THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Wednesday, May 3, 2023
The Standing Senate Committee on Transport and Communications met with videoconference this day at 6:45 p.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.
[Translation]
The Chair: Good evening, honourable senators.
I am Leo Housakos, a senator from Quebec and chair of this committee. I would like to invite my colleagues to introduce themselves, starting on my left.
[English]
Senator Simons: Paula Simons, a senator from Alberta, Treaty 6 territory.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
Senator Cormier: René Cormier from New Brunswick.
[English]
Senator Quinn: Jim Quinn, New Brunswick
Senator Klyne: Marty Klyne, a senator from Saskatchewan, Treaty 4 territory.
[Translation]
Senator Clement: Good evening. Bernadette Clement from Ontario.
Senator Cardozo: Andrew Cardozo from Ontario.
[English]
Senator Dasko: Donna Dasko, a senator from Ontario.
Senator Wallin: Pamela Wallin, a senator from Saskatchewan.
The Chair: Honourable senators, we are meeting to continue our examination of Bill C-18, An Act respecting online communication platforms that make news content available to persons in Canada.
For our first panel, I’m pleased to welcome Google Canada. We have with us Mr. Richard Gingras, Vice President, News, by videoconference; and Jason J. Kee, Government Affairs and Public Policy Counsel. Thank you for joining us. You have seven minutes for opening remarks, and then we’ll turn it over to senators for Q & A.
Richard Gingras, Vice President, News, Google Canada: Good evening, Mr. Chair and honourable senators. Thank you for the opportunity to appear and share our perspective on Bill C-18.
We have heard our position on this legislation mischaracterized as not wanting to be regulated or not wanting to support Canada’s new ecosystem. This is untrue.
Through both our services and our direct funding of news organizations, Google is one of the world’s biggest financial supporters of journalism. Last year, we linked to Canadian news publishers more than 3.6 billion times at no charge, helping them make money with ads and new subscriptions. We also pay news publishers to licence curated and paywall content through Google News Showcase, which currently supports more than 150 publications across Canada.
Through the Google News initiative, we provide tools, training and funding to support the shared goal of enabling a healthy, independent and diverse news ecosystem. We are willing to do more. We support a thoughtful approach to regulation that protects the foundations of the open web and recognizes the value we already provide to publishers.
Unfortunately, Bill C-18 will not encourage the continuation or expansion of publisher licensing agreements, as it is intended to do, and it may jeopardize current products, services and investments that benefit the news ecosystem and all Canadians.
For over a year now, we have shared our concerns and proposed thoughtful solutions and alternate models we feel would be more effective at achieving the underlying goals. However, rather than considering a fund model, or addressing concerns raised by us and others, recent amendments glossed over serious issues, exacerbated others and produced a range of new inconsistencies.
The debate on this legislation has also created dramatically unrealistic expectations among news publishers and politicians, treating Bill C-18 as an unlimited subsidy for Canadian media, and the publisher class has grown so broad under this bill that it won’t have an impact where it matters most.
Core among the issues of Bill C-18 is the provisions that override well-established copyright allowances and put a price on links. By making Canada the first country in the world to put a price on free links to web pages, this bill ignores the existing $250 million value of free traffic to publishers and sets a dangerous precedent that is contrary to the long-term interests of the Canadian news ecosystem. Leaving existing copyright balances intact, as was done with the European Union Copyright Directive, would establish a reasonable baseline that recognizes the value of free traffic and enables negotiation of value-added content and services.
Regrettably, Bill C-18 could see existing support to Canadian news publishers slow down or stop while Google and others seek the clarity we need to ensure a reasonable outcome. Creating clear exemption criteria would have the immediate benefit of encouraging Google and publishers to sit down, reach agreements and flow money to journalism quickly. Replacing final-offer arbitration with standard commercial arbitration, which is relied upon for the most complex business disputes, would be the fair and just way to settle any resulting disputes. Furthermore, clarifying eligibility criteria would ensure that the bill effectively and equitably supports quality journalism for local communities, including ensuring that eligible news businesses actually produce journalism and directly fund the creation of journalism.
The reality of Bill C-18 is that the extreme level of business uncertainty and uncapped financial liability that Google is being asked to accept merely for providing free links to the news sources Canadians are searching for and from which news publishers benefit is unreasonable and threatens to create a situation where everyone loses. If we must pay publishers simply for linking to their sites, making us lose money with every click, it would be reasonable for us, or any business, to reconsider why we would continue to do so.
We remain laser-focused on working constructively with senators, the government and the news industry to fix this legislation and make it work the way it’s intended. At minimum, Bill C-18 should include a clear and attainable path to exemption that incentivizes businesses like Google to continue to support the Canadian news ecosystem.
We look forward to your questions.
The Chair: Thank you, Mr. Gingras.
We will go to questions now, and we will start with the deputy chair.
[Translation]
Senator Miville-Dechêne: Welcome, gentlemen. So one of the problems with the bill is the vagueness of the value that platforms and news publishers have to negotiate. News publishers refer to 30% of newsroom costs, while platforms, like Google, refer to the commercial value of the news content versus the commercial value of the traffic it drives to news sites.
Can you tell us how you solved this problem in Australia and what amendments you would suggest to remedy it? It seems that this is at the heart of the disagreement between you and the media.
[English]
Mr. Gingras: Thank you, Senator Miville-Dechêne, for the question.
It’s important to note that, in Australia, the bargaining code that was proposed was indeed a piece of legislation that we considered quite unworkable. We expressed those concerns. There were changes in the bill before it was ultimately passed but, more importantly, the government gave us a clear understanding of how we could be exempt from that bill. Indeed, we proceeded and worked with the industry to address what we were asked to do, and we were never designated under that bill. So that bill does not apply to us in Australia.
To your point, as I’ve noted in my opening remarks, I think one of the unfortunate problems with the bill is that it creates a disincentive for us to do all we can to connect users to new and diverse voices that are expressing current events in Canada.
Also to your point, the suggestion that somehow this bill should result in compensation by Google and others equal to a third or 30% of newsroom costs is both inaccurate and problematic. I know that was expressed by someone out of Australia, who admitted that it was mere speculation on his part. I have looked into that closely, as we have, and frankly we find no mechanism to even understand what newsroom costs are across Canada or in Australia, for that matter.
I would also add that as important as it is — and I think we all agree — that we and others provide support, I would question whether the future of an independent media would be wisely founded upon an economic model that was reliant on a third of its funding from third-party private companies such as Google. Again, we think it’s an unrealistic expectation, and we think it’s an unwise expectation. We’re certainly glad to do all we can, but we don’t think that’s the right constructive path to get there.
[Translation]
Senator Miville-Dechêne: If you do not accept the 30% calculation, how do you calculate the value of journalistic content on platforms like Google?
[English]
Give us a measure of the value of this content. We’re going full circle, because if you’re not transparent about the value, how can we make progress?
Mr. Gingras: Thank you, Senator Miville-Dechêne.
I believe that we have been transparent. First of all, I would point out, as we have indicated, that news queries on Google’s search is less than 2% of overall queries. It’s a very small percentage of queries, as I and others have indicated, such as the Reuters Institute. In any society around the world, the percentage of citizens who are interested in serious news is in the single digits, however unfortunate that might be. I think we would all like that to be higher. The number of queries is less than 2%.
The amount of revenue that we earn directly from news on our products is even less than that. That’s not difficult for anyone to assess. If you do a query on Google Search for a news topic, such as this bill, you will not see ads. Advertisers are not particularly interested in “newsy queries” as a method of reaching their potential customers. So it is a small percentage.
Again, we’re willing to do more than it provides to us, but I think it’s important that that be recognized, and that the value we do provide, both in terms of traffic and the many other means that we have used to provide support to the news industry in Canada, also be recognized.
The Chair: Colleagues, please stay within the five-minute parameter.
Senator Miville-Dechêne: Am I past mine?
The Chair: Yes. Please just try to stay within a five-minute parameter for questions and answers. Then, if time permits, we can have a second round.
Senator Simons: You’ve come in today with a rather conciliatory statement, Mr. Gingras. Google’s public-facing comments before this have been that, were we to pass Bill C-18, you would pull out of the market and block Canadians from not only seeing Canadian news but international news on Google searches. Is that still Google’s position?
Given the rise of AI, which was not really considered seriously at the time this bill was drafted, would it not prejudice your use and development of AI technology if you blocked all Canadians from seeing Canadian and international news links via your search engine?
Mr. Gingras: Thank you, senator.
First of all, I don’t recall that we’ve ever made a statement that we would pull out of Canada. What we have stated is that, given the legal framework of Bill C-18, we would have to reconsider how we use links. Clearly, we would prefer not —
Senator Simons: The language was that you would block Canadians from accessing both Canadian-produced and international news on your platform.
Mr. Gingras: As part of these recent tests, we stated that we had to evaluate our use of links and, through those tests, we did, indeed, for that five-week period, not block, but we did not have those news sources in our index. Of course, Canadians could visit those sites in many other ways, but yes, for that short period, for a very small percentage of Canadians, that was the case.
Senator Simons: They were blocked and they could have gone to Bing or Yahoo or another search engine, but you would have to know first that you were filtering out all news.
My question is, how could that possibly work for you in an AI model that requires as much data as possible? Would you not be shooting yourselves in the foot?
Mr. Gingras: Senator, we’re in the very early stages of the development of these technologies. We certainly recognize their huge potential benefit, and we’ll continue to develop them with that in mind.
Again, as we speak here today, we are eagerly, if not desperately, seeking a constructive path forward. We don’t want to end up in a position where news is not in our products. We would rather not that at all, but as we’ve indicated, even indicated with the tests, the primary usage of our products by Canadians is to find all manner of things other than news. That is, indeed, the core of the —
Senator Simons: Before I run out of time, if I can just get in another question: In your additional materials, you suggested that one of your concerns with Bill C-18 is that it doesn’t do enough to impose journalistic standards on news or to make sure that you are allowed to elevate certain news sources over others. As a former journalist myself, I’m concerned at the idea of either the state or these corporations deciding what is or is not acceptable news. Are you calling on the government to create more policing of what is published before you would accept this kind of legislation?
Mr. Gingras: No, senator, that wasn’t our intent there at all. I would share your concerns. I don’t think it’s up to the government or anyone to decide exactly what journalism is. The point we were trying to make, and will continue to make, is that the underlying precept of the bill was to drive support for the development of quality journalism for local communities across Canada, but the breadth of the definition of “eligible news businesses” appears to go far beyond that, such that it won’t proportionally help with what we just said, providing quality journalism to local communities. That was our concern there.
Senator Simons: In terms of your undue preference concerns, my understanding of this clause is that it’s meant to make sure that neither Google nor Facebook can penalize companies that are not in productive negotiations or are not playing well with others, but do you interpret that to mean that you would not be able to index quality and acceptable sites over others?
Mr. Gingras: Precisely. What we were pointing out, simply, was that we felt — and my colleague Mr. Kee might want to jump in on this — that the language with regard to undue preference was not clear and that it could be interpreted, or misinterpreted, to suggest that we could not rank, as we do, to provide users with the most relevant and authoritative sources. It might subject us to many challenges, legal challenges, of our ranking efforts. That was our concern. If our understanding and interpretation of that is incorrect, we’d be pleased with that, but I’ll let Mr. Kee add, if he has the time.
Jason J. Kee, Government Affairs and Public Policy Counsel, Google Canada: Quickly, that is exactly right. The concern is that the undue preference provision can render us potentially liable for elevating any sort of information if someone feels they have been disadvantaged, and that could easily apply to purveyors of non-authoritative content who are unhappy about the fact that they’re not high up in the ranking. This provision was improved at the other place, but it still renders us potentially liable, so we’re quite concerned about it.
[Translation]
Senator Cormier: I’d like to welcome the witnesses. My question is for Mr. Gingras. Can you give some examples of agreements entered into with Canadian media companies so we can fully understand what type of media you are dealing with?
[English]
Mr. Gingras: Thank you.
In our efforts and programs in Canada, there are many. They range from training programs to innovation challenges to our relationships with the Google News Showcase. In all of those efforts, we seek to address and make our programs available to as diverse an array of publishers as we possibly can, without fear nor favour to any individually over another. As I mentioned with Google News Showcase, under those arrangements, that supporting news organization is in approximately 120 communities across Canada. Again, it is our objective to be as broad and diverse as possible.
As I mentioned in the prior hearing, I’ve spent a tremendous amount of time working with publishers in Canada, both legacy publishers and emerging publishers. There’s an extraordinary array of emerging news publishers in Canada, and we’ve worked closely with them to help in their development, and we would love to continue to do so. I think their voices should be heard in these debates as well.
[Translation]
Senator Cormier: Thank you for your answer.
I would like to understand the issue around clause 11, the issue of exemptions, as you seem to enter into agreements with various types of media. In the document I received at my office a few days ago, why do you say that the bill as it stands now gives a strong incentive to digital news intermediaries to wait to enter into voluntary agreements with news publishers until the regulator clarifies the situation? What’s stopping you from entering into voluntary agreements with as many diverse media outlets as possible, which would ensure that you get the exemption?
[English]
Mr. Gingras: We feel the exemption criteria at this stage are quite vague, such that we’re not sure how that is a potentially good path. Furthermore, given that, it’s unclear in our minds how it creates the right incentives by the publishing industry itself to come to the table and reasonably negotiate such that we might actually effectively pursue an exemption, but Mr. Kee might have a more detailed explanation on the technical perspective.
Mr. Kee: The purpose of the exemption criteria, as we understand it, is to incentivize voluntary agreements and to provide, essentially, an out. It’s the proverbial carrot to the stick of the mandatory bargaining regime that’s in the bill. The challenge that we find with the wording that is currently there is it’s so expansive as to effectively require you to have an agreement in place with every single publisher, and that wouldn’t necessarily be feasible, given the fact there’s a wide range of publishers and they all have different needs.
It is also worth noting that the exemption criteria require all these deals to look alike, and it requires them to be paying and receiving compensation for the making available of their content. We find with a lot of smaller publishers that using in-kind programs, training and other kinds of programming and support that we have, is actually more effective. The exemption criteria that are there do not actually reflect that.
Lastly, we just want clarity about what exactly is enough, how much are we expected to be contributing, and we don’t have that kind of clarity.
[Translation]
Senator Cormier: You say that the CRTC has no experience with news — that’s what it says in the document I received. It is reasonable to expect that the regulatory process will be lengthy.
Since you’re afraid that the process will take too long, why haven’t you taken more initiative to enter into voluntary agreements beyond the exemption criteria? You are in a position today, before the bill is in place, to enter into agreements with a range of different media. Why aren’t you doing that?
[English]
Mr. Kee: I think we have done exactly that. The Google News Showcase is our premier program where we actually will engage with a news publisher partner, who will then provide us, essentially, curated news information that we then show on certain products, particularly our Google News and Google Discover products. This is a program that isn’t necessarily suitable for all publishers. It requires them to participate and provide a certain volume of content to us that some smaller publishers are not necessarily going to be capable of doing, which is why we offer alternative programs to small- or medium-sized publishers, by and large.
So to be clear, we have been engaging with publishers in Canada voluntarily for some time, long before Bill C-18 was introduced, and, again, we wish to continue to do so. The challenge we face is that without a clear sense of a path to exemption, we don’t know what else we should be doing, how much we should be spending and what the expectations are. Until we have that kind of clarity, it’s difficult for us to move forward.
Senator Quinn: Thank you for being here this evening. It is good to see you again, Mr. Kee.
We had our meeting on April 19, and we talked a bit about — I was interested in what the impact is of providing the links to news outlets in terms of the effect on Google’s revenue. We couldn’t really get into that during the meeting, but I looked around a little bit to see what I could find in terms of revenue for Google, and from 2013 to 2023, revenues went from $55 billion to $280 billion. I understand that revenues are largely driven by advertising at around 80%, so that means that last year there would have been revenue of about $224 billion driven by advertising. What is interesting for me is that for our traditional publications, advertising has gone down, and I assume Google’s has gone up from this information that they provide.
I want to go back to Mr. Gingras saying that 1% is tied to links. I think my colleague was trying to get at quantifying something. I want to get a quantification of how much revenue Google accrues from the 1% news links that are provided. If it is 1%, it could be somewhere around $22 billion tied to advertising. Even assuming it’s half of that, it would be $10 billion.
There has to be a relationship between advertising disappearing from traditional publications and Google providing links and benefitting from providing links to have that news transmitted via the platform. As we said during the meeting, I believe people should be compensated for the work that they do.
I want to see what comments you and Mr. Gingras have in terms of those values. I may be way off base, but that is from your own annual report.
Mr. Gingras: Senator, if I may, I think one of the unfortunate parts of the situation is a misunderstanding of what has happened to the advertising environment with the introduction of the internet. The suggestion has often been made, and it was somewhat embedded in your question, that somehow the advertising revenue of news organizations moved to Google, and that really wasn’t the case.
You can see that in our own individual behaviours. Newspapers in their day were the internet of their communities. You went to them for all kinds of information. But the internet changed that. It was the internet that disrupted the advertising environment. There were four key categories that drove revenue for newspapers. Probably 75% to 80% were classified ads, which moved to the internet. When you look for an apartment for your son or daughter, you go to a classified ad service on the internet. Department stores are now a shadow of their former selves in a world of e-commerce. Food discount coupons in the paper, which my mom always used — supermarkets don’t work that way anymore; they have loyalty programs. None of that revenue came to Google. Automotive dealers — none of that money came to Google. The internet disrupted the advertising environment, without question.
One huge benefit — and I want to end on this point — is that small businesses in communities could not afford to advertise in newspapers. Small businesses are a majority of our advertisers because of the cost effectiveness and efficiency of internet advertising. It is important to keep that in mind as we look at this debate.
As we’ve noted, we’re willing to do our part to support the news industry, but we should do it on a sound basis of understanding what actually happened in the world of advertising and what values we currently provide in terms of, for instance, search traffic. As I’ve noted, it’s a small percentage for us, but it’s often a large percentage for news publishers. It has replaced the 30% of their operating expenses that they used to pay for distribution and news stands, and now that comes to services like Google search at no cost to them at all.
Senator Quinn: Would you agree that it is fair to say that there is some revenue accrual to Google’s favour with the shifting in advertising, and not just the classified ads? As I said, if it’s $20 billion, cut it in half and it’s $10 billion, and cut that in half and it’s $5 billion. There is some accrual that comes back from the shift in some advertising that would be in traditional newspapers. Some of those newspapers are regional newspapers, which we have lost so many of. Wouldn’t it be reasonable to assume that the company benefitting from that should have some dialogue with them to come to an agreement? That’s the first part of my question.
The second part is that I understand you have had deals with some of the larger publications in Canada. Have there been discussions with other publications in Canada to work out deals?
The last part of my question is that I understand in Australia that this is exactly what was happening so that you were exempt. The deals were made and you were no longer applicable to the law. What progress are you making in those negotiations to avoid being subject to this particular bill should it pass?
Mr. Gingras: One thing I should point out in regard to Australia is that the class of eligible news businesses was exponentially smaller than what we see in Bill C-18. It was a much more targeted approach.
We would very much like to engage in that dialogue. We have been engaging in that dialogue, but expectations have to be reasonable and appropriate to both parties. I think that is what is at question here: Is that reasonable and appropriate? We will certainly continue that dialogue.
What I would urge us to do is to make sure we’re thinking of the future and not the past. We shouldn’t look at this legislation to recreate the past, which is now gone, but how to put the focus driving the necessary innovation by emerging players and legacy players.
The Chair: Mr. Gingras, I hate to interrupt you, but Senator Quinn’s time is up.
Senator Cardozo: Thank you both for being here.
If I can take that discussion further, Mr. Gingras, I gather that you would have preferred a different model, the fund model, but I see that you have deals with a number of outlets at this point. You agree that you are prepared to help Canadian news media. What would you rather see instead of this bill?
Mr. Gingras: Senator, we feel that the role of a search engine is extraordinarily important in an open society. We do our absolute best to do that in a highly principled way. We think and know that citizens around the world trust us because they feel we do that well. I think it would damage that trust to the extent it was perceived that we had a direct hand in funding news organizations in societies. Now, we’ve done that. We feel that we’ve been guided to do that in places around the world, but I don’t see that as an ideal approach.
We would rather see an approach such as a fund where the structure and criteria were carefully crafted, where it was governed by others and not us, and where the sources of the revenue could indeed be largely from us, not necessarily tied to individual companies but to a broader class of activity. How do we come up with a model that achieves the right result, doesn’t create undue influences on anyone’s part and achieves a longer-term objective in the interest of the news industry?
Among the emerging players are people who are being successful and profitable in the world of digital news. The situation is not nearly as dire as some have suggested. People are making this work, but they tend to be new organizations who figured out how to be effective in our modern digital world.
Senator Cardozo: In terms of the fund, you said it would be governed by someone other than those in the industry. Who would it be governed by, and who would set up a governance structure?
Mr. Gingras: I could give you an example, but I suspect that you are all far more expert at this than us. In the past I have referred to Canada’s journalism labour tax credit. It had very clear criteria. In fact, we actually echoed it in our work with Google Showcase. They created a board of experts to adjudicate appeals for folks whose application might have been rejected. I’m not sure how those were appointed. I suspect that they were done like in other commissions and bodies to try to represent expertise from across the landscape. There are many ways to do that, both in your protection from undue influence either from private entities like us or, as others might suggest, concerns about government influence as well.
Senator Cardozo: That is not all that different from this in that you would have a government-appointed body, the CRTC — or perhaps not the CRTC — who would oversee this. Would you still not be having deals with news businesses?
Mr. Gingras: Well, under our understanding of the bill, yes, it guides us toward private negotiations either with collectives or individuals. If that’s the only way this can happen, we would do that. Again, my concern with that is that we’ve had this experience. We’ve tried to be very equitable and criteria-driven with our work with Google News Showcase. But that tends to guide suspicion on the part of others. I think it’s also important to come up with structures that actually reinforce trust, not only in the news media but in the mechanisms of actually supporting the news media.
Senator Cardozo: At this point, how many deals do you have in place, and do they cover ethnic and Indigenous media?
Mr. Gingras: I don’t have the exact number of deals in my head. We can certainly get that. I do know it covers [Technical difficulties] down to as small as Yellowknife. I don’t know the specific populations they serve. I imagine they’re diverse. I would like to think they include Indigenous populations from those publications, but I don’t have any specific data on that to provide.
The Chair: You don’t have that data to provide the committee?
Mr. Gingras: Again, we strike relationships. Even under this bill, we would be striking relationships with news publishers who serve those communities. It would not be to us to determine specifically their audiences. As far as the ownership of their entities, there, too, I don’t have a clear indication of the ownership structures of every publication.
Senator Wallin: I have a couple of quick questions just on the eligibility. Do you have any idea who is eligible in your discussions with government? I’m assuming you’ve had some. Have you asked those questions? Do you get a sense they know who they think provides actual news in this country or what a definition of journalism might be?
Mr. Gingras: Well, in our various engagements with the government, the Ministry of Canadian Heritage and members of Parliament, we’ve certainly asked those questions. I don’t think anyone right now has very clear answers to those questions. As I noted, we had always thought the criteria laid out, for instance, for the journalism tax credit were quite good in that regard. It is tricky. I recognize that, in a sense, defining what journalism and journalists are is almost contrary to the notion of free expression, so I understand the sensitivity. But that is why I actually thought the model suggested with the tax credit was quite a reasonable one.
Senator Wallin: I come to this debate from that point of view. I’m a believer in free speech and free expression, so I want the most available content out there. What I fear is that, with this particular bill, there will be less and less access for me and other Canadians to a wide variety of sources. You’re going to, as Senator Simons said, shut down operations or the sharing of news links. But this is certainly going to restrict that because it is now dependent on what the definitions are, liability, who is a journalist and who decides. It is really going to restrict that free exchange of ideas, which is the very core of the internet.
Mr. Gingras: Yes. Again, that’s why I think these questions are so particularly sensitive and important to address properly.
I do want to just correct one point. We have not suggested we would shut down our operations in Canada. We have simply said that we would likely have to adjust our product.
Senator Wallin: Do you have the sense that the government understands your business model and what your concerns are about unlimited liability with no definition of what’s an eligible news organization or news producer? Do you think they understand the concerns you have about forcing you to be hands-on in picking and choosing what kind of information goes forward? I mean, I don’t like it. I don’t want government involved in that, and I don’t really want you involved in that either. I want open access.
Mr. Gingras: Senator, I can’t speak to their level of understanding. We have made considerable efforts to explain our concerns in great detail. I met with the Ministry of Canadian Heritage — I believe it was on February 13 — and went into the very specifics we’re talking about here today, and I will continue to try to do that. In my job, I look at situations like this and ask myself if I did the best job I could to explain because, clearly, people are not understanding as clearly as we feel is necessary, given the importance of the legislation we have before us.
Senator Wallin: Do you think they understand that you’re willing to fund journalism, not just willing to fund failing legacy models? To your point, we’re not trying to save the past. We’re trying to build something that is in the future.
Mr. Gingras: I would hope so, and I have one observation. As I’ve mentioned, I work around the world. Canada has an extraordinarily innovative digital news ecosystem — companies like The Discourse, The Narwhal, Indiegraf and Village Media. Village Media is profitable in operating in over 100 communities in Canada. I don’t think Jeff Elgie had been heard in these discussions. I know from what I hear that they don’t feel their views on this legislation are being heard. I think it would be important to consider that as well because, again, the full breadth of diversity here is important, and most important is that we be thinking about the future and not attempting to recreate the past.
Senator Wallin: About the paying for links, I guess my concern is that if I sent a message to somebody saying that I read a really interesting piece on such and such a publication, then that becomes your bill.
Mr. Gingras: No, I think the law in that regard doesn’t restrict individuals from sharing links. It is very specific to these designated news intermediaries.
Senator Wallin: What about a public forum, if I do that on Twitter or somewhere?
Mr. Gingras: Again, it depends on whether they’re a designated news platform. I think it’s clear that if you shared it on that platform — I’m speaking about Google Search, which is not about sharing. If you shared in a social network environment, that would indeed be the case.
Senator Dasko: Thank you for being here.
I just want to ask, quite simply, if the bill passes as it is, what will you do? What are you going to do as a company?
Mr. Gingras: We don’t as yet know because I think, again, there are still considerable degrees of uncertainty. The bill has not passed. I think there are still opportunities for change.
Senator Dasko: Let’s say it passes as it is. What are you thinking you will do?
Mr. Gingras: I don’t think it’s appropriate for us to speculate. We’ve been clear on the considerations we have, which is to do with whether we need to assess how we use links or whether we need to assess whether it is logical for us to continue to provide a service like Google News, which earns us no revenue yet drives significant traffic to publishers. Do we need to consider the nature and construct of the relationships we have with publishers, given the structure and the demands of the bill and the broad class involved in the bill? That is obviously a very complex set of circumstances. I can only cite our concerns about the uncertainty and the fact that I have no certainty right now as to what we might do.
Mr. Kee: It is also worth noting that the bill is creating a fairly complex framework that has the challenges and issues we identified but still requires a number of regulations both from the Governor-in-Council and the CRTC over the course of process that will give greater clarity and certainty regarding issues around the exemption criteria, for example. What is a designated news intermediary, or not? What is the process for eligible news businesses to register? How can they negotiate collectively? The CRTC is going to have to set up a code of conduct that will actually govern negotiations that will set certain minimum terms. These are all matters that, frankly, I don’t think anyone would be able to tell exactly where they’ll land. We’re in a process where we’re just trying to understand what the potential implications of this bill on our existing products and services might be as well as what the effect may be, recognizing there will be greater information coming down after passage.
Senator Dasko: Do you think you will stick around through those processes?
Mr. Kee: At this point, as Mr. Gingras said, we just simply don’t know.
Senator Dasko: I want to ask you about the Australian situation right now. Are you fairly satisfied with the status quo and the way it has worked out with Australia? I would just like your sense of the situation right now — not the past and what you went through. Right now, what is your feeling about your situation in Australia?
Mr. Gingras: We are satisfied in that we feel we have addressed the interests and desires of the government as well as the news industry and, obviously, have managed to do so in a fashion where a piece of legislation that we had concerns about is not enforced against us. It wouldn’t be intellectually honest for me not to note that that structure is not the kind of fund structure we suggest. Those were individually negotiated arrangements with collections or individual publishers.
My guess is you will find, as I noted earlier, some degree of suspicion in the environment in Australia. Did we benefit certain players more than others? Certain large players more than certain small players? Thus, obviously, the desire for us to try to approach this in a different way.
Senator Dasko: Since no situation is perfect, and companies will complain about this or that, I take it from what you’ve said that it’s going fairly well, all things considered, with the Australian model, which is what we’re trying to develop here.
Mr. Gingras: Yes. Of course, there are key differences, as I noted earlier, because it is not identical to the bargaining code in Australia, and among those elements were the lack of clear exemption criteria. It did not involve a regulatory agency in the mechanics of it along the way. It was designed for speed, and I think Bill C-18 is not going to be able to attain the speed you might like.
Mr. Kee: It is worth noting that the Australian code has had, in our view, the unfortunate effect of essentially becoming a bit of a precedent and a model that everyone is looking toward. As Richard suggested, a code-style model has a series of perverse incentives. It puts a price on links, which we’re deeply concerned about, as well as rewarding legacy players over small and innovative players. We feel a fund-based structure would obviate many of those challenges but accomplish the same policy objectives.
Senator Dasko: Mr. Kee, what is your expectation of what will happen if you don’t make deals with some of these eligible organizations?
Mr. Kee: Bill C-18 is quite clear that eligible news businesses can compel us into mandatory bargaining, which then goes to dispute resolution and final-offer arbitration with criteria we’re concerned are weighted against platforms and will not allow the arbitration panel to properly consider the evidence.
Senator Dasko: Understood. Thank you.
The Chair: You’ve recommended replacing final-offer arbitration with standard commercial arbitration. What are the benefits of standard commercial arbitration, and what are your concerns with the final-offer arbitration?
Mr. Kee: Final-offer arbitration is a form of what is called “baseball arbitration” that is used in certain circumstances where two parties will put their final offer on the table, and the arbitrator has to pick between the two. It is predominantly used in markets where it’s pretty clear what valuation is — it is well established — and the intention is to try and bring the parties close together because you don’t want to put an offer on the table that isn’t going to be accepted. In this case, we’re dealing with a brand new market where there isn’t any consistent valuation methodology. The concept of paying for links is brand new, so there isn’t that valuation model.
Final-offer arbitration would not allow an arbitrator to consider evidence and come up with compromised solutions between the two. Standard commercial arbitration does. In that case, you have two parties who put forward their positions, the arbitration panel would listen to the arguments, weigh the evidence, and then could select one of the two positions or it could come up with a compromise. In our view, that’s more appropriate for circumstances where the valuation isn’t clear.
The last thing is that it has the benefit of being very flexible. If you’re concerned about either party dragging their heels, you can put in very firm timelines to ensure that no one can do that, and so they come up with fast decisions.
The Chair: Thank you for that.
I’d like to cite our Parliamentary Budget Officer, who, in his findings, said 75% of the funding, in his opinion, with this bill would be going to the giants — CBC, Bell Media and Rogers. My concern with this bill is that it is evidently weighted, as usual, for legacy media and legacy broadcasters. Of course, the government, in the same breath, is saying the objective of this bill is to help journalism and to help diverse journalism, diversify news in this country. At the end of the day, isn’t it contradictory? I think the lack of diversity in our news sources now would be hurt even further when the vast majority of the pie with this bill is intentionally going to the giants — CBC, Bell Media and Rogers.
Mr. Gingras: Mr. Chair, I can only, in a sense, agree with your assessment, with all due regard to the CBC and those other entities. If the objective is to address local news, quality journalism for local communities, it’s hard to see how that would be attainable given the disproportionate allocation that those analyses suggest. Frankly, I suspect those analyses are quite correct.
The Chair: Thank you.
Do you think that freedom of expression is further eroded by the fact that the majority of support is going to the largest media players rather than local news entities that government claims it is trying to protect? Will small publishers be worse off? Is money being siphoned toward favouring these large broadcasters with an objective that I can’t understand?
What would be a better approach if we want to achieve more diversified news and help start-ups and local news outlets across the country, which now, for years, have been struggling far more than the legacy media giants?
Mr. Gingras: I have a couple of comments on that. One is we think again of an approach where the criteria were more precise in terms of the objectives of the bill and the methods to attain that.
But I want to make a relevant point there. As I’ve noted, we see an unfortunate loss of trust in news media. We see awkward statistics about the number of people who are interested in news. The concern I have — and I come from this with a journalist background and a technology background — is how do drive the innovation in the media and news space to rebuild that sense of relevance so journalism can perform its critical role in open societies? That’s why I keep going back to how do we think about how to drive innovation that is forward-looking and not look backward to try to recreate a past that can’t be recreated.
Mr. Kee: I keep coming back to the benefit of a fund-style model, which is that you can construct it to ensure you’re supporting the class of news outlets or the class of journalism you want to ensure are getting the disproportionate benefit.
In this case, the core concern is diversity of voices. The concern is you don’t necessarily want a handful of large legacy publishers to be essentially dominant. You want to encourage the evolution and emergence of diversity voices, small players who are basically serving diverse communities that may not necessarily be heard, historically, where they have a real opportunity to build a sustainable business model. Continuing to subsidize is not necessarily going to encourage that behaviour. Essentially, making sure that we’re building a funding mechanism that is supporting innovation and sustainability, helping them build sustainable models, is one way to do that. A model we just launched with the government of Taiwan is an innovation fund that was intended for small publishers in Taiwan. This would be one level.
The Chair: Thank you, sir.
Senator Clement: Thank you both for being here.
I’m looking at your submission here, and you have a concern around clause 51, that it creates liability for elevating authoritative information and empowers bad actors. However, last year, in the EU, Google was fined for using — or abusing — its powerful dominance in those spaces. I know that was anti-trust legislation, but there was a considerable fine around that. Clause 51 seems to set up a safety mechanism. Are you disputing that we would need a safety mechanism?
Turning to transparency around rankings, you talk about wanting to favour the smaller innovator, but how do Canadians know how you’re ranking? Are you committing to more transparency around that? I would argue that a lot of Canadians don’t understand how Google is doing that and can’t find that information.
Last year, Google decided to block, as a test run, access from some Canadians to searching. What did that test run achieve? Can you comment on that in relation to the agreements that you’re supposed to be looking at?
Mr. Gingras: Let me start by addressing the ranking question, and then we can go on to the others.
As I’ve indicated, the trust of our users is incredibly important to us. We do provide a tremendous amount of information about how we rank. There’s a document online, publicly available, about 170 pages long, that addresses the principles behind our search algorithm and how we approach it. I think it’s very thorough and very useful, and I would encourage people to read it.
Secondly, we try to be as clear as possible in terms of our methods, within the bounds of security. As you might know, people are always trying to game the algorithm, and we have to protect against that.
The third point is the most important one with regard to algorithmic accountability, and that is enabling third-party research — which we do. Academic research, for instance. If we look at assessments by those kinds of academic methodologies, they largely reinforce what I’m saying, which is that we adhere to our principles. If they suggest that there are areas where we’re not doing the best job, that’s important feedback to us.
Again, what drives us is the trust of our users. Our business is based on the trust of our users, who could move to another search engine with the click of a mouse.
I’ll speak about the results of the tests and then turn it over to Jason for the third point. The test told us nothing particularly new. It reaffirmed the fact that news queries are a tiny percentage of our overall queries. It also indicated that it had no impact on our users with regard to the 98.X% of all the other queries. All their efforts to learn about what the best new heating system might be, or how to plan a travel vacation to Vancouver and so on and so forth, remained as it was before. Those are the kinds of things we learned from the test, but I’d like to turn to Jason to address your last point.
Mr. Kee: With respect to clause 51, undue preference, my understanding is that the principal intention is to prevent any platform — Google or otherwise — to engage in retaliatory action. Essentially, you can’t necessarily punish a publisher who comes forward and says, “I would like to bargain with you now that you have an obligation under this code to engage and pay for links to my site.” We couldn’t necessarily down-rank them on that basis. We concur with that; we agree.
The challenge we have is that the wording is adopted from broadcasting and is so broad as to essentially prohibit any undue preference, undue disadvantage or unjust discrimination that a publisher alleges. If a publisher complains that they feel they’re not receiving the level of rank that they’d like to see — which can happen, because ranking is inherently giving preferences, advantages and disadvantages to someone; you have to find a way to order it — they can complain and we would have to litigate that.
The bill is structured such that once the publisher complains, the onus shifts to the platform to prove that the given preference, advantage or disadvantage was not undue. Our deep concern is that that will have profound effects on our ability to engage in ranking, especially because we already have systems in place to try to elevate authoritative information and down-rank basically low-quality information in order to provide a valuable service to our users.
Senator Clement: I understand that you want your users to trust you, but when we’re talking about dominance and we’re looking at those fines in the EU, how do you respond to that?
Mr. Kee: I think there are circumstances where, obviously, some concerns come up. I would say that we live in an environment where Canadians get their information from a wide variety of sources. It’s not just Search. As Richard indicated, the vast majority of queries we have on Google Search are not news related. The vast majority of people get their information from a variety of sources. The market is quite competitive, both in the case of Search, the internet, as well as in the advertising space.
Essentially, we’re saying that there is a variety of competitive alternatives. That acts as discipline to us because we have to ensure that we’re constantly innovating and acting in the best interests of our users in order to remain competitive.
The Chair: I’d like to thank Google Canada, Mr. Kee and Mr. Gingras. I had many senators on second round, but I do thank you for taking the time to come before this committee and answer our questions.
For our second panel tonight, we’re pleased to welcome Meta Platforms, Inc. We have Ms. Rachel Curran, Head of Public Policy, Meta Canada; and Marc Dinsdale, Head of Media Partnerships, Meta Canada. Welcome, and thank you for joining us this evening. You have seven minutes allocated for opening remarks, and then we’ll jump right into Q & A. Ms. Curran, you have the floor.
Rachel Curran, Head of Public Policy, Meta Canada, Meta Platforms, Inc: Thank you, Mr. Chair. It’s a pleasure to address the committee this evening.
Mr. Chair, senators, the way we consume news is always changing. Radio, then television and now the internet have changed people’s habits. The reduced costs of gathering and distributing information has lowered barriers to entry. The proliferation of content has increased competition for audiences. Technological changes in the advertising industry have and will continue to challenge traditional business models. The news industry has been just one sector profoundly affected by these changes.
This disruption has allowed small businesses to reach larger audiences, including a wave of new, innovative digital news start-ups across Canada. It has also driven claims by traditional publishers that companies like Meta have benefitted unfairly from news links that publishers willingly shared on our platforms to reach audiences online. This has led policy-makers in Canada to propose legislation that would require internet-based companies to pay news publishers for content and links that they choose to post.
Unfortunately, frameworks such as the Online News Act before you are based on a false premise and fundamentally misunderstand the true relationship between platforms and publishers. It is publishers who benefit from being on our platforms, not the reverse.
We estimate that Facebook feeds sent Canadian publishers more than 1.9 billion clicks in the last 12 months and free marketing worth more than $230 million in estimated value. This number is proof that our tools and apps are good for the news industry. Our platforms help publishers sell more subscriptions, grow their reach and display their ads to a larger audience than they might have otherwise. As with other businesses, non-profit organizations, political parties and publishers choose to use our apps because they benefit from doing so.
News content is also not a significant source of revenue for Meta. Posts linking to news articles make up less than 3% of what people see in their Facebook feed. One in five Canadians actually say they would prefer to see even less news content on our apps. Globally, more than 90% of organic views on article links from news publishers are on links posted by publishers themselves, not Facebook users.
That’s why, for months, we’ve been sharing publicly our concerns with Bill C-18, the Online News Act, a framework that requires us to compensate publishers for links or news content they voluntarily put on our platforms. It is quite frankly, senators, unworkable for us. As the Minister of Canadian Heritage has said, how we choose to comply with the Online News Act is a business decision we must make. We’ve made our choice.
Because the legislation ignores the realities of how our platforms work, the preferences of people who use them and the value we provide news publishers, we have no choice but to comply with it by ending the availability of news content in Canada if Bill C-18 is passed as drafted. This decision is consistent with our response to similar legislation tabled in the United States last year.
The public policy debate around Bill C-18 is, of course, intertwined with concerns about the role of journalism in civic society. Let there be no doubt about this: We agree that news holds tremendous social value. But this bill misrepresents the economic value of news to our company, and it risks further subsidizing large, legacy organizations and profitable broadcasters at the expense of independent and innovative news businesses.
We urge the Canadian government to consider a policy response that reflects the true division of value between platforms and publishers and that addresses the concerns we have raised today.
Thank you, senators. We welcome your questions.
[Translation]
Senator Miville-Dechêne: Thank you for being here to speak to us. A lot of people thought you were bluffing when you threatened to stop distributing news in Australia. You backed down on that issue, masterfully.
That’s what’s happening now in Canada, and you’re saying quite clearly that you’re not going to participate, that you’re not going to comply with this legislation, that you’re going to make different business choices. Are you still bluffing, here in Canada and before this committee? Why should we believe you now when you’re threatening to stop sharing Canadian news?
[English]
Ms. Curran: Thank you, senator, for that question. I’m sorry, but I missed the first part of the question.
Senator Miville-Dechêne: Basically, I was saying that many people thought you bluffed in Australia by saying you would not carry Australian news. In fact, they were right because you withdrew this threat. You’re doing the same thing in Canada now — threatening not to carry Canadian news. So why should we believe you now?
Ms. Curran: Thank you, senator, for the question.
First of all, as our friends at Google have also said, we’re not actually designated under the Australian legislation. No company has yet been designated under that legislation. What we have managed to do is reach what we have called an untidy and short-term compromise.
I will also say this: We do have commercial agreements in place with publishers in Australia, including commercial deals and grant funds, but we don’t pay for content that publishers are already posting. We only pay for net new content, for products that we might want to introduce in the future. In a sense, those deals are similar to what we have already done in Canada with our News Innovation Test program, which my colleague Marc Dinsdale can speak a little bit more about, where we entered into commercial partnership agreements with publishers for new behaviour, not for existing, voluntary posting to Facebook.
What is notable about Canada is that all of that actually happened without legislation. Despite our best efforts to find a way to work with the news industry and to enter into these commercial deals in a way that helps create sustainable business models, we’re still faced with an unworkable piece of legislation that forces us to end the availability of news on our platforms entirely.
Mr. Dinsdale, do you want to talk about the News Innovation Test program?
Senator Miville-Dechêne: Before that, I’d like to know how many deals you’ve concluded and with what kinds of media. Are you going with bigger media or smaller, community media? Explain to me why you’re saying you’re not paying for the value of news but you’re trying something else.
Marc Dinsdale, Head of Media Partnerships, Meta, Canada, Meta Platforms, Inc.: Thank you for the question, senator.
When you look at the entire package of our commitments within the news industry, the News Innovation Test is certainly one of those. That includes 18 publishers across the country — large, small, representing both official languages.
In addition, we have run a number of other news programs, to the tune of more than $18 million over three years, which include a lot of other publishers whose needs might be different. This was echoed in what Google was saying as well. In those programs, we’ve run accelerated programs that tried to connect publishers with people from the New York Times, for example, and other coaches who can help them navigate into the digital world. That has also been broad in scope. That has included large and small publishers, BIPOC publishers and Indigenous-first publishers. We have also funded programs like the Meta and Canadian Press News Fellowship Program and Indigenous News Fellowship Program, which helps to fund directly roles within their newsrooms.
There is one thing I would also add, if I may, when we talk about Australia. This is also a different moment in time. When we look at the direction that our users want us to go in, we look at the fact that more than 50% of time spent on our platform is on video. Reels is the fastest-growing format on our platform. People want to see video from people of creators. We look at the fact that, as Mr. Curran said, 20% of the people on our platform say they want less news. When we think of value and equitable exchange in the industry, those are factors in this for people on our platforms and people who are in more competitive environments as well. People engaging in other platforms are saying the same thing. That is where there is a dissonance in discussions about value.
[Translation]
Senator Cormier: I’d like to thank the witnesses for being here.
I’m going to continue to reflect on the agreements. I’d like to understand it better. You talked about the different types of agreements that you make. You’re a business. I’d like to know, how many figures can you give us about the amount of money that Facebook makes through those agreements? How much money do you make? How much money do the media outlets that enter into these agreements with you make?
Do you have any figures to give us that would help us to understand this balance or imbalance between Facebook and these media players?
[English]
Mr. Dinsdale: Thank you for the question.
When we look at the values, I can talk about what we put into the programs and the commitments we have made. As I said, there is the $18 million that we’ve committed to over three years, and that does not include the News Innovation Test programs we have done with the 18 publishers. Those are protected by commercial confidentiality so I’m not able to share the numbers on them.
Beyond that, there is the foundational value of the free marketing, as we’ve heard it called, of over $230 million a year that publishers gain from voluntarily placing links on our platform that we then share with people. This is information you can hear from us but also from someone like Jeff Elgie, who spoke publicly in the past about the value that he receives from Facebook for free. If he had to go and pay for what he receives for free — and he made the calculation himself — he said that it would be astronomical for him. When we think about the totality of the value, I would say that is —
[Translation]
Senator Cormier: Okay, but as far as Facebook is concerned, you’re talking about the investments you’re making, which is fine, but we’re talking about trust here. Do you have any figures to give us so that we can understand the impact these agreements have on you? If, tomorrow morning, you had no more agreements, how much money would you lose? We’re talking about commercial agreements.
[English]
Mr. Dinsdale: Thank you for the question and for the clarification as well. If I’m not mistaken, that goes to the heart of what we consider the commercial value of news.
The challenge is that, again, people have told us they want to see less of this on our platform. Our platform is moving away from what the news industry fundamentally provides to us, which is links to news content. In that sense, we have talked about the fact that we make little to no revenue off news proper. Also, the reality is that — and, I think we said this in Australia and in other places — there is a high substitutability to news content on our platform because people don’t come to our platforms for news. People come to our platforms to connect with communities they care about, to share stories with friends and to engage with public figures, et cetera. They don’t come to our platform for news.
[Translation]
Senator Cormier: Do you have any data that would lead us to conclude that what you’re saying is true, that people don’t go on Facebook for news? Is that clear from the data?
[English]
Mr. Dinsdale: I would have to go back and understand if there is specific research on that, but we can look to the public sphere of 20% of people — and this is from the Reuters news institute — who say there is too much news on the platform.
[Translation]
Senator Cormier: If you have any data, I would like it made available. We would appreciate it if you could send it to the clerk so that we have a clear understanding of these issues.
[English]
Mr. Dinsdale: Thank you. We will follow up as best as we can on that.
[Translation]
Senator Cormier: Thank you. Very briefly, in the interest of time, what are the three main issues in Bill C-18, which is before us, because there are negotiation processes that will be put in place? There are several steps before going to arbitration. Tell us briefly what the three main issues are, so that we understand them.
[English]
Ms. Curran: The main issue is this: We are being asked to compensate publishers for material that they voluntarily placed on our platforms because they gained a certain benefit from doing so.
As my colleague Mark Dinsdale said, news content on our platforms is highly substitutable. We don’t lose any revenue, or very little revenue, if news content is substituted by something else. This is not a real source of revenue for our company, yet we are being asked to compensate news publishers for this material when they place it on our platforms because they get free marketing and distribution value from doing do so. It is the fundamental underlying premise and structure of this framework that we’re objecting to.
Secondarily, we object to the assigning of value to news links. You’ve heard previous witnesses, including Professor Michael Geist, talking about the problem with trying to associate a certain monetary value to links, including news links. For us, the problem is trying to assign or forcing us to compensate publishers for material that they place on our platforms, whether that’s audiovisual content, or links, or snippets. It doesn’t really have any commercial value to us, so it’s very difficult for us to accept that we have to pay for this.
Senator Simons: I want to turn now to the very specific amendments that you provided us with before you spoke.
Mr. Dinsdale, you’ve just finished saying that people want to see video. For years now, Facebook has worked with newspapers and encouraged them to post more video to Facebook. Lots of video and audio are being shared on Facebook, and yet among your first series of amendments, you would like to scope out all audio and audiovisual content from the bill. You say that that’s regulated under the Broadcasting Act. That’s certainly true, but I don’t think that has anything to do with the question of compensation since I don’t like the compensation link tax model with the idea of benefits. Can you explain to me what on earth is the rationale to exclude all audio and audiovisual content from consideration under the act?
Ms. Curran: I can speak to this initially and my colleague Mr. Dinsdale can weigh in as well.
As the chair of the committee said previously, the Parliamentary Budget Officer has written a report that says that the primary beneficiaries of this bill are going to be the highly profitable and already subsidized broadcasters in Canada, including the CBC. Look, our argument is this: Audiovisual content posted by broadcasters should be scoped out of the bill. There is still a problem with news content posted by broadcasters that isn’t audiovisual content, but we are saying this content specifically should be scoped out of the bill.
Senator Simons: What about small-town radio stations or people sharing their podcasts? Don’t misunderstand me. We’ve spoken before. You know I don’t accept the premise of the bill and have great sympathy with your general argument. However, I don’t understand how on earth we can differentiate by saying that audio and audiovisual content — much of which, frankly, is posted by things we used to call newspapers — could be not included. Every news site these days posts video and audio, including the Toronto Star, The Globe and Mail, the National Post, Le Devoir and La Presse.
Mr. Dinsdale: Thank you, senator.
I would respectfully refute part of that. I think that if you go to the Toronto Star, The Globe and Mail, or La Presse’s Facebook pages, you will see that almost exclusively all they’re posting is linked posts. It’s link post, link post, link post, link post, almost exclusively.
Senator Simons: They’re linking to video. They’re linking to audio.
Mr. Dinsdale: Respectfully, I’d argue that they’re linking to text content the vast majority of times. This is, again, because they see the value in us taking people from our platform and sending them to them.
Senator Simons: I understand that argument. That’s not the question I’m asking you. You’re putting forward an amendment that says we should take all consideration of audiovisual content out at a time when traditional print products are becoming more and more multimedia. I can tell you, having worked in those newsrooms, that if I heard the words “pivot to video” one more time — I pivoted to video so many times, I felt like I was trapped on a swirling teacup ride. I don’t understand. Are you saying that private radio is out, or are you saying that podcasts are out, something like Canadaland? What would be in and out under this model? I don’t understand the amendment.
Mr. Dinsdale: I would also respectfully argue that the designation of what is in and out is irrespective of the type of content — that is, is it a news outlet owned by a news business — and that is an entirely different set of considerations. So to your question of commercial radio, we need to seek guidance from the final text of the bill to understand what is a music radio station considered compared to a news talk radio station —
Senator Simons: I would love it, Mr. Dinsdale, if you would actually answer my question.
Ms. Curran: Senator, maybe I can say this: The premise of this news regulation is that the declining revenues of the written news publishing industry in the digital age is something the government needs to support, and we are saying if that is truly the objective of a bill, then it doesn’t make sense to include audiovisual content and radio in that objective.
Senator Simons: I would say that as long as we’re making this premise, local radio revenues are in decline because of competition from digital advertising, local television stations are in calamitous decline, and other innovative start-ups are operating in a multimedia world —
All right. Let’s move on to another of your amendments, which I see cleverly manages — maybe someone else would like to ask about the amendment that manages to scope out Facebook but include Google.
Ms. Curran: We’re happy to answer that question, because we think we have a very different relationship with the news industry than Google does.
Senator Wallin: Well, why don’t you explain that, then?
Ms. Curran: Thank you, Senator Wallin. Happy to explain that.
Look, Facebook doesn’t scrape the internet for news content. We don’t aggregate news content in search results. We have a very different relationship with news content and with news publishers than Google does. We think parliamentarians ought to take that into account when deciding who should be scoped in under this bill. News content is really not a critical or important or fundamental part of the services we provide and the product we provide to Canadians, so our reaction to this bill is necessarily going to be very different.
Senator Wallin: With your argument that the free exposure and the value of the exposure that people voluntarily seek by posting their material to you is very valuable, I don’t understand particularly why, then, they are so supportive of this. Is it just free money?
Mr. Dinsdale: That’s a great question, senator.
I think you would find that there obviously is a set of publishers very much in support of this and obviously a set of publishers very much against this, and it is the characteristics of those publishers that are telling. There have been fears expressed that any innovative new publisher is placed at a disadvantage, especially if the Parliamentary Budget Officer is correct that 75% of the revenues will go to the largest traditional media organizations in the country. A new entrant into the market has to dig themselves out of a $329 million hole.
Senator Wallin: The new ones are unfairly treated compared to the CBC or the Toronto Star, or whatever it may be, because we don’t have a proper definition? That is part of the problem I have got here. What is news? What is journalism? Who decides what is a new entity? Who decides that? If we don’t have any definitions on that, it’s pretty hard to even impose this on you. The clearest one here is one of your amendments, which is on copyrighted content versus — that you’re quite happy to pay for that if something is copyrighted, but if people are voluntarily providing it, well, that’s that, and you’re just a conduit.
Ms. Curran: The EU copyright directive respects the principles of copyright law. If snippets are posted or a link is posted, that’s exempted from the EU framework. If Canada were to follow a similar approach here, that would make this a much better piece of legislation.
Senator Wallin: Meaning that you’re not going to reproduce a Margaret Atwood novel for free, but if someone references Margaret Atwood, that should not cost you or penalize you financially?
Ms. Curran: Absolutely. If we’re reproducing that text in full and placing ads against that content, let’s talk about what we need to pay to compensate for that. If we’re posting a snippet in a link or if a publisher is posting a snippet in a link, which is allowed currently under our copyright law, then let’s allow for that. That is certainly the approach the EU has taken, and we think that is the better approach.
Senator Wallin: Even if news is not a big part of your product in the end, you’re still willing to support it. Why?
Mr. Dinsdale: Thank you, senator.
Part of the crux of the challenge is that we want to be a platform where there is this expression of ideas and the sharing of content. If you look at the exchange of value that exists now, we think it is equitable. We would like to continue to do so, but if this exchange of value moves from being equitable to one that introduces new and unknowable costs to us for things that, again, quite frankly, unfortunately, people want to see less of on our platform, and the choice we are provided is either comply and enter negotiations where we don’t know the value of the outcome or remove news content from the platform or end availability of news content on the platform, we have to choose ending the availability of news content on the platform.
Ms. Curran: To be clear, senator, we don’t want to do that. We have supported the news industry, as my colleague Mr. Dinsdale has said, through $230 million of a free marketing and distribution value. We have supported the news industry through the News Innovation program and other programs we have launched.
But, really, this bill is going to force us to end the availability of news on our platforms in Canada, and we don’t want to be there. Google said the same thing. They don’t want to end up in this position. We want to support the news industry in the transition to the new digital reality, and we are trying to do that to the best of our ability, and this bill is going to force us into a position where we cannot do that.
Senator Manning: Thank you to our witnesses.
I am just following the conversation here, and I want to have the opportunity maybe to reiterate, but I want to go back to something you said on a couple of occasions now. I want to make sure I understand it properly. Are you telling us that Global News or the Toronto Star would post their content to their own Facebook page in order to drive traffic to their websites, and this bill would make Facebook pay them for that? You’re like a community billboard, but you will be forced to pay someone who uses your billboard to promote their own business?
Ms. Curran: That is exactly right, senator. We will be forced to compensate news publishers for material that they post to drive traffic and drive clicks back to their page and websites where they can then monetize those views and eyeballs either through a paywall or they can place ads against the views that show up on their web page. We are being asked to compensate them for an activity that actually benefits them from a monetary perspective.
Senator Manning: Can you articulate for us what the potential monetary liability will be for your company as a result of this?
Ms. Curran: That is also an excellent question. Part of the problem with this legislation is that it exposes us to a totally unknown liability and a liability that we don’t control. It incentivizes publishers to post material to our platforms in a volume that we don’t control and in a manner or a pattern that we don’t control. We can’t control how much they post, and we can’t control how much we pay for that material. Part of the problem, senator, is the uncertainty around this framework which exposes us to a totally unknown liability.
Senator Manning: My understanding is that if Bill C-18 passes as it is today, and then some regulations are coming afterwards, wouldn’t it be in everybody’s best interest if we had regulations beforehand so that at least we know what the rules of the game are?
Ms. Curran: Absolutely. If we knew what liability we were exposed to — this has been part of the short-term solution in Australia. We were able to know and cap our liability at a certain amount. If we knew that ahead of time, we could make an informed commercial decision about whether that was something we could live with. When it comes to Bill C-18, we are really exposed to a completely uncertain and unknowable liability. Senator, no business would agree to do business under those conditions. No business could agree to that.
Senator Manning: I would like to go back to a question that Senator Miville-Dechêne asked. When your company announced in March that you will end the availability of news content on Facebook and Instagram in Canada, the minister responded:
This tactic didn’t work in Australia, and it won’t work here. Canadians won’t be intimidated . . . All we’re asking Google to do is negotiate fair deals with news outlets when they profit from their work.
In principle, do you agree that smaller players — since that is what the bill is telling us we’re leaning toward — and news outlets need the support of the government as a referee in order to conclude fair deals with platforms like yourselves?
Ms. Curran: In principle, we do agree that the objective of the bill is to support smaller, local and regional players. In practice, what the Parliamentary Budget Officer has said is that this bill is going to direct the large majority of funds, 75%, toward established, highly profitable and highly subsidized broadcasters, and it is going to benefit the large broadcasters and publishers who are already benefitting from programs that are in place. It is not actually going to do anything for the smaller, local and regional players that the bill purports to benefit.
Senator Manning: You didn’t end availability in Australia, but you saying you’re going to end availability here. Give me one part of the Australian setup versus the Canadian setup that we are planning here that would facilitate you moving to not making available news here in Canada.
Ms. Curran: That’s a really good question. Importantly, under the Australian legislation, we have not been designated. No company has been designated — you heard that from Google as well — so we were able to reach a short-term compromise that allowed us to continue to carry news content in Australia. The bill in Canada is quite different. It asks us to designate ourselves as a news intermediary automatically upon passage of the bill. There is no room provided for a process to play out that would allow the government to decide whether we should be designated or not. That’s the key difference between the Canadian and the Australian legislation. There is no room to reach a compromise with the government before being designated under the legislation.
Senator Manning: Thank you.
The Chair: I have a comment before I ask my question. There is no doubt that the digital world has changed the way all of industry operates. We see it in the retail sector. We see it in the taxi industry, where Uber has come in and changed the way things operate. We see it in the travel industry, where people go to direct travel websites to book their flights and don’t go through travel agents. The government didn’t rush to save the taxi industry or travel agents in this country. We’re not rushing to save the retail market, which is struggling. There seems to be a love affair with our current government to decide exactly the flow of money goes to media agencies in order to prop them up. I believe that is a slippery slope. That is my personal comment.
In terms of a direct question, would Facebook prevent news outlets from posting links if this legislation passes and you’re forced to pay for those links?
Ms. Curran: Yes, senator. We have made that decision. We very much do not want to be in that position. If Bill C-18 passes substantively as drafted, we will prevent the sharing of news links on Facebook and Instagram, or what we have called “ending the availability” of news content on our platforms.
The Chair: That would have a tremendous impact particularly for those journalists and newspapers that are linking them right now. I would think that would reduce their capacity to use that megaphone to reach what I think would be millions of Canadians.
Mr. Dinsdale: Thank you, senator. It would. When we look at the number of times this happens and the 1.9 billion clicks that we provide to publishers to send them from our platform to their websites to consume their content and buy subscriptions, it is hard for us to understand the economic value of that because all of that value happens on these websites that we don’t have access to. It would be a challenge.
One of the things I would also note is that when you look at the industry as a whole, part of the reality is that we represent a small part of how people get to these sites. When you look at the traffic that is attributable to us, it is maybe 13%, according to the National Economic Research Associates report that just came out. It is difficult because we are providing a lot of value to the industry. We are not the reason why these publishers exist or don’t exist. This kind of a thing is a piece of both worlds in that statement.
The Chair: I also get a sense there is not unanimity among the journalism world, among journalists in particular, with regard to this bill and the end result that will come out of this experiment. Is that a fair assessment on my part?
Mr. Dinsdale: I would characterize that as fair. Especially once a study, like the Parliamentary Budget Officer’s study, comes out, the smaller publishers start to understand the implications of the type of model that is being suggested here. I think it would be fair to say that there are concerns from smaller publishers.
There was a piece that was written — I can’t remember who wrote it — that talked about the other challenge being the blockage to innovation and that the news industry is going to be not necessarily formed by the publishers that exist now but by the thousand publishers that are to come. A bill like this makes it challenging for those thousand challengers to be born and grow.
Senator Dasko: I want to pursue the Australian situation a little bit more. You made deals in Australia, yet you’re very critical of the legacy media. Did you make deals with Mr. Murdoch and his massive companies there, or did you not because you don’t like the legacy media?
Ms. Curran: The Australian legislation contained a number of important differences from the Canadian legislation, which we’ve outlined for Senator Manning, that allowed us to reach a short-term compromise. We did enter into commercial deals with certain outlets in Australia, but again, that was for net new content, not for content that publishers were already voluntarily posting to our platforms. Truthfully, senator, we’re not sure at this point how long those arrangements are going to last. We are at a different moment in time, as my colleague Marc Dinsdale has referenced. If we were to be designated under that legislation, I think the outcome might be very different.
Senator Dasko: But the situation can go on there as it has been. I asked a question earlier to Google about the status quo. You could just continue this with their law not being formally enacted or whatever and you’re out there making deals with companies in this situation. You could do that, right?
Ms. Curran: We do have short-term deals in place with certain outlets in Australia, yes. Our investments there have over-indexed towards the larger status quo publishers and not the new digital start-ups or innovative outlets that we would like to support. Whether those agreements will continue beyond the three years is, I think, very much in question.
Senator Dasko: You may just opt out of Australia; is that what you’re saying?
Ms. Curran: It’s hard to speculate at this point, senator, but if we were to be designated under that legislation — which we have not been yet — I think the outcome would not be very much different than what it is in Canada or the U.S.
Senator Dasko: You said that you knew what your liabilities were ahead of time there, and here you have an unknown liability. You also said you have low news traffic and so on. Would you be able to say, “We’re a low-volume operation on the news, and we don’t have all that much money to allocate to this particular legislation program,” and so on? Can you not operate that way?
Ms. Curran: If you’re asking whether we get much revenue from news content, no, we don’t, and that’s part of the issue. As my colleague Mr. Dinsdale has said, news content is what we call highly substitutable on our platforms. If we substitute news content with other content, there is no impact on our user engagement or on our revenue numbers — certainly no negative impact, and sometimes a positive impact. So news has no real commercial or economic value to the company.
That’s the problem with the framework that is outlined in Bill C-18. It’s not that we believe news has no social value, because we believe that strongly. We would love to continue supporting the news industry through our free marketing and distribution tools, for instance, along with the programs that Mr. Dinsdale has outlined. However, it has no commercial value to us. Therefore, if we are asked to pay for it, our business decision is that we will no longer continue to carry that content.
Mr. Dinsdale: If I may, senator, part of the challenge as well — and I think Google talked about this — is the outsized expectations. There is a number to this now, apparently, and that number is $329 million.
I agree that, in an ideal world, we could look at the economic realities of what news means to us, the commercial value, but it doesn’t feel like the framework that is proposed allows that. The framework is a conclusion that is looking for a methodology to get to. That, I think, is the overarching challenge, relative to your suggestion.
Senator Dasko: But the framework would permit you to make deals that don’t cost very much, wouldn’t it? In terms of low online audience, low online content for news, you can argue on this basis and say, “We have this low-volume operation. It doesn’t provide value.” Therefore, in the fairness equation that is part of the deal of the bill, you can say, “What is fair? There’s not much volume; therefore, there’s not much revenue.”
Ms. Curran: Senator, it would be great if that were the case. I don’t think that’s true. The government has said that they expect to get a certain amount of money out of this bill. There are some competing numbers there — $330 million from some sources and $215 million from Heritage Canada officials — but they are clearly working backwards from a number that they hope to get to. Clearly, we are expected to contribute a significant portion of that number because the bill is targeted to American technology companies. If you’re saying that we could make the argument that there is no commercial value to us, unfortunately, that’s not the case, because they’re trying to get to this number — whether it’s $215 million or $330 million — and going backwards. As my colleague said, the methodology is working backwards from there.
Senator Cardozo: You said that if you stopped carrying links to Canadian media, you have nothing to lose financially for your company?
Ms. Curran: That’s correct, yes.
Senator Cardozo: My question is about how decisions are made and about the power of governments and corporations. We’re in this situation, which we saw kind of play out in Australia. Ms. Curran, I look to your advice. You’ve worked at senior levels in our government. You’ve worked closely with the House of Commons and the Senate. Here we are, as senators, looking at a bill, with a company saying, “If you dare do that, we’re going to do X.” What should the political system do? Should we say, “Okay, you are the boss of me. We’ll step back”? This is a major issue that we’re dealing with in the geopolitics of the world.
Ms. Curran: That’s a great question, Senator Cardozo.
No, we think it’s actually a good thing that parliamentarians are considering this issue of how to support the news industry and independent journalism, which is a critical part of our system and our democracy. We think there are better ways to do that than the framework that has been outlined in Bill C-18. Our colleagues at Google referenced a central fund, for instance. There is always the option for government to direct tax revenue to supporting industries that it feels need the support because of the position they’re in. I think we can say that there are other models that — at least conceptually or theoretically — would be easier for us to support. We believe that sustaining and supporting the news industry is an important objective, and we want to be part of that.
Senator Cardozo: Who would set the framework for how that happens in the fund? Currently, you’re supporting a few efforts here and there. Would it be the corporations who decide what that system of support is for newspapers? Would it be the democratic system?
Ms. Curran: I think there’s an important role for policy-makers and for government in terms of supporting industries that are not necessarily succeeding in a market-based system. We have no concerns at all — at least in theory — with decision-makers and policy-makers stepping into this space and saying that the news industry is something we need to support. It’s the fourth pillar of our democracy and it’s something that will be very important to Canadians, so we think it deserves government support as well. We would be very happy to participate in that. This is not an instance where we’re saying, “Leave it up to us. If we think this is worth supporting, we’ll support it; if not, we won’t. Let the market decide.” That’s not our position at all. We think there’s an important role here for government and policy-makers.
Senator Cardozo: It’s a tough one as to who would play a role. In terms of government, do you want government as opposed to the free media? But we certainly have a situation where news media is in crisis. I agree with you that it’s a key part of our democracy. What do we do?
Ms. Curran: I agree with that. Our colleagues at Google have suggested a different model which, at least in theory, would be easier for us to support. Our primary concern with this framework is that it’s asking us to compensate news publishers for material they place on our platforms, at a price and at a level that is totally unknown to us. We can’t operate under a framework that asks us to pay a totally unknown and uncertain sum.
Senator Cardozo: Lastly, do you think you might be able to work that out through the regulatory process? We had CRTC here yesterday. They will likely have a two-phased process. They first ask everybody for their ideas; then they put together a draft set of regulations and send them out for a second round of input. Would that give you some comfort in terms of being able to have input on some of those details?
Ms. Curran: I can tell you that with regard to the Australian model, which we have referenced during this hearing, because there was a delay between the legislation passing and our designation under the legislation or under the news media code — which has yet to happen — it allowed us space and time to work that out and to figure out a more certain liability that we would be exposed to. As I told Senator Manning, because we had that space and time to figure out what we would need to pay and whether we could live with that, that allowed us ultimately to reach a compromise, even if a short-term compromise, under that legislation. The problem with the Canadian bill is that it asks us to self-designate as a news intermediary almost immediately upon passage of the bill, so there is no space and there is no time for a process to unfold which would allow us to set parameters around that liability.
The Chair: Thank you, Ms. Curran.
Senator Clement: Thank you both for being here.
I want to come back to your assertion — repeated assertion — that the news has no economic value for you. You do keep data on who is clicking on news. That indicates a preference, doesn’t it? That data gives you an advantage in terms of how you’re going to target your ads, so I don’t understand how news doesn’t have an economic value. You’re keeping data, and data is extraordinarily valuable to you. I don’t accept those assertions.
Mr. Dinsdale: Thank you, senator.
When we talk about the economic value, we talk about it in the sense that it’s such a small part of the experience and that it is highly substitutable, and we believe that if it was no longer on our platform, it would not affect our business. How can we invest in something that, at the end of the day, is not going to have a material impact, whether it is or isn’t on our platform? We look at it from the economic perspective in that sense, the exchange of value between us and publishers, and we believe, frankly, that publishers get more out of this relationship than we do because we’re providing them with this $230 million in value, and we don’t believe we receive that back.
Again, the preferences of our users are moving away from news. People want to see less news on our platform. They want to see entertaining content from creators or individuals. I think that’s kind of the tension there.
Senator Clement: I’m not going to disagree with you there; it’s just that the data you get from people clicking on news shows preference that you’re able to use. But thank you. I appreciate the response.
Mr. Dinsdale: Thank you.
The Chair: We are quickly running out of time. I will suggest that the last three questioners put their question, quick and short, and the witnesses can answer all of them at the same time.
Senator Simons: It seems to me that news is not fungible. If you’re saying that you’re going to replace news with other content, that content might be disinformation and mischievous information that is designed to set people asunder, and I wonder — I’ll let you answer all the questions at once — if you think Facebook bears any responsibility for sharing timely, important, pertinent and accurate information, especially in times of crisis.
Senator Miville-Dechêne: I want you to come back on your assertion that news has no commercial value to you. Can we get figures on that? Because why would we believe you? It would be normal for you to come here and say, “News has no commercial value, and we don’t want Bill C-18 because we don’t profit from it.” But, obviously, why should we believe you?
[Translation]
Senator Cormier: I understand that, in response to the bill, you plan to remove content from the news media. I also understand that you want audio and audiovisual content to be excluded from the scope of the legislation.
So, if the bill is passed with your amendment, does that mean that you would block written news content, but continue to distribute audio and visual news content, as it would not be covered by the legislation?
[English]
Ms. Curran: Thank you, senators, for those questions.
Let me address the question of misinformation first. We’re going to challenge the premise of that question a little bit. Twenty-four million Canadians use our platforms monthly to obtain information from government, from non-governmental organizations, from community organizations, from emergency services, to receive updates about their friends and family and the kind of things they’re doing in their lives, so I think you would agree that’s not bad information. If we are forced —
Senator Simons: I think you would agree that Facebook has faced significant criticism for sharing very bad information —
The Chair: Senator, we’ve run out of time. If we can allow the witnesses —
Ms. Curran: Well, senator, I think you have also said that you have a Facebook community where you share information about what is going on in Ottawa and the legislative initiatives that you’re engaged in, and you have a really good and engaged Facebook community who wants to hear from you on those issues.
I think if we’re forced to end the availability of news on Facebook — it is not something we want to do, but if what is left is updates from friends and family and from parliamentarians and from government organizations and community organizations, we don’t think that’s bad information or misinformation. I think we would challenge the premise of the question that removing news is only going to leave bad information on our platforms. I don’t think that’s the case at all.
Marc, do you want to address the other questions?
Mr. Dinsdale: Certainly, thank you.
To the question of value of news, again, it is challenging for us to put a number to that except to say that it’s not what people want to do on our platforms. It is replaceable in terms of other content, and so, therefore, from a commercial perspective, it is —
Senator Miville-Dechêne: This is not my question. I want to know if you have a figure to give us.
Ms. Curran: I think we can follow up with that, senator, on the work we’ve done to assess the value of news on our platforms, absolutely.
In terms of ending audiovisual content — and, I’m sorry, Senator Cormier, if this was not your question — if we’re forced to end the availability of news on our platforms, it would be audiovisual content and text content. It would be all news content as defined in Bill C-18, and we’re still waiting to see what the final shape of that bill looks like because that is the definition that we will use to define news content on our platforms too. Anything that is defined as news content in Bill C-18 is ultimately what we will be forced to remove from our platforms.
The Chair: I would like to thank Ms. Curran and Mr. Dinsdale for your appearance here this evening. I appreciate your time. We went a few minutes over, but I do thank you for your indulgence.
(The committee adjourned.)