would have a discussion back and forth? From my time, I recall that there was strictly no interaction between the minister’s office, or MPs, or the public, or industry, with commissioners around issues that are before the commission so that when you’re dealing with these issues, you would not expect the minister’s office at any time to be saying, “Can you do this one quick? Can you let this one through?” That’s my first thought.

Second, in terms of clause 93 as I’m reading it, and as you provided some information about it, it seems that it would be quite a while before this act goes into effect fully because it’s saying certain sections of the act would not go into effect until the regulations were made and in place.

Third, can you tell us a bit more about how regulations are made? You talked about it taking a year or so. Do you put out draft regulations for feedback or do you just ask for feedback totally open? How does that process roll out?

Mr. Shortliffe: I’ll take the first two parts of your question and then I’ll ask Mr. Balkovec to address the regulatory part of your question.

First, we never deal with the minister’s office. We don’t see that as appropriate. We do deal with the Canadian Heritage staff, however. Again, when the bill became public, we had some technical concerns about it. We weren’t questioning the policy because that’s the government’s role. We have interaction with them, but we have never spoken to the minister’s staff about it, and we have not spoken to MPs about it. Frankly, we don’t see that as appropriate. We see it as appropriate to interact with our colleagues and to interact only on the level of trying to understand the government’s intent and how we can make it better. We’re not engaging in a dialogue, for example, to say, “This would be better if it was a fund.” That’s not our place. Our place is to take the legislation that is given to us.

Senator Cardozo: — talking to departmental officials.

Mr. Shortliffe: Just to department officials, yes. We’re limited in that way.

I’m sorry, but what was the second part of your question?

Senator Cardozo: In clause 93, does it mean that this act will take a year or two before it goes into effect?

Mr. Shortliffe: Mr. Balkovec talked about how regulations work but once the bill is passed, DNIs and news organizations could, in theory, start signing deals immediately. They’re not limited to wait. They’ll probably want to wait to see what our regulations are, but in theory they could start immediately. Once our regulations are passed, a DNI, be it Google or Meta — or another DNI, if it qualified — could come to us and say, “We are going to start the exemption process quickly.” It’s not that they have to wait for the entire process before there are any deals with news organizations. We know that some deals with news organizations already exist, but we don’t know their amplitude.

Mr. Balkovec, would you talk about the regulatory process?

Mr. Balkovec: Absolutely. I would give clause 49 and clause 50, the code of conduct as an example here. As it stands, the commission needs to set up a code of conduct by regulation.

Regarding the regulation-making process, the commission makes regulations regularly; it’s able to do that. The process is fairly prescribed and fairly inflexible. The Statutory Instruments Act governs a lot of it. The commission would usually have a public consultation and from that draft some draft regulations. The commission is then required to send those to the Department of Justice to have them examined. That’s required under the Statutory Instruments Act. That is a potential issue because the timelines are taken out of the commission’s hands, in that case, once the draft regulations leave the building. We would then get those back and publish them again for further comment to see if any amendments need to be made. Only after that second consultation would we finally make those regulations.

It may be possible for the commission to move more expediently if this code of conduct could be made by some other means, for example, by a commission decision.

The Chair: Thank you, Mr. Balkovec. The time has elapsed.

Senator Dasko: I had some important questions to ask, but I can’t let this topic of throttling go by without explanation, especially since you raised it in reference to undue preference. Can you explain what throttling means? Is this throttling a way to achieve undue preference? How might it apply in this case, in this bill and in this area?

Mr. Balkovec: Absolutely, senator. I apologize. I sometimes forget I’m not always speaking to other telecom nerds.

Senator Dasko: I think you came to the end of your time anyway, so therefore please tell us what throttling is. It will be a new lexicon for us.

Mr. Balkovec: Absolutely. That’s something we encounter in the telecom context and not necessarily under this bill. It’s a practice whereby an internet service provider prioritizes or slows down certain types of internet traffic. There are legitimate reasons to do that — network management and potentially public safety reasons — and there are other less legitimate reasons to do that, such as favouring content from certain types of services online.

The Commission developed a policy under the Telecommunications Act to govern situations in which that sort of practice would be acceptable or unacceptable. I was simply trying to give that as an example of the sort of thing the Commission may do under this bill — hold a public consultation to determine what sorts of actions, in the making available of online news, could be considered a legitimate ranking of information online, for instance, versus more illegitimate practices that may have their basis in retaliation or something like that.

Senator Dasko: I see. You know, we often focus on algorithms and how algorithms work and how those might involve some sort of undue preference. Of course, companies use algorithms all the time, and they change them. Algorithms are not fixed by companies. They’re flexible and change and so on. Would it be considered — setting aside throttling — part of normal business to be able to change algorithms and essentially have the freedom to develop them and to change them with respect to the platforms we are talking about and with respect to the way they profile links to news organizations?

Mr. Balkovec: Those are all excellent questions. Those questions are precisely the reason the Commission would likely have a public hearing to flesh out the answers to those questions in a public and transparent setting.

Senator Dasko: But what would the considerations be? I mean, if this is normal business, then it’s normal business, right? It’s allowed.

Mr. Shortliffe: I think we do see it as normal business. Again, we’ll have to have the public record. I’ll give you what is, obviously, a purely theoretical example. Suppose, for example, that you had negotiations going on, and anyone who had signed a deal suddenly saw their impressions go up by 100% and anyone still in negotiations saw their references drop off to zero. In that case, you would probably have a case to say that someone is using their market power to favour the people whom they’ve signed deals with and disadvantaged the ones they are in negotiations with as a negotiation tactic. That would be a case to come in and say that it’s not just a question of a preference, it’s a question of an undue preference because they’re trying to use it to destroy competition.

When we deal with undue preference cases now in the broadcasting sphere, those are the kinds of metrics we look at. It’s not whether you have decided, for example, to carry one channel and not another. It’s whether, for example, you go to a channel you directly compete with assets you own and suddenly tell them they need to take a 70% cut to stay on the broadcasting distributing undertakings, or BDUs — that’s a cable and satellite company. That looks like undue preference because suddenly you’re saying this is not just the normal course of business. That said — as you said — algorithms change all the time, and our job is not to tweak algorithms to determine how people get news.

The other thing is that news businesses rise and fall. There may be a newspaper that is very relevant to its readers and has a change in its outlook — it’s reportage — and two years later, it’s less popular. That will happen, and this is not meant to backstop this. This is meant to look at where you see an egregious case of —

The Chair: I hate to cut you off, Mr. Shortliffe, but I have to move on to Senator Clement.

Senator Clement: Thank you for being here. “Telecom nerds” — that’s funny. There are so many opportunities for “nerding out” at this committee, it’s fabulous. Nerds are welcome.

I have a question in follow up to what Senator Wallin was saying about resources. You have Bill C-11 and potentially Bill C-18. You spoke of internal resources. What do you need to be successful here if all this goes through? I heard your answer, but I wonder what more you might need.

Mr. Balkovec, you mentioned flexibility and needing more of that. Perhaps you could lean into that in the answer to that question. What would the CRTC need to be successful in supervising and doing what it needs to do around these two pieces of legislation?

My second question is about comparison with other country models. Apparently, Bill C-18 gets transparency a bit better in terms of the transparency of agreements. But do we go far enough? Do you have any opinion on Bill C-18 versus other country models?

Mr. Shortliffe: I’ll start with the second part of the question first. I have to be cautious, because we don’t want to comment on whether the bill is the right approach or not. That is Canadian Heritage’s call. We will say that in speaking to our colleagues in Australia, including our regulatory colleagues, this bill provides for much greater transparency. The Commission will have a much greater understanding of what is happening than our colleagues in Australia. I think that will be useful, especially when we get to questions like undue preference, which are inherently complicated. I think the public reporting provisions of having an auditor to speak to the overall value of the bill and being able to track it, year by year is certainly something that would improve on the Australian model.

Frankly, when we speak to our colleagues in Australia, our first question is how much the bill is worth. They have estimates. You’ve seen them publicly. However, because all the deals are private, they cannot actually tell us what the value of the Australian model is.

In terms of the resources we need — and we’ll provide some material on what we need — on Bill C-18, I think we’re quite comfortable that we have the right model.

Mr. Pye, do you want to just talk for a moment about where your staff is at, and how we’re staffing up?

Mr. Pye: At this point, there’s been the creation of a dedicated team to Bill C-18. The team is in place. For the time being, the team is focused on, obviously, the implementation phase of the act.

Once we have additional clarity on the timing of Royal Assent and so on, at that point, we will proceed with further resourcing of the team to ensure we have the staff in place and to ensure the administration of the act in an efficient and effective manner.

At this stage, the team is there, and there’s a work plan in place. The capacity is there. The capacity is not an issue at this point, and we have the funding to ensure that capacity ramps up in a manner that is necessary to execute our mandate under the act. From that standpoint — purely from a resource standpoint — we’re in a good position.

Senator Clement: Thank you.

The Chair: I’d like to thank our panellists for being with us here today. We appreciate your time.

The deputy chair and myself would like to send back the message to your chair that we have invited her. It’s been over a month that the invitation was sent out, and we do feel, at the end of the day, that she is the one who is accountable for the CRTC. She is the one who will be interpreting this piece of legislation with her colleagues, and it’s incumbent on her to show Parliament a little bit more respect.

We thank you for your time.

Colleagues, we’ll go in camera for a few minutes in order to take care of some housekeeping business.

(The committee continued in camera.)