THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
OTTAWA, Wednesday, May 31, 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, and to study the subject matter of those elements contained in Division 2 of Part 3, and Divisions 22 and 23 of Part 4 of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.
Senator Leo Housakos (Chair) in the chair.
The Chair: Good evening, honourable senators. My name is Leo Housakos. I am a senator from Quebec and the chair of the Standing Senate Committee on Transport and Communications.
I would ask my colleagues to briefly introduce themselves.
Senator Simons: Paula Simons, Alberta, Treaty 6 territory.
Senator Miville-Dechêne: I am Julie Miville-Dechêne, and I represent the senatorial division of Inkerman, in Quebec.
Senator Cormier: I am René Cormier from New Brunswick.
Senator Clement: I am Bernadette Clement from Ontario.
Senator Harder: Peter Harder, Ontario.
Senator Cardozo: Andrew Cardozo, Ontario.
Senator Dasko: Donna Dasko, Ontario.
Senator Wallin: Pamela Wallin, Saskatchewan.
The Chair: Colleagues, we’re meeting to continue our examination of Bill C-18, an Act respecting online communications platforms that make news content available to persons in Canada.
For our first panel, I’m pleased to introduce, through video conference, from the Minderoo Foundation, Emma McDonald, Senior Policy Adviser; from Star Observer, Lawrence Gibbons, Group Publisher, Star Observer and City Hub and Co-chair of the Public Interest Publishers Alliance. We also have Christopher Gogos, Publisher of Neos Kosmos and Director of the Independent Multicultural Media Australia. As an individual, we have with us as well Rod Sims, professor, Australian National University.
Each organization will have five minutes for opening statements, and then we will turn it over to my colleagues for Q & A. We will start with Emma McDonald. You have the floor.
Emma McDonald, Senior Policy Adviser, Minderoo Foundation: Good evening, senators. Thank you for the opportunity to give evidence to the Standing Senate Committee on Transport and Communications. I’m the director of Minderoo Foundation’s Frontier Technology initiative. Minderoo Foundation is one of Australia’s largest philanthropies with $2 billion committed to a range of global initiatives.
Prior to joining Minderoo, I worked as a general counsel at several large media organizations and was head of public affairs at the Australian Broadcasting Corporation, ABC. Most recently, I served as a senior policy adviser to the Minister for Communications, during which time I worked on the News Media and Digital Platforms Mandatory Bargaining Code as it made its journey from competition policy to world-leading microeconomic reform.
Before I go any further, I must advise the committee that I’m subject to a non-disclosure agreement with Google, so I may not be able to answer some of your questions.
I know from first-hand experience that curbing the power of big tech is challenging. During my time in government, Facebook consistently argued that there was no economic value in news being on their platform. They claimed the law fundamentally misunderstands the relationship between our platform and publishers. Google told us that our code was unworkable.
As you are probably aware, Australia lived through the blocking of news content by Facebook when we were on the cusp of introducing laws like your Bill C-18, the online news act. When Facebook defriended Australia in February 2021, it was just as the legislation was about to go to the Senate. It frustrated many Australians and angered politicians of all persuasions, but ultimately it didn’t stop the Australian government staring down powerful adversaries and passing the News Media Bargaining Code in early March of 2021.
Facebook and Google have been free riding for years, profiting from the inclusion of news content on their platforms. Government intervention is the only mechanism that will force them to the negotiating table to pay for news and information that delivers value to their businesses. The Australian code was developed in response to concerns from large and small media outlets about the impact behemoth digital platforms were having on Australian media and the local ad markets.
We know this is not a uniquely Australian or, indeed, Canadian problem. Globally, the market power of Facebook and Google with their sophisticated ad tech and vast scale has been disrupting and decimating local media for at least a decade. We have all witnessed the shedding of audiences and newsroom jobs and the loss of advertising revenue at an alarming rate. Despite the tech outrage in the lead-up to the introduction of the code, it has proven to be a success for Australian news media, large and small. It’s workable and it’s effective. It did not break the internet. It is not a link tax, and it showed that it is possible to curtail the market dominance of the platforms.
Not long after the code became law, most major Australian media companies secured lucrative deals with Google and Facebook. But by October 2021, just over six months after the code was introduced, it became apparent that smaller independent publishers could not get Google or Facebook to talk to them.
So in November 2021, Minderoo Foundation agreed to support a group of 24 small independent publishers by offering to collectively bargain on their behalf to help them negotiate deals with Google and Facebook. We did this based on our belief that these small publishers should be given the same opportunity as large publishers to negotiate with Google and Facebook for the use of their content for the public benefit.
Our collective bargaining efforts brought an end to the wilful blindness, and although Facebook jettisoned our group on the grounds that they had grant programs available for smaller publishers, Google came to the table and negotiated with our group in good faith. It took six months of back and forth negotiations, but I’m pleased to advise this committee that all our publishers, including Neos Kosmos and Star Observer, who are represented here today, secured agreements and funds from Google.
The Australian code was designed to address bargaining power imbalances between Australian news media, businesses and digital platforms and help support the sustainability of public interest journalism. Media that serves a public interest function and employs people comes in all shapes and sizes. The code and the collective bargaining efforts have delivered positive outcomes for small news media businesses like the two you will hear from today.
Senators, the ball is now in your court. Other countries are watching what you do with great interest, and momentum is definitely building. We need to support local news more than ever to build trust, combat disinformation and bolster our democracy. I urge you to stare down the threats from big tech and pass the law to save your local news services. Thank you.
The Chair: Thank you. I will turn it over to Star Observer, either Mr. Gibbons or Mr. Gogos. You have the floor for five minutes.
Lawrence Gibbons, Group Publisher, Star Observer and City Hub and Co-chair of the Public Interest Publishers Alliance, Star Observer: Chair and senators, thank you for inviting us to speak in relation to Bill C-18. I am the publisher of the Star Observer, Australia’s largest and boldest media outlet, and of the Sydney City Hub, which is based on North American alternative news weeklies such as Toronto’s Now, where I consulted before moving to Australia in 1995.
I am also the co-chair of the Public Interest Publishers Alliance, a group of 24 small and independent Australian publishers.
Today, I am joined by Christopher Gogos, a fellow member of the Public Interest Publishers Alliance. Christopher is the publisher of Neos Kosmos, Australia’s leading Greek community publication. He is also the director of Independent Multicultural Media Australia.
For the last few months, while the legislation has wended its way through the Senate, disinformation about Bill C-18 has been spread like a social disease. Some Canadian outlets have falsely reported that only large media conglomerates got tech deals in Australia. This is fake news. We should know. Our group of 24 small and independent publishers secured a deal from Google, and we were not the only ones. A larger group of regional papers, the Country Press Australia, also did a deal, along with a range of individual small and mid-sized titles.
Our group, the Public Interest Publishers Alliance, is made up of independent titles, serving two dozen distinct communities in disparate markets across the whole of Australia. We include multicultural publishers, LGBTQ media outlets, scrappy rural and urban mastheads and independent titles reporting on vital community interests ranging from global warming to women’s rights to the arts. Each of our member publishers is committed to producing public interest journalism. We stand for the old‑fashioned principle that a civil society requires a fiercely independent press to inform our citizenry, engage the community and hold power to account. No secretive algorithm could ever replace the importance of the fourth estate to a functioning democracy.
Yet, despite the significant role that journalism plays in our liberal societies, the digital duopoly poses an existential threat to the very existence of journalism around the globe. Together, Google and Facebook, or Meta, suck up over one third of all global advertising revenues combined, making it increasingly difficult for content creating publishers to survive. If democracies such as Canada and Australia wish to preserve diverse local news coverage, there is little choice but to require Google and Meta to do deals with publishers, big and small.
In response to the tabling of Bill C-18, the tech giants have funded a massive propaganda campaign threatening to pull news content from its platforms across Australia. We Australians have heard it all before. In 2021, when our Parliament debated similar legislation, Facebook pulled the plug on news published on their platform. Then, after a few weeks, the news returned. Despite claims to the contrary, a range of small and independent media companies sat down at the negotiating table. Australian legislation facilitated this outcome. Importantly, the law allowed independent publishers to join forces to collectively bargain with the mega-transnational tech firms.
In Canada, Bill C-18, as amended by the House of Commons, would allow independent mom-and-pop publishers to join with larger publications in collective negotiation. Concerns that the digital duopoly will only ever do deals with large media companies are not ill-founded. Left to their own devices, Google and Meta would only ever bargain with a few mega-media companies in a cynical attempt to buy off the biggest players and mollify the government.
This is precisely what is happening in Canada without the passage of Bill C-18. To thwart legislation, Google and Meta have started doing exclusive content licensing arrangements with larger publishers alone, to the exclusion of many French‑language, multicultural, LGBT and First Nations publications.
If there is one message that we can send to our Commonwealth kin, it is this: Only the passage of a law compelling the digital duopoly to bargain with a range of public interest publishers will ensure that Canadians continue to have the rich and diverse media landscape you so richly deserve. In the absence of such legislation, an ever-shrinking Canadian landscape is all but inevitable.
The Chair: Thank you, sir. I see, unfortunately, we’re having some technical difficulties with Mr. Rod Sims. He has disappeared on us. What I suggest, colleagues, is that we go into Q & A with our panellists, and, at some point, if Mr. Sims comes back, we’ll give him an opportunity to intervene.
Senator Simons: I have heard from many people about the wonders of the Australian deal, but I have questions. In March of this year, News Corp Australia announced that it was laying off 1,250 people from its newsrooms, a cut of 1 in 20 of their staff. When I asked Mr. Sims in the past if he can tell me how much money the other independents have received from the platforms, I’m told these deals are all confidential. There’s no way of tracking how much money is actually going into newsrooms and no way of tracking whether there has actually been a net increase in hires of journalists or news production.
How am I to have confidence that this is actually working in light of the fact that over a thousand journalists lost their jobs once Rupert Murdoch had this deal?
Ms. McDonald: Senator, it’s a shame that Rod Sims is not available right now to answer this himself, but I am aware of a recent report that has been released by The Australia Institute that has evidence that the job advertising numbers have increased by 46% since the bargaining code has been introduced in Australia.
So there is evidence — and I can make sure that you get a copy of this and that it’s tabled with the committee — that demonstrates that there has actually been an increase in jobs.
Rupert Murdoch is one of many publishers who have secured deals. Perhaps I should let Mr. Gogos and Mr. Gibbons speak to this as smaller publishers, but we can definitely share that report from The Australia Institute with you about the job numbers.
Chris Gogos, Publisher of Neos Kosmos and Director of the Independent Multicultural Media Australia: If I could give my experience and opinion on this as a small publisher, what the bargaining code has done for us is it has actually given us capacity not only to keep people but also to add journalists to our staff and accelerate our transformation into the digital era, which is critical for a sustainable publication of our size to be viable. It’s as simple as that. We have seen the positive from the deal.
Mr. Gibbons: If I can endorse what Mr. Gogos has said, as a small independent publisher, the resources that we’ve received have allowed us to add journalist staff, but, equally as importantly, the deal has given us the resources to redevelop our website and put resources into our digital transformation. Frankly, it’s naive to think, as an independent publishing company, that resources that go into expanding our digital reach and resources that go into expanding our advertising capability and capacity don’t contribute to the overall livelihood and sustainability of the publication, because all of these things are integrated. Without the investment that we’ve had from Google over the last year, our business would be in a substantially different position post-COVID.
Senator Simons: I won’t ask how much money you’re getting, but let me put it this way. We’ve been told that if Bill C-18 comes into force in Canada, it will provide 35% of the operating costs of Canadian newsrooms. Are you getting anything close to 35% of your operating budgets from these deals?
Mr. Gibbons: I’ll jump in and tell you that we are under a non-disclosure agreement that prevents us from providing that information. I must say that I find that completely unsatisfactory as someone who’s committed to transparent journalism and the free flow of information. But unfortunately, the law is the law, and I’m not prepared to breach my funding agreement by providing you with that information.
Senator Simons: Cards on the table, I was a working journalist for 30 years. I am concerned that once you are beholden to the two biggest behemoths — the two companies that control what we see, that set the news agenda for the world, that provide the paradigm through which we understand what’s happening around us — that you are now beholden to them so much that you’ve all signed non-disclosure agreements, you won’t tell me how much money they’ve given you, you won’t tell me how many more journalists they’ve allowed you to employ and you can’t answer me when I say that Rupert Murdoch, who is the biggest press baron in Australia, took his money and then laid off 5% of his staff, or 1,250 people; that’s a number I can wrap my head around. I need to be convinced that this is real and that it’s worth the cost of selling your soul to Google and Facebook.
Mr. Gogos: I obviously cannot speak for News Corp and the way they do business. Myself, being a small publisher and not having the access to the behemoths such as Google and Facebook — that’s an important point to make here, that accessibility to those companies was actually very difficult for small companies like mine and that what our collective bargaining arrangement allowed us to do was to actually have accessibility and to be at the table and to have a discussion. Without such legislation, this would not have been possible. This is a very important point to make from a small publisher’s perspective.
I’m under the same non-disclosure agreement, so I cannot answer your question directly, but what I can say is that the agreements in place are workable. We do not feel at any point that we’re at the behest of anybody, whether that’s Google or Meta.
Senator Simons: I have many more questions, but I pass the baton.
The Chair: I see Mr. Sims is back online. If he is good to go, we will give him the floor for five minutes for his opening statement.
Rod Sims, Professor, Australian National University, as an individual: My apologies for whatever Zoom was doing to me. It has never happened to me before. I’ve missed a bit of what has been said. I just want to make three points.
One is that, as has been said, the logic of the News Media Bargaining Code was that there was a massive imbalance in bargaining power in the sense that Google and Facebook simply would not even talk to, and certainly not in any way engage with, media businesses about payment for their content. That was a complete impasse. The News Media Bargaining Code solved that problem. We then have gotten commercial deals between media companies and the digital platforms in ways we could not get before.
Second, there were three key provisions of the bargaining code. One is that there’s a requirement to negotiate, and if that doesn’t work, then arbitration will kick in, which is final offer arbitration. Further, if you do a deal with one media company, you have to do a deal with the lot. The platforms could have said they don’t want any news on their platforms, but if they have any on, they have to do a deal with all companies. The third provision was that we allowed collective bargaining, as I know has just been explained.
The outcomes were excellent and pretty much what I expected. The amount of money paid by the platforms to media in Australia was over $200 million per annum. Google did a deal with everybody, and Facebook with companies that employ about 85% to 90% of journalists. Many small companies got a direct deal, but two groups used collective bargaining. One was Country Press Australia, which represents the smaller players and already had an industry body to work on its behalf, and the other one was brought together by Minderoo, as you’ve heard.
I should say that the smaller players got more money per journalist employed than the larger companies. The myth that is put out about that, that the small publishers missed out, is just that; it’s a myth. They did very well. Country Press Australia is extremely pleased with its deals, and I know you’ve heard from Minderoo.
We only recently got some data that showed that there was a 50% increase in the hiring of journalists post the code deals being done. That didn’t surprise us, because all the feedback from journalists in the country was, to quote them, “There has never been a better time to be a journalist in Australia.” Once the media bargaining code was completed, we saw companies hiring journalists, and journalists immediately noticed that.
The News Media Bargaining Code, and I would say the Canadian equivalent, is absolutely necessary; otherwise you won’t get commercial fair dealings between the platforms and the media companies. There is just no way the media companies would do deals if there were not either the existence of a media bargaining code or the threat of a media bargaining code. We know that as a fact in Australia. It has been very successful, and I urge the Canadian Parliament to pass your equivalent. Thank you. That’s all I have to say.
The Chair: Thank you, Mr. Sims.
Senator Cormier: Welcome to the witnesses. My first question is for Mr. Sims. I’m happy to hear that there is good news, but I have to tell you this.
In its brief, the Community Radio Fund of Canada expressed major reservations regarding the success of Australia’s bargaining code, given that nearly all of Australia’s community broadcasters were unable to benefit from the agreements.
According to the information the fund provided, less than a dozen or so of Australia’s 455 community radio stations signed agreements, and most of those were owned by Rupert Murdoch. Can you comment on that and tell us how we can make sure that community radio stations are able to take advantage of the support under Bill C-18?
Since we’re having technical difficulty, I think the chair will let me ask Ms. McDonald a question.
My understanding is that small media organizations in Australia that the Australian Communications and Media Authority had deemed eligible to negotiate agreements did not do so because of the administrative burden.
Can you tell us how the Frontier Technology initiative supported those small media organizations? Can you give us detailed information on what Frontier Technology provides resource-wise? Can you tell us the estimated value of the services you provide to Public Interest Alliance?
I have a second question for you. I worry that, under Bill C-18, small media outlets in Canada will also have trouble negotiating voluntary agreements. Do you have any recommendations to share in relation to Bill C-18?
Ms. McDonald: Thank you for the questions. In terms of how we assisted the small publishers, first of all, I have to acknowledge the support of the Australian Competition and Consumer Commission, the ACCC, who made the collective bargaining process extremely easy. The publishers were frustrated; they went to the ACCC. I spoke with the ACCC about supporting them. Then I connected originally with Lawrence Gibbons, and then Lawrence — you might laugh in Canada when I say this — herded the cats, so to speak. He collected together all the publishers who were interested in participating in Minderoo Foundation’s collective bargaining for them.
One of the things about the ACCC’s process that made it so easy was that it was simply a form-filling exercise where I had to list the publishers. One condition was attached: They had to have an annual turnover of AU$10 million or under to participate in this particular form of collective bargaining.
Once we had lodged the forms with the ACCC that we were bargaining, we notified Google and Facebook. Then it was just a back-and-forth negotiation with Google — not with Facebook, as I mentioned in my opening statement. I met with Google regularly. I convened meetings with the group of publishers and gave them updates on how the discussions were going with Google. Lawrence and others also convened separate meetings for that group to help them understand what was happening through the bargaining process.
As I mentioned, after about six months, we landed in a place where the publishers were all happy with what was on offer from Google. I hope that answers your first question.
Senator Cormier: Yes. And the second one is this: Do you have recommendations for us, because I’m worried here that small media will have problems negotiating?
Ms. McDonald: They will. I think voluntary deals are particularly difficult for independent publishers if they do it alone. If your government and your regulators could look at a similar model to what was introduced in Australia — which made it pretty seamless for us to work collectively — that would be a great addition to your legislation. The facilitation of the coming together of parties like Minderoo Foundation or Country Press Australia or industry associations that exist already in Canada that can work with publishers and bring them together and do that collective bargaining — I’ll let Chris and Lawrence speak to that — but I think it was hugely beneficial for them and for the Country Press Australia group.
Senator Miville-Dechêne: I have one quick question that my colleague tried to put to Mr. Rod Sims, but he was not hearing at the time. You talked about an increase of 50% in the number of journalists all across the industry. What is the retention rate? I especially want to hear you about the firing or the letting go of 1 in 20 journalists by News Corp, the Murdoch empire. They got a lot of money from the platforms, and it seems that it has not gone to journalism. What does that say about the Australian model?
Mr. Sims: It was a 50% increase in hiring. The number of new journalists hired rose by 50%. It was not an increase in the number of journalists by 50%. We could see that across many media companies. If I remember correctly, there was some reduction at News Corp. My memory is they had both some reductions at times and extra hirings at other times. I don’t know the net result of that.
News Corp, I suppose, got probably just slightly less than 20% of the money, and they are about 20% of our media business in Australia. That is one company. Certainly, I know that the other big companies, such as the ABC and Nine and Seven and The Guardian, all increased their hiring. All I can say about News Limited, at certain times, they had some redundancies, and at other times they definitely had some hirings. Sorry, I don’t know the net effect of those two things.
I do know that the net effect right across journalism in Australia was a lot of extra journalists hired.
Senator Miville-Dechêne: Do you have some information on the retention rate? Are they there, the journalists who were hired, or is it not possible to give me some more exact figures?
Mr. Sims: I know for a fact that the journalists hired by the ABC, which is the public-owned broadcaster and extremely large, are still retained. I know at Guardian Australia, they are still retained because I know the number of journalists they had before the bargaining code and afterwards. The extra journalists hired, which was about a 50% increase in journalism, are still there. I don’t know what it is for Nine, Seven and News Limited. We just don’t have those numbers.
Senator Miville-Dechêne: I’ll just jump to another topic, which is the bargaining. You have said that small media have bargained on their side as groups, and bigger media have bargained individually. Here, at this point, we have a big coalition that is assembling small and big print media; it’s called News Media. They have about 560 newspapers in general, big and small, and they want to collectively bargain.
If we are looking at the Australian model, you are saying that the smaller media got more out of their negotiation in terms of percentage than the big guys. Does it make sense that small and big media, in such a number — we’re talking about more than 500 newspapers — get together, who is going to be the loser and the winner there, from your point of view?
Mr. Sims: We certainly noticed benefit from individual deals. I should say individual deals were done by the larger players, they were done by the medium-sized players and they were done by some of the small players. Some of the quite small media companies in Australia did their own deals.
There were two groups that collectively bargained, as I mentioned, Country Press Australia, where you go to very small towns and they have got small newspapers with two or three people. They did an excellent deal, and I think Minderoo Foundation did a great job with some others. Some of the small did their own deals, and some of them did collective deals.
The smaller players got more per journalist than the larger players. I think it’s really up to the media companies themselves as to how they want to do this. If they have joined together to collectively bargain as a big group, I don’t have a concern with that. It means deals will get done. It means they will get some benefit. As Emma McDonald said, you need some mechanism to help some of the very small players. Country Press Australia actually had an industry organization that could work on its behalf. If in Canada you have an industry organization that covers a larger number of players big and small, I don’t have any problem at all with them negotiating on behalf of their members. There is not a lot in it in terms of the amount of money. I’m really making the point that the small players in Australia were in no way disadvantaged, but I don’t have a problem with all the players getting together, large and small, to negotiate collectively.
The Chair: Thank you, Mr. Sims.
Senator Cardozo: Thank you and welcome to our guests from all the way in Australia. Good morning to you if you’re from Western Australia; it is obviously quite early. Thank you for doing this for us.
I have a question for Mr. Sims. As you are looking at the whole field, is this the clash of the titans, with democratically elected governments looking at a policy and the private sector corporations saying, “Don’t you dare”? How seriously should we take this threat? I wonder if you have any idea of how much money is involved. Is it $200 million, $300 million; do you know the ballpark figure overall?
My question to the other two is about your thoughts on threats to your independence. There have been references to having these deals with these major corporations — my colleague referred to “selling your soul.” Is it any different from the deals you do with your major advertisers? You have about a minute each to opine on those questions.
Mr. Sims: Okay, thank you very much. When Google threatened to move their search out of Australia, and Facebook threatened to take all news and emergency advice off their platform, there was a large pushback from the Australian population that this was Google and Facebook being disrespectful to Australia and disrespectful to Australian politicians. I think there is an underlying democratic issue there.
I should just add that it’s very hard for Google to take search out of Australia, and I think it’s extremely hard for Google to take search out of Canada. As soon as Google threatened to take search out of Australia, the CEO of Microsoft spoke to the Australian prime minister the next day, offering to have Bing come in. I’m not suggesting that Bing is a perfect substitute, but I am suggesting that Google has to think awfully hard. It has about 90% of search all around the developed world. If it left one major country, such as Canada, and a new competitor was allowed in, I think that’s a big threat to Google. It’s not clear to me that Google was ever going to carry out the threat in Australia. I suspect not in Canada.
The overall funding was over AU$200 million per annum. I think it could be close to AU$250 million, I just don’t know, but I know it’s well over AU$200 million per annum for deals that run from four to five years each.
Senator Cardozo: Ms. McDonald and Mr. Gibbons, do you have a quick comment on your editorial independence once you have signed these deals?
Mr. Gibbons: I’m happy to speak to the editorial independence. We have had no discussions about content on our sites with Google. Frankly, they are a big behemoth, and I don’t think they care what we publish. In fact, I have had absolutely no discussions with them in relation to my appearing before the committee, which I was fascinated by.
I was told by executives at Google that doing a deal with them did not mean that they were silencing me, and I respect that. I have to say, having Google as a financial beneficiary to my small business has actually been a great tool to have not only the financial resources but the expertise and advice in terms of growing and sustaining my business. I have been very grateful.
One other thing I would say is that the challenge with the Australian legislation is that Facebook and Google were never actually designated under the act because the Treasurer chose not to do so. That meant that it was up to those companies to decide whether or not they were going to talk to us. They did not talk to us individually at Google until we collectively bargained and until we got one of Australia’s richest men’s philanthropic group behind us. Facebook chose never to deal with us and chose, in fact, not to deal with a lot of people. That’s one of the flaws of the Australian legislation as it came down the pike. It simply was never enforced.
Ms. McDonald: Senator, I’m not a publisher, so I can’t speak to that point. Probably, it would be better for Mr. Gogos to speak to that point. As I said at the beginning, I worked in media companies for most of my career before I took this job. I know that this isn’t the panacea. It is one of the tools in the tool kit that we need to support publishers in the future. It has done a great job in Australia, but it’s the beginning of the story, not the end of the story. I think you’ll find the same thing if you bring in this legislation. It’s an important piece, and I understand the concerns about the dependence on Google and Facebook, but if you have got a huge advertiser like a big, major car company or a supermarket chain, it’s no different. It’s helping to fund your business. Commercial media is based on receipt of funding from other commercial businesses.
Senator Dasko: Thank you to our witnesses for being here today. I want to try to get a sense of what the basis of negotiations was between the media organizations and the two platforms, in particular, the differences between the way the organizations negotiated and dealt with the two companies differently.
I don’t know if the publisher, Mr. Gibbons, is able to share any of this or Ms. McDonald or Mr. Sims — can you tell me what the expectations were from Google versus the expectations from Facebook? I’m trying to understand what the basis was for the money and especially the differences between the two. I hope I have asked that question clearly enough.
Mr. Sims: I’m happy to make a start, if that’s okay.
During the discussion and the lead-up to the legislation, Google always engaged with the ACCC, which I chaired at the time, and the government. Facebook did not, so they always took a very different position. Google was most concerned about anything that interfered with the integrity of their algorithm. Once they were convinced that wasn’t an issue, while they didn’t like the code, they went ahead and negotiated. Facebook just wanted the whole thing to go away. They did negotiate because they were worried about it getting designation. We always thought the threat of arbitration would give us the outcome we wanted. In the end, it became the threat of designation.
So I can only say that Google had a much more proactive approach than Facebook.
Senator Dasko: May I ask it this way: Did the companies get more money out of Google than Facebook?
Mr. Sims: Yes, they did. We judge that to be appropriate because Google is much bigger than Facebook in terms of the amount of advertising money it gets. The problem is that Google only did deals with companies that employ 85% of journalists.
When the companies were both doing deals, we felt the money that was being paid was appropriate to their share of gain. Yes, Google was paying more, but we always expected they would. We thought that ratio was about right.
Mr. Gibbons: I just want to make a couple of points. First, Australia has always been the most monopolistic media market in the free world. When Mr. Sims says that 85% of the media and journalism jobs are in the hands of a few companies in Australia and that they got the lion’s share of the money, that is just the commercial reality of the market.
Second, in terms of how the deals were actually structured — our group of 24 publishers who were cat herded, as Emma McDonald described it — it wasn’t a coincidence that we came together. Under the media bargaining code in Australia, there was a media register that publishers were invited to sign up to. It was a pretty arduous task. We had to fill in forms and demonstrate we were public interest publishers and meet an entire government threshold. The majority of people in the Public Interest Publishers Alliance were on the government register, and I can speak for Christopher, who is a part of the group. We assumed that once we got on that register, it would give us a front-row seat in terms of bargaining with Google and Meta. So we individually sent off letters to each of the companies and said, “Hi, we’re on the register. We’re ready to talk.” And we sent emails and emails, and nothing happened; no one responded. It was under that frustration that we contacted the ACCC, who advised us of the collective bargaining mechanism, who then introduced us and facilitated our work with Emma McDonald.
Now, the bottom line is that Google eventually returned our calls once we came together as a group and once we had Emma McDonald and the Minderoo Foundation behind us. Meta never talked to us, never returned our calls, and referred us to their grant process for small publishers. And — disclosure — both Christopher and I did get grants from the Meta funding. However, I can disclose that it is a fraction of the money that we received from Google.
Senator Wallin: I will put my question to Mr. Gibbons, but we keep referencing in our discussions the Australian legislation. In point of fact, it never really came into existence. It was the threat of the legislation that actually led to whatever negotiations, however badly they may have been handled. Would you confirm that?
Mr. Gibbons: I 100% confirm that. I know that other people have other opinions, but I can tell you that there were a number of independent publishers who didn’t get deals. I can also tell you that many of those publishers who chose not to be a part of the collective bargaining process never got deals in the end.
While the threat of designation brought Google to the table and didn’t matter one diddly-squat to Facebook, at the end of the day, what I take from the Canadian legislation, as I see it, is that, first, it is not up to a politician to decide whether they are going to fall to the power of the digital duopoly; two, that the designation is more likely to happen; and three, that small independent media publishers aren’t left to their own, they’re part of the legislation as it’s crafted from the beginning.
Hats off to Canada, and I hope everyone gets deals.
Senator Wallin: One of the concerns here is that we are giving the power to a — I won’t say “outdated” — broadcast regulator who will have to develop expertise in this particular area. We’re giving that body, the CRTC, the power to designate at their whim. Do you have any thoughts on that? It may not be a politician doing it, but it’s a regulatory body that is directed by politicians.
Ms. McDonald: In terms of the CRTC, which is your communications authority, I believe, which is similar to our Australian Communications and Media Authority, I don’t know enough about your regulator to speak with great authority. But I would certainly have faith in the Australian Communications and Media Authority, who understand how the media sector works and certainly understand digital disruption. They have followed the path of studying how media has been impacted by digital platforms for a very long time. They’ve worked side by side with the Australian Competition and Consumer Commission over the years to come up with policy positions. They’re part of the legislation that exists now, which is that even though it’s a competition law, the registration of the media organizations that Lawrence Gibbons was referring to happens via the Australian Communications and Media Authority, on the understanding that they know the media industry best.
I think it makes sense for them to designate. In a way, it’s probably better than putting it in the hands of a treasurer, whose attention can be difficult to get when they’re dealing with so many things as a treasurer of our country. That’s my view.
Senator Wallin: It was more about the process of unilateral designation one way.
Ms. McDonald: So they designate Facebook and then —
Senator Wallin: No, sorry. We’ll see, but it is intended in this legislation that the regulatory body would be able to say, “Okay, you’re a designated publisher and therefore you’re required to pay; you’re a designated body and you’re required to pay the so‑called link tax.” But that’s not how your system is working because the legislation didn’t actually ever come into force.
Mr. Sims: Can I just say that the legislation did come into force?
Ms. McDonald: Exactly. I was going to say that. I agree with you, Rod. Keep going. The legislation does exist. It absolutely is in force.
Mr. Sims: In the final discussions between the Treasurer and Facebook, on the one hand, and Google on the other, the Treasurer discerned that they did not want to get designated. Both Google and Facebook did not want to get designated because of the effect that might have as a precedent around the world.
The Treasurer said the legislation is the law of the land. It’s absolutely on the statute books. The next step is whether or not the Treasurer designates Google and Facebook. He said, “If you go out and do a lot of deals, I won’t see a need to designate you.” They went out and did a lot of deals in record time. Within six months we had virtually all of that done. That’s how that worked.
The Chair: Thank you, Mr. Sims. I hate to cut you off, but Senator Wallin’s time is up.
Senator Clement: Good morning, thank you for being here. Ms. McDonald, we do herd cats here in Canada, quite a bit, so I got your reference.
My first question is for you, and it’s about the fact that you went from a competition policy to an economic model. In Canada, we’re quite interested in competition or the lack of it. Why did that happen? Why did it go from that to the economic model?
In light of what Mr. Gibbons was just saying about Facebook and Meta and the difficulties there, would it not be preferable to have an economic model where instead of doing secret deals, you actually have a set percentage of a news outlet’s editorial expense budget, and everybody gets the same thing across the board? Ms. McDonald, if you could comment on that, as well as anybody else who wants to comment.
Ms. McDonald: I will defer to Mr. Sims as the economics and competition policy expert. I worked for the minister for communications, and my background is more legal and in the media regulatory space. It would be inappropriate for me to speak about this with any authority, so I’ll hand it to Rod.
Mr. Sims: I’ll be very quick. We decided not to make this a copyright issue and instead to make it a market power issue. Market power is very much something the ACCC, the competition regulator, deals with. The ACCC doesn’t just work with competition law; it also works on market power issues. That’s why it came to the ACCC. But you are right; it is an economic concept here. We are dealing with how to overcome the problem with the excessive market power that Google and Facebook have. So you’re right; it’s an economic outcome rather than a competition one.
Senator Clement: Why did that happen? Why did you make that choice, then, if it is a monopolistic issue?
Mr. Sims: The way we solved the monopolistic issue is the way we do it in Australia all the time. There’s an established model where you have negotiate-arbitrate positions. All we’re trying to do is rebalance the bargaining power. Once you have negotiate-arbitrate, the company with all the power can no longer say “go away” to the small player. It has to deal with them; otherwise they will find themselves in front of arbitration.
Given the threat of arbitration rebalances the bargaining power, that then allows commercial deals to be done, and that’s what we were seeking to achieve. We actually wanted deals to be done between individual media or collective media and the platforms. We never wanted them to be public. We never wanted the government to decide what the percentage is. We wanted commercial deals and we got them.
Senator Harder: Thank you to our guests for joining us. I recall that we had to postpone you once earlier, several weeks ago, because of Senate business, so I very much appreciate your being here with us this morning for you and this evening for us.
I want to ask about or explore your sense of where our legislation differs or has learned from your experience. We talked about designation. Could you comment, Mr. Sims, on the data collection and transparency in this legislation versus yours? Are there any comments you might make on that? That gives me the opportunity to talk a bit about lessons learned that might be the next step for Australia in this field based on what you see happening here.
Mr. Sims: Thank you for the question. I think the data transparency provisions you have in the Canadian bill are excellent. That is a deficiency. The ACCC is the only organization in Australia that has the information that can tell you the deals were more than AU$200 million. It should be more transparent than that. I think the Canadian law has picked up the key defect in the Australian law.
The only other issue, of course, is the automatic designation. I think that will get revisited. We have a new government; it has many things on its mind. I think eventually Facebook will get designated, but I agree that the lack of automatic designation is also a problem. I think the Canadian law fixes up the two issues I would have had.
Senator Harder: If I could ask an unrelated question in the same theme, Mr. Sims, if we’re talking about five years from now, what is the state of not only Australia and Canada but other places where regimes like this exist? Can Google fight off having the United States join some kind of framework not unlike yours or ours?
Mr. Sims: We know that deals like this have been discussed in Indonesia, in parts of Africa, in India, and I think the next country to do it will probably be the United Kingdom. I think once that happens, you have such a precedent around the world. I can’t speak for the United States’ parliament — they seem to have great difficulty agreeing on things between the two parties — but my sense is that there is bipartisan support for a media bargaining code in America; it’s just too hard for the parties to agree on things. I think with the momentum, in five years’ time you’ll see a lot more bargaining codes like this.
Senator Harder: Thank you.
The Chair: I’d like to thank Mr. Gibbons, Mr. Gogos, Mr. Sims and Ms. McDonald for participating in our study and sharing your views on our study of Bill C-18. Thank you very much.
Honourable senators, for our second panel I’m pleased to have with us here from Unifor, Randy Kitt, Media Sector Director. We have from OpenMedia, by video conference, Matthew Hatfield, Campaigns Director. From the Internet Society Canada Chapter, we have Philip Palmer, President; and Sue Gardner, Member, Policy Committee. I welcome you all and thank you for joining us. We will begin with opening remarks from Unifor, followed by OpenMedia and then the Internet Society Canada Chapter.
Each organization has five minutes for opening statements, and then we’ll turn it over to Q & A. I turn the floor over to Unifor.
Randy Kitt, Media Sector Director, Unifor: Thank you. Unifor is Canada’s largest private-sector union, with more than 310,000 members. Our union represents more than 10,000 media workers, including journalists in the broadcast and print news industry.
Journalism is about holding power to account, telling Canadian stories and building community. Journalism is an essential element to a functioning democracy, and journalism in Canada is in crisis. Advertising revenue for community newspapers dropped 66% from 2011 to 2020. During that time, almost 300 newspapers either disappeared or merged with other publications.
In broadcasting, it’s a similar story. News outlets are closing, consolidating and downsizing. Unifor’s own membership numbers confirm this trend. Between 2009 and 2022, to use The Toronto Star as an example, membership has declined from 610 members to 178, a decrease of 70%. In broadcasting, between 2017 and 2021, employment decreased by 16%. In the last year, almost every major news outlet has shrunk, whether it be by layoffs, buyouts or attrition.
The result is less journalism, less local news coverage. Small‑town Canada will now get the majority of their news from the major centres — Toronto, Vancouver, Calgary and Montreal. With these huge gaps in coverage, news deserts are created.
Social media has proven to be an unreliable alternative. Unchecked opinion peddled as truth has been proven to divide us, pitting neighbour against neighbour. We are more polarized than ever because of it. A strong Canadian news media has the ability to build community, instead of tearing it apart.
Where has all of the advertising money gone? American web giants Google and Facebook have cornered the world’s advertising market. Their market share dominance is an abuse of power, where they dictate terms and price. Google is under investigation here in Canada and around the world for stifling competition, making it nearly impossible for publishers to compete. It’s important to note that Google and Facebook don’t produce any news of their own, local or otherwise.
How do we save local news? Unifor believes a crucial part of the funding puzzle is Bill C-18. Simply put, Google and Facebook must pay their fair share and contribute to the creation of Canadian news. Unifor supports the speedy passage of this bill, as we are almost too late to act. Without this support, more news outlets will close, as they are already on the brink.
It is disheartening to note that as we speak, Google and Facebook, while in the midst of negotiating deals with publishers before this bill is passed, are also threatening and, in some cases, removing news access to Canadians. This is a further abuse of their power and market share and it shows that this legislation is needed more than ever.
This government must not cower to these threats and instead stand up to these monopolies and use every tool in their tool box to ensure publishers get a fair deal.
Unifor has evaluated Bill C-18 on the basis of three major themes: inclusivity, accountability and transparency.
On inclusivity, the bill acknowledges that diversity must play a key role, smaller outlets must be included, and the bill is also platform-agnostic to recognize broadcasters and podcasters. Unifor submits that all eligible news outlets should be included.
On accountability, Unifor maintains that this money should go towards news creation. Hiring journalists to tell our stories and to hold power to account is the most important metric for measuring the success of this initiative. Recipients of this money should also be held to account.
On transparency, the platforms have ensured that the value, duration and other terms of deals negotiated thus far are shrouded in non-disclosure agreements. Unifor submits that the terms of these negotiated deals should be made public.
We do know that this bill will allow the CRTC to give us annual aggregated numbers, as we currently receive in the broadcasting industry. Unifor would also suggest that arbitrators should have special access to the value of these deals and other relevant confidential information so they can make informed decisions in the arbitration process.
Unifor has submitted amendments to strengthen the bill with these three themes in mind, and we urge you to send this bill back to Parliament, strengthening the bill in these areas.
To sum up, the news industry is in crisis, and local news is essential to the public good and a functioning democracy. We know from the Australians that a bargaining code with an arbitration process can be successful, and we believe that Bill C-18 is an improvement on the Australian legislation. Unifor supports the speedy passage of this bill. Let’s not get sidetracked by noise. Let’s get Bill C-18 passed and bring our media legislation into the 21st century and ensure a sustainable future for Canadian local news. Thank you.
The Chair: Thank you. And now from OpenMedia we have Mr. Matthew Hatfield.
Matthew Hatfield, Campaigns Director, OpenMedia: Good evening. OpenMedia is a grassroots community of over 180,000 people in Canada who work together for an open, accessible and surveillance-free internet. I am speaking to you from the unceded territory of the Tsawout Nation.
I’m here to talk about truth and trust. Bill C-18 is built on the idea that online platforms are collecting substantial revenue from the sharing of news stories on their platforms, revenue that would otherwise go to news outlets. That premise is simply not true.
We can squint at it and reinterpret it to something that is true. We could say that large online platforms gain a lot from being part of every Canadian’s information diet. We need quality journalism in that mix, so why not ask platforms to pitch in to support it? I believe that.
We could make it even simpler. We could say these platforms earn a lot of revenue in Canada and they should pay more of it back to our government for any purpose the government chooses. I buy that too.
I wish Bill C-18 were built on either of these simple premises. Instead, it is built on the idea that platforms are literally diverting substantial revenue directly attached to the news people see and read online. Based on that false idea, Bill C-18 supposes, with a few vague calculations and forced negotiations, we can refund journalism.
But a poor foundation doesn’t take much weight.
News content is extraordinarily important. It has also never been very profitable in itself, even before the internet. The overwhelming majority of that content has always been attached to all the other functions that online platforms now fulfill, like being bulletin boards, marketplaces, dating sites and conversation spaces. That revenue simply isn’t associated with the reading or sharing of journalism.
The false idea that simply permitting links to news demands fair payment is not only a fundamental break with how the internet has always worked; it goes against what is healthy for us all: encouraging linking to credible journalism to spread as far as we possibly can. That has led to an obvious response from platforms. If they are benefiting inappropriately from the sharing of links, as C-18 says they are, why not stop sharing them? Would that be good for Canada? No, it would be enormously destructive. But Bill C-18 is so poorly thought through, that’s a perfectly logical and legal response.
Maybe all this complexity and loose handling of the facts would be worth it if the money from Bill C-18 was slated to go where it should. It isn’t. I’d like to ask you this: What journalism do you think is most important to our democracy? I would say two things: one, local journalism that connects us with the people around us and builds a strong social fabric; and, two, public interest journalism that demands a lot of time and money but holds the powerful — in government and private life — to account.
It’s overwhelmingly local and provincial journalism that has collapsed in the digital era. But not a single dollar of Bill C-18 is earmarked to reopen local outlets where news deserts have appeared.
Because Bill C-18 negotiations are with existing publishers, and new revenue will likely be connected to their existing web traffic, we’re overwhelmingly rewarding the few large national chains that are still making a go of it, not revitalizing local journalism. And are we funding public interest reporting? No. Deals based on social media will reward outlets for growth in their shares and clicks, which strongly encourages national stories and inflammatory clickbait, not slow accountability reporting. If we were looking at our actual journalism deficits as the core problem to be solved, the bill would never be set up this way.
So much for truth; let’s talk about trust. The mechanisms for determining who is included in Bill C-18 and on what terms are simply too flimsy and secretive to serve. If you only fix one part of Bill C-18, please fix this.
I testified to your colleagues in the House on Bill C-18 last October, and since then, the world has changed a lot. Generative AI has arrived, and it is clear that the cost of producing credible‑seeming but completely false content of all types is falling to zero. I know many of you in this chamber are frustrated by hearing from Canadians you believe have been severely misinformed. I’m sorry to tell you that problem is about to get much worse. In the face of a likely unprecedented flood of online misinformation, we are going to need credible, trustworthy reporting more than ever. But that reporting will only be able to separate itself from AI misinformation if there is a crystal clear chain of custody of how it is produced — of who has influence, who is providing what funds and how all of that impacts their credibility and independence.
Right now, Bill C-18 does the exact opposite. We cannot enter a new era of misinformation with our truth tellers enmeshed in a complex web of secret deals that are forced by government; least of all when those deals are negotiated with many of the very same companies who are also making the large language models driving misinformation.
It is OpenMedia’s principled position that Bill C-18’s fundamental flaws are so deep, it should be rejected and replaced by a simpler, fairer media support bill. But if that’s not an option, we beg you to at least make Bill C-18’s operation fully transparent to every Canadian so that the relationships it creates can easily be understood and misinformation does not further bloom. Over 12,000 members of our community have reached out to you to ask for fixes to Bill C-18. We hope you’ll hear them.
Thank you, and I look forward to your questions.
The Chair: Thank you, sir. Now I turn the floor over to the Internet Society Canada Chapter.
Philip Palmer, President, Internet Society Canada Chapter:
We thank the committee for the opportunity to appear before you this evening.
The Internet Society has submitted a brief that outlines its concerns with Bill C-18, many of which have been raised by others before this committee. We will concentrate our remarks on what we believe is the regulatory heart of the bill — the power of exemption.
The stated scheme of Bill C-18 is that the platforms self‑identify, negotiate commercial agreements to compensate news businesses for the value of their content and then apply for an exemption. The exemption is to be the reward for compliance.
We believe, in contrast, that the exemption power will act as a disincentive to participation in the scheme of compensation. Rather than the means to reward compliance, the exemption power represents a retrospective regulation of the relations between platforms and news businesses. The structure of the exemption power denies finality to the negotiation process, it threatens to destabilize the results of good-faith negotiations. Most importantly, the exemption power forces platforms to subsidize a range of news businesses that would not qualify for commercially based compensation. Bill C-18 represents a contribution program with governmental, rather than commercial, objectives.
Our conclusions are based on the following factors. In the structure of exemption provisions, fair compensation is but one of 19 requirements that must be met for exemption. The platform must enter into agreements that not merely compensate news businesses for their content; they must “contribute to the sustainability of the Canadian news marketplace.” Fair compensation is not enough.
Second, news businesses with no real relation to the platforms are to benefit from the agreements. A platform seeking an exemption must conclude agreements, even those that are non‑‑compensatory. For example, the agreements must ensure payments that sustain independent local news businesses. The list of necessary beneficiaries of agreements includes not‑for‑profits, news businesses that reflect a diversity of business models, and news businesses that address diverse populations, including official language minorities and Black and racialized communities.
The Department of Canadian Heritage has acknowledged that many of these have no claim to compensation, but to earn an exemption, they must be paid. A separate requirement ensures that Indigenous news outlets both benefit from and are sustained by the agreements.
To complicate matters further, the CRTC can impose conditions upon its granting of an exemption — an instance of regulation by exemption. The bill provides that cabinet can set further conditions by regulation. The number and kinds of conditions are unrestrained by the legislation.
Finality is undermined when the CRTC issues an interim exemption with the clear intent that platforms open up concluded agreements — possibly including arbitration decisions — to conform to the desires of the regulator. Once granted, the CRTC has the power to revoke an exemption order. It is problematic that the Governor-in-Council can make regulations respecting how the CRTC is to interpret exemption requirements. This undermines the independence and the integrity of the CRTC.
The agreements between platforms and news businesses must ensure that platforms supervise the use to which compensation will be put and regulate the relations between the business and its news operations. The platforms become the direct regulators of news businesses. The CRTC becomes the indirect regulator of Canadian newsrooms. It is a task for which the platforms have no expertise and for which the CRTC has no lawful basis.
Taken together, the complexity of the exemption requirements acts as a disincentive to participation in the Bill C-18 bargaining scheme. Why does the Internet Society care? Because these disincentives threaten to disrupt the functionality of the internet for Canadian users and, by subsidizing manifestly non-viable news businesses, the scheme will impede innovation in the Canadian news market and threaten the viability of digital-first start-ups that are offering innovative news experiences to Canadians. I look forward to your questions.
The Chair: Thank you, sir. I want to remind each of my colleagues that you each have four minutes for questions, and I want to remind our witnesses that that includes the answers.
I will be a bit rigid on the four minutes so each senator can participate. Thank you.
Senator Simons: I have a question for Ms. Gardner and for Mr. Hatfield. Today, Meta issued a statement on the California Journalism Preservation Act, which is a little bit like Bill C-18 except it’s more like a tax that creates a fund, which Facebook has said they would prefer here, but they are not very happy about this. This is Meta’s statement:
If the Journalism Preservation Act passes, we will be forced to remove news from Facebook and Instagram rather than pay into a slush fund that primarily benefits big, out-of-state media companies under the guise of aiding California publishers. The bill fails to recognize —
— et cetera. You get the general idea. I’m wondering: Facebook and Google insist to us that they are not bluffing. Does it seem to you more or less likely that they will pull the news as more jurisdictions experiment with formats like Bill C-18 or the Australian model? In other words, if they are threatening to do this in California, should that make us more or less worried about them doing it here, do you think?
Sue Gardner, Member, Policy Committee, Internet Society Canada Chapter: That is such a good question. Jesse Brown was here — was it yesterday? He said something that struck me. He said he didn’t think it’s out of the question that Facebook and Google will “. . . make an example out of Canada to show other countries what happens when they are interfered with.” That’s the way I am reading this moment.
I have asked myself why so much attention is being paid to Bill C-18 outside of Canada. I said to the Independent Senators Group previously that I think the platforms were taken by surprise by what happened in Australia. They have now had some time to think, and I think that they are aiming to send a message and to use Canada as an object lesson. I would be more worried rather than less worried because the threatening and the bluster is one thing, but if there is — what is it that Rod Sims said? The U.K., Italy, India, the United States, California, et cetera — if there is stuff like that happening around the world, it becomes all the more important to nip it in the bud now, I would think.
Senator Simons: I’m intrigued because when Facebook and Google have spoken to us, they have said with big eyes — blink, blink — that if only it were a fund, they would be happier. What California is proposing appears to be precisely what they said they wanted here, but they are having the same reaction of saying that they will block all news in California. It’s not exactly clear to me how you do that for a state as opposed to a country, I guess with IP addresses.
What should we make of a statement from Meta like this? Should it make us more or less willing to play chicken with them?
Mr. Hatfield: It’s a fascinating scenario. I don’t think that we can be certain of what either Meta or Google intends. I think Meta’s business model is so far from the news, ultimately, that I think they probably will at some point. They are certainly trying to de-emphasize it. I would not be surprised at all if they tried to turn it off globally at some point. With Google, I think it’s harder to say.
I do think one of the issues with the Bill C-18 conception is, as I mentioned in my introductory speech, that generative AI is going to change things a lot. That we are tying news support to a particular form of sharing of content is not a version of support for news that will last very long into the future, and we should be aware that even if it worked in some sense temporarily, it likely won’t work for very long.
Senator Simons: So this begs the question — I would think that if you’re doing large language models and generative AI, you will need access to news stories as fodder for your robot. If it can’t crawl news stories, it’s not going to be able to get information to answer the questions that it is asked.
The Chair: Thank you, Senator Simons.
Senator Cormier: Welcome to our guests. My question is for Mr. Kitt from Unifor. Do I understand correctly that you proposed amendments? Is that what I heard? If so, did we receive any information on that?
Mr. Kitt: We proposed the amendments to the House of Commons, not to the Senate, but I could give you a copy of those.
Senator Cormier: I would appreciate it to have that, of course.
Mr. Kitt: Absolutely.
Senator Cormier: I heard that your concerns are on diversity, accountability and transparency. You spoke about the issue of transparency in the other place. I imagine you still have that challenge with the bill as we are studying it.
From your point of view, could clause 86, which deals with the independent auditor’s report, be made clearer as to its content? Do you think that could help with transparency?
Mr. Kitt: Yes, I think that currently the bill provides for aggregate information from the CRTC and not individual deals. Unifor believes that the value of these deals should be made public, as journalism is in the public interest, so the public should know the value of these deals. I know there is a lot of pressure to keep the lid on that, but short of that, I think arbitrators definitely should have that information. How can an arbitrator rule on a deal if they don’t know what the values of the other deals are? It’s important that information is there. If the CRTC is managing it as they manage confidential information in the broadcast industry — and there are not a lot of complaints about the way they handle that — I think the aggregate numbers from the CRTC to be made public and those arbitrators getting the value of those deals so they can make informed decisions would suffice.
Senator Cormier: Yes, I understand that, but about the independent auditor’s report and how that could be made clearer. I asked you that question.
Mr. Kitt: I have no comment on that. Thank you.
Senator Cormier: Okay, thank you. That’s all.
Senator Miville-Dechêne: Thank you for being here.
My question is for Mr. Palmer.
You were very critical of Bill C-18. There wasn’t much you didn’t criticize. It’s easier to criticize than to draft a bill or come up with a constructive solution.
I’d like to hear your comments on the power imbalance. The reason there are conditions attached to the exemption is to give small media outlets a bit more power. Do you admit that there is an imbalance of power and that, right now, the platforms have the upper hand, that they are holding the big stick? This isn’t a situation of perfect competition.
I know you’re an advocate of totally free and open Internet. That’s not quite where we are anymore. We are in a society where we are trying to keep our journalism or media alive.
What do you recommend? It’s fine to say that the government shouldn’t regulate the Internet, because it’s sacred, but it seems to me we are past that point.
Mr. Palmer: I will say a couple of things in response. First of all, I don’t like to criticize federal legislation. I have been involved in the drafting of upwards of 25 to 30 bills that have actually passed through Parliament. I respect the drafting process, and I’m very confident that I’m familiar with how it works.
I do have particular criticisms with respect to this legislation and I do think that in comparison with the Australian model, the Canadian model is flawed. It doesn’t lead to clean conclusions. The Australian legislation leads to deals. They are done; they are over. In Canada, we have deals done, and then in order to escape further processes, you go for an exemption, and the process goes on and on. Looking at it, I do not see the purpose of the exemptions. I would have preferred to see deals made.
I’m not an advocate of a totally free and open internet. There have to be certain regulations. I do feel, however, that this approach to the internet is flawed, and even if this legislation is passed, I think that we’ll be living with serious conceptual problems for a long time to come and some very serious practical problems.
Senator Miville-Dechêne: You’re talking highly of the Australian model, but Facebook didn’t do many deals. It’s a half failure, too. They just had no law in place, so they couldn’t come back. Now they are talking about having a law again.
Mr. Palmer: The law is in place. They just didn’t designate Facebook as a party. Frankly, I think that’s a cleaner way than Canadians have approached the question of who must negotiate.
Senator Cardozo: My question is for Mr. Kitt. It’s regarding your thoughts about the CRTC. I just want to make a couple of points about the CRTC because, having been a commissioner, I want to share my personal views of it.
I think oftentimes people talk about it being a political organization. I was there for six years. When I was appointed, I was told I wouldn’t have contact with MPs. I knew a few from different parties and I literally had no contact with people for six years, in some cases family friends, whose families I didn’t see for that amount of time. It was like being in prison for six years; you are suddenly let out, and all these kids have grown up. In my experience, the political interconnection was not present or is very minimal.
Second, I think a lot of the work we’re talking about will be done by the professional public servants who work for the CRTC.
Third, I think there isn’t another agency in government that has dealt with a similar industry. In fact, they do deal with broadcasters who are news makers, and newspapers are not that different from broadcasters. They are much less different from a lot of other areas.
What are your thoughts about the CRTC as the agency that would be doing this work?
Mr. Kitt: It’s a good question. From someone who has been advocating at the CRTC for many years and has disagreed with many decisions that they’ve made, oddly enough, I was comforted by the decision to put the regulation into the hands of the CRTC because, as you said, it’s quasi-judicial and it’s independent to a point. I know there are directives from Parliament, which are all public, but I think Unifor is comforted that the CRTC will handle it with its ability to mediate those deals and make sure that the balance is had.
Senator Cardozo: It’s interesting. During my six years, I never heard of anyone ever being comforted by the CRTC, so it’s nice.
Mr. Kitt: Not comforted by the CRTC but comforted by the fact that it would be them making those decisions.
Senator Cardozo: Mr. Palmer, you talked about open and free internet. If I can take you to a bigger plain, partly what we’re talking about here but bigger, namely, this discussion about ChatGPT and what’s happening with artificial intelligence and all the rest. You have the owners and inventors of artificial intelligence asking government to do something. What are your thoughts about what government should do with AI?
Mr. Palmer: I am actually not capable of answering that question. I wish I could, but I just don’t know enough about AI and its implications. I have met some people who have done some real thinking, and it gives me confidence that real thinkers are on the issue, but I’m afraid I can’t help you there.
Senator Cardozo: Ms. Gardner, do you have any thoughts on that?
Ms. Gardner: I don’t think anybody can answer this question at all, which is the problem. AI may pose existential risk to humanity. It’s a possibility, and that is what the people who have signed the open letter — a lot of people calling for regulation — are concerned about, that existential sort of sci-fi risk that the robots take over and subjugate us or kill us. There are dozens, hundreds of other risks.
Even if you just think about it in a news context, there are so many different pieces of it even there. Who will write the news? What if the news is hallucinated?
There has been work done. NewsGuard, an organization in the United States, did a test with ChatGPT where they had it generate propaganda and disinformation in different voices and from different perspectives and found it incredibly credible and persuasive. It’s also not supposed to do that — it has guardrails — but it did do that, which is bad. Then there are questions around job loss. There’s just a lot. It’s too much for us.
Senator Wallin: I’d just like to go back to Mr. Hatfield because I think you made a very important point here. For those of us who have spent our lives in journalism, we know that news has always been the lost leader. It did not generate money. We were subsidized by the selling of cars or the rental of apartments. So when we talk about funding the organizations rather than journalism, I think we’re kind of fundamentally missing the point.
I think that also has an impact on the new media that we’re seeing develop because they don’t want money from government or big tech; they just want access to viewers, readers’ eyeballs, and we’re going to make that more difficult. Do I have a sense of what you’re saying?
Mr. Hatfield: Yes, I think to some degree. There is absolutely likely to be some types of reporting that need some form of subsidy, to your point. It has always been thus. The subsidy used to be advertising that came from non-news sources. That’s not working anymore.
We’re sort of skipping a crucial step where people see that advertising is now with platforms and they think that must mean that the fact there is news and there is advertising on those platforms, clearly these two things are linked, and they are taking value that belongs to the news. That is not the case.
As a result, we’re setting up a system through Bill C-18 that doesn’t fundamentally really make sense, which is why we were calling for a radically simpler approach. Take money from platforms if you want to, but let’s make sure the money is going to where it actually needs to go. We heard from Unifor about news deserts. Is money from Bill C-18 going to fix news deserts? The outlets aren’t there to ask for the money. There is no person for it to flow to.
So I think we’re just losing track of what the actual problem is a little bit here and perhaps making a bill that is not going to address our journalism problems for that reason.
Senator Wallin: Yes, because we’ve heard this concern expressed by many that the beneficiaries of Bill C-18 are likely to be the big players, the national chains or the CBC, and the CBC is, of course, already receiving more than $1 billion in government funding.
Are you concerned that, in that context, if this bill passes, then the new, more innovative approach, the online news organizations that have reverted to a subscription base where people are responding to their actual content, they may somehow be punished or neglected by this system?
Mr. Hatfield: Yes, some parts of the support could be interpreted as a subsidy against those start-up outlets. Particularly, I’m hearing in Australia that perhaps small outlets receive slightly more disproportionately per journalist than the larger ones. But really, the majority of the funding should be going to the smallest outlets.
In Canada, a lot of the funding looks to be going to the CBC. It’s wonderful and fine to support the CBC, but it’s unclear, when the government could increase their budget if needed, why we should be subsidizing that versus start-up outlets that are not going to be getting support on that level.
Senator Wallin: Mr. Palmer, on that issue, you also raised the concern about this being about government objectives, not commercial objectives, and making these new players actually viable.
Mr. Palmer: Yes, the problem of the dressing of this as a series of commercial negotiations with the gun to the head of the big players in the form of monetary penalties — I think the primary issue is really the one that Matt Hatfield has alluded to, which is whether there is an appropriation of value in the news. And if there is not, then really what is this all about?
The Australian model was never tested in the sense that it never went through arbitration processes where you’d have counting evidence of this kind and that kind, expert witnesses and so on.
I suspect if this legislation comes in, we might see some contestation here in Canada. It would be interesting to see what the result is. Of course, again, the institutional biases that are reflected in the legislation drive to a result. It’s unclear. One of the things about this legislation is that it has never been clear what its basic premise is. Is it that Google and Facebook are stealing the value of news, or is it simply that Google and Facebook have built the better mousetrap in terms of being able to collect advertising revenues?
Senator Wallin: Thank you.
Senator Dasko: My questions are for Mr. Palmer.
You have certainly offered a picture of this bill as causing some serious problems and issues. You’ve talked about disincentives and, especially, destabilizing the environment around the internet, news and news organizations.
I wonder if there’s anything you would suggest. I haven’t read your brief yet. Is there anything that you would suggest that can be done with the bill in terms of top priorities you might have for change, in particular with respect to the stability and uncertainty issues that you’ve outlined? Is there anything that can be done, in your view, to ameliorate the harms that you see?
Mr. Palmer: I’m speaking out of school here because my society has not taken a position on this and has not put forward amendments.
For instance, I think the interim exemption power, the power to issue interim exemption orders, is probably a mistake. It will lead to blackmail, regulatory blackmail. It will force the reopening of concluded agreements, which will destabilize the commercial players. I think those are major threats. That would be one area that I would say could easily be fixed. I don’t think it’s very easy in the political context, but, in terms of the legislation, that would be something that would be important.
Senator Dasko: You’ve focused on the exemption orders. You mentioned 19; there are 7 listed, but I think the detail brings up more than that if you look at each clause within the clauses.
Mr. Palmer: What I did was I went through it and looked at all the various subrequirements. I came up with 19. I may be modest in that.
Senator Dasko: Yes. Would you make any changes there?
Mr. Palmer: Yes. The test should be this: Have you concluded a sufficient number of agreements? Period. That is if you’re going to have an exemption power, which I don’t think is a very profitable way to go. I don’t think it’s a very useful instrument.
As I say, it’s a rather extortionary scheme we’ve come up with. If what you want are agreements, get agreements. Don’t add all this stuff where they have to keep coming back to the CRTC and satisfy this and that.
The government could create regulations that add further conditions to the 19 items that we’ve got already. These things are major flaws in the conception of the legislation. They will harm the ability to negotiate and get to deals. Yes, that’s it.
Senator Dasko: Just focus on the deals.
Mr. Palmer: Focus on the deals. Get the deals.
Senator Dasko: Get the deals done.
Mr. Palmer: The virtue of the Australian system is they got the deals. They went after the deals. It may not be perfect for Canada, but I think we have introduced imperfections that were unnecessary.
Senator Clement: Thank you to all the witnesses.
I asked a previous witness, an Australian, about their economic model. They seem to be happy with the deals. They wanted them to be kept deliberately secret. It worked with the model.
If Bill C-18 is going to be what we get here, how can we make it better in terms of transparency? The question is for everyone. I know, Mr. Kitt, you have amendments. You could talk more about that. They didn’t want that.
Here, we talk about transparency. Can we talk about the pros and cons of transparency? I would think it is more pro, and that is what we would want here. What would we do to Bill C-18 to ensure that?
Mr. Kitt: I’m not sure I heard that they didn’t want transparency up there. I think it’s Google and Facebook that don’t want the transparency. They want the values of the deals secret.
We’re all owed transparency here. As government, if we’re going to impose this legislation and help these parties out, these news creators, they owe the public the knowledge of what these deals are worth.
Senator Clement: How do we do that? Do you have any suggestions, any of you?
Mr. Kitt: I think they have to report it to the CRTC. Whatever the legislation says, they have to report to the public, whether it’s those aggregate numbers or more specific numbers. We would argue more specific numbers, but if there were to be a compromise, the aggregate numbers and letting the arbitrators also know the value of the deals.
Mr. Hatfield: I don’t think the independent auditor’s report is adequate. The public is going to have a lot of questions around what’s going on here, what the nature of the relationships is.
The more the CRTC is stacking on different government policy objectives through this process, the more people will want to know how these are being applied. What exactly was done to bring in more local content or any others from this long list of objectives?
Frankly, I think not having any of that transparency on individual deals is really dangerous. We’re entering a world where you, I or anyone could click a button and create a plausible-seeming extremely explosive, untrue version of one of these deals, leak that on the web and claim it was the real thing.
If we are barring showing the real deals and the internet is flooded with fake deals, and then we’re saying, “Go to these platforms or outlets and trust what they’re doing is credible,” we’re going to be seeing a lot more distrust of those outlets in the future.
Senator Clement: Have you spoken to your counterparts in Australia? There’s a lot of positivity around that. Have any of you talked to them?
Mr. Palmer: I’ve talked to some Australians who take a less enthusiastic view of the workings of the Australian process. I can’t say that they speak for any large group within Australia.
On the issue of transparency, transparency is a wonderful thing when you’re talking about public processes. This legislation is ostensibly about commercial dealmaking; that’s the guise of the legislation. At its core, you’re dealing with private relationships. Transparency is the last thing that most dealmakers want. I doubt very much that Postmedia would want the details of their deals with Google made public any more than Google would like to see that made public.
If you want deals, you de-emphasize transparency. If you want transparency, you make it a public process and you create a tariff, as the CRTC does with these various funds that they require people to pay into, or approve the tariffs that are proposed by Bell or Rogers. Then you have a public process and you know what the result is. The government has chosen to go down the road of negotiations and bargaining, and that’s incompatible with full transparency, public transparency. There are compromises you have to make in these things, and one of the compromises is that in order to get these guys bargaining hard, you have to give them some room to manœuvre within closed doors.
The Chair: Thank you to our witnesses and thank you to all my colleagues for your cooperation. I was hoping to get in a second round, but time does not permit that. I do thank the witnesses for coming and sharing your views on Bill C-18.
Colleagues, in the remaining few minutes, we have a motion. Of course, our witnesses are welcome to stay or leave if they want to.
We have a motion in amendment proposed by Senator Wallin to our draft report on the subject matter of Bill C-47, which was distributed by Senator Wallin to all members of the committee. I will briefly turn the floor over to Senator Wallin to explain the motion in amendment.
Senator Wallin: All of our committees here — and Banking and others — have been asked to look at certain sections and then pass it on to the Finance Committee. I felt this would provide some clarity on our thoughts as we hand this over to Finance.
It’s pretty straightforward. I don’t know if your pages are numbered, but it’s on the second page, five paragraphs down. It states now:
The air passenger rights advocate suggested that the changes to the air passenger rights regime miss the mark, creating a secretive process while maintaining the “required for safety purposes” loophole.
That’s completely accurate. I just wanted to add a bit more body to it.
When you see what I’m proposing to replace it with, points 1 and 3 come out of the testimony that we heard from Professor Daly, University Research Chair in Administrative Law and Governance at the University of Ottawa. It’s actual technical language.
Point 2 is a clearer explanation of what is currently in our report, the thing that I just read to you now.
I think the question is this: Do we want to — and I believe this is helpful; we had some discussions about it at Banking too — be a little clearer in our advice to the Finance Department in terms of what they, in turn, say to government in their assessment of our discussion? I’ll leave it at that. Does anybody have any questions or comments?
Senator Harder: Just an observation and then it leads to a question. I have no problem that this accurately reflects what we heard. If I look at the draft report, that would outsize that paragraph and the particular witness behind that paragraph relative to other paragraphs of the report. I think the drafters have some symmetry to what we’ve heard, and this would expand paragraph 9 unusually. If people are comfortable with that, I’m not going to object. I just think that the existing report, I felt, was better balanced with respect to everything we’ve heard and made the point that, obviously, the concerns were ones we very much heard in paragraph 9.
Senator Wallin: I guess the passenger rights issue is so core. I stood in line with the Minister of Transport the other night for two hours in Toronto waiting for a plane. If he had any doubt about what people feel about what’s going on with our airlines and at our airports, I think it was pretty clear there.
I think that has become the bulk of the focus, which is whether the rights are substantive enough. Is there a way for the consumer and the flyer and the user to access this system? I don’t disagree that it kind of makes this a core point or a larger point, but I think it is a larger point. That’s why I was suggesting it.
The Chair: If I may say the following: I agree with Senator Harder that it will expand the point and it will draw attention. I think that’s the objective. Quite frankly, I think the report is as balanced as it is because, in a very limited time, we had a very balanced number of witnesses here — actually, an imbalance, to be honest with you. Because at the end of the day, when we were studying passenger rights in this country, we didn’t have that many passenger rights advocates appear before the committee.
Above and beyond what I hear about the committee, even last night I got emails — and this is anecdotal — from people stuck on planes in Montreal for three hours. It’s unbelievable. It seems to be non-stop.
At the end of the day, I don’t think this in any way creates any obstacle for the bill. It does magnify a message which I think the committee has expressed we hear from constituents across the country.
Senator Harder: I was just making the point that you’ve acknowledged. I have no trouble joining a consensus.
Senator Wallin: Do you want me to move it? I’m not sure what we should do.
The Chair: Is it agreed that the draft report, as amended, be adopted and that the Subcommittee on Agenda and Procedure —
Senator Cormier: In the French version, paragraph 1, it’s just a detail, but the name of the law is not in italics and it is in the English version.
La Loi portant exécution de certaines dispositions du budget —
The Chair: Is that in the second paragraph?
Senator Cormier: It’s in the first, in the fifth line, where it says, “Loi portant exécution de certaines dispositions du budget.” Is that the name of the act, and if so, shouldn’t it be in italics, like the English?
The Chair: The clerk sees it.
Senators, is it agreed that the draft report, as amended, be adopted and that the Subcommittee on Agenda and Procedure be empowered to approve the final version of the report, taking into consideration this meeting’s discussion and with any necessary editorial, grammatical and translation changes required?
Hon. Senators: Agreed.
The Chair: So carried.
Is it agreed that the chair be authorized to table the report in the Senate — that’s important — or with the Clerk of the Senate at the earliest opportunity?
Hon. Senators: Agreed.
The Chair: So carried.
(The committee adjourned.)