Bill C-18

Online News Act

An Act respecting online communications platforms that make news content available to persons in Canada

This enactment regulates digital news intermediaries to enhance fairness in the Canadian digital news marketplace and contribute to its sustainability. It establishes a framework through which digital news intermediary operators and news businesses may enter into agreements respecting news content that is made available by digital news intermediaries. The framework takes into account principles of freedom of expression and journalistic independence.
The enactment, among other things,
(a) applies in respect of a digital news intermediary if, having regard to specific factors, there is a significant bargaining power imbalance between its operator and news businesses;
(b) authorizes the Governor in Council to make regulations respecting those factors;
(c) specifies that the enactment does not apply in respect of “broadcasting” by digital news intermediaries that are “broadcasting undertakings” as those terms are defined in the Broadcasting Act or in respect of telecommunications service providers as defined in the Telecommunications Act ;
(d) requires the Canadian Radio-television and Telecommunications Commission (the “Commission”) to maintain a list of digital news intermediaries in respect of which the enactment applies;
(e) requires the Commission to exempt a digital news intermediary from the application of the enactment if its operator has entered into agreements with news businesses and the Commission is of the opinion that the agreements satisfy certain criteria;
(f) authorizes the Governor in Council to make regulations respecting how the Commission is to interpret those criteria and setting out additional conditions with respect to the eligibility of a digital news intermediary for an exemption;
(g) establishes a bargaining process in respect of matters related to the making available of certain news content by digital news intermediaries;
(h) establishes eligibility criteria and a designation process for news businesses that wish to participate in the bargaining process;
(i) requires the Commission to establish a code of conduct respecting bargaining in relation to news content;
(j) prohibits digital news intermediary operators from acting, in the course of making available certain news content, in ways that discriminate unjustly, that give undue or unreasonable preference or that subject certain news businesses to an undue or unreasonable disadvantage;
(k) allows certain news businesses to make complaints to the Commission in relation to that prohibition;
(l) authorizes the Commission to require the provision of information for the purpose of exercising its powers and performing its duties and functions under the enactment;
(m) requires the Canadian Broadcasting Corporation to provide the Commission with an annual report if the Corporation is a party to an agreement with an operator;
(n) establishes a framework respecting the provision of information to the responsible Minister, the Chief Statistician of Canada and the Commissioner of Competition, while permitting an individual or entity to designate certain information that they submit to the Commission as confidential;
(o) authorizes the Commission to impose, for contraventions of the enactment, administrative monetary penalties on certain individuals and entities and conditions on the participation of news businesses in the bargaining process;
(p) establishes a mechanism for the recovery, from digital news intermediary operators, of certain costs related to the administration of the enactment; and
(q) requires the Commission to have an independent auditor prepare a report annually in respect of the impact of the enactment on the Canadian digital news marketplace.
Finally, the enactment makes related amendments to other Acts.

[Philip Palmer]

I think that's a serious problem. I think that, for instance, the approach that Mr. Singer's discussing in the United States, where all newspapers and news organizations are sort of forced into a collective and distributed that way, is a good deal more susceptible to positive outcomes than is the model in C-18, where large organizations can put themselves forward and force a collective agreement on news intermediaries without including the smaller players who have to then try to find experts, lawyers, etc., to support a bargaining process. I think that is very difficult.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Thank you, Madam Chair.

I'm sitting here smiling because Mr. Singer has no idea what Bill C-18 is all about. It's about the exact opposite of what he's talking about.

The CBC, Rogers and Bell get most of the money. The newspapers get the crumbs. We're not like the United States in this bill. We have pointed that out on this side numerous times. Small and medium newspapers get absolutely nothing.

I'm going to move to you, Mr. Palmer, because you have some recommendations.

I sit here laughing at Mr. Singer, because he has absolutely no idea what this bill is all about. It's not about the newspaper industry in this country. I've said that for months. They're getting crumbs. I believe the local CBC, the public broadcaster, should be excluded from this bill.

What are your thoughts, Mr. Palmer?

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Let's talk about timelines.

You did raise the issue of antitrust legislation and going against big tech. You mentioned in your opening remarks 10 years to work through appeals that big tech could bring to stop antitrust legislation. They have with their power the ability to stop up the works for a decade. I think all of us understand the power that big corporations have.

On the timelines around the JCPA and Bill C-18, we're currently discussing the thresholds to make sure that this actually goes through, that negotiations are compelled, there is final offer arbitration and that there is a clear movement. What do you feel are appropriate timelines?

Many have said that there should be shorter timelines of three months for a negotiated period, arbitration, then final offer arbitration. That would all be taking place in a relatively short span of time and it forces big tech companies to actually work in good faith, rather than drawing things out, as they certainly would with antitrust legislation.

How important is it that there are relatively short timelines around negotiation, arbitration and final offer arbitration?

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Madam Chair.

Thanks to our witnesses.

I'd like to go back to you, Mr. Singer.

We've had a variety of witnesses over the last few weeks. The vast majority are strongly in favour of Bill C-18, including—and I thought this was an interesting point and kind of a watershed moment—the community newspapers of Alberta and Saskatchewan. This is where half of our Conservative caucus is found. The community newspapers in those provinces are very strong advocates for Bill C-18, though they want to see improvements in the legislation.

Certainly in my community of New Westminster—Burnaby, we've seen a hemorrhaging of local news content as a result of what so many would say is unfair competition.

I am interested in coming back to the Journalism Competition and Preservation Act in the United States. I want you to tell us a bit about what would happen if this is not put into place.

The Australian model is something that a lot of other countries are looking at because their local community news has been decimated.

What would happen without the Journalism Competition and Preservation Act? How would you see journalism evolving in the United States?

[Martin Champoux, Bloc, Drummond, QC]

I find your response quite interesting, because we're discussing the possibility of tightening the eligibility criteria a little to foster quality journalism.

Do you think it would be realistic to make digital businesses responsible for the quality of news content, or lack thereof, in some cases? I'm asking because we've heard some arguments that Bill C‑18 would encourage the spread of fake news, misinformation and all kinds of more or less credible content.

Is it realistic to think that online businesses could include a warning or grant certification to businesses with whom they are sharing content?

[Sue Gardner]

Yes, I can.

In my opinion, the debates about whether Bill C-18 literally constitutes a link tax are hairsplitting. They are a bit beside the point.

The whole basis of the legislation is the notion that making available material or facilitating access to it is taking value from the party that made the thing, and that notion flies in the face of the entire Internet, because the entire Internet is built on the concept of linking, sharing, annotating, commenting and building on the work of others. That is what makes the Internet fantastic. There are limits to that. We do have copyright law, but there is no need and it is not beneficial to take the position that linking or making available is taking value, because it's not.

I know that people tend to dislike the phrase “breaks the Internet”. I dislike it, too, because it always sounds like hyperbole, and I am not trying to say that if this bill becomes law, the Internet is immediately different or immediately broken, but it is consistent with breaking the Internet, and it is a step on the road to breaking the Internet.

I would like to urge the committee to take a long view on this. The Internet is still quite young. It's going to be with us for a long time. I think the actions we take today that may seem small and of little consequence will shape it and will shape how it develops in ways that I think we could come to regret, and this is one of those ways.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you.

In your opening remarks, you referred to Bill C-18 creating what you termed a “link tax”. You talked about how assigning value to certain links over others potentially changes the entirety of the Internet in the way that it functions.

You said that it lends to the potential commercialization of the Internet. You said that this would be a gradual change, but make no mistake, it would in fact occur.

Would you care to expand on that a bit?

[Sue Gardner]

No, I have not. I'm a completely independent voice. I used to be on the CBC payroll, until 2007, but since 2007, I have taken no money from anybody tangentially, potentially, definitely or at all involved in Bill C-18.

[Philip Palmer, President, Internet Society Canada Chapter]

Thank you, Madam Chair.

On behalf of the Internet Society Canada Chapter, I would like to thank this committee for the opportunity to address this important subject.

As a preliminary observation, the Internet Society supports initiatives to financially bolster news organizations as they transition to the Internet era. We believe that a broader levy applied to all social media platforms and search engines, coupled with a truly independent body to apportion funding, would have been fairer and a more reliable source of funding than the illusory bargaining scheme that is at the heart of Bill C-18.

Neither Bill C-18 nor the Australian legislation on which it's based represents bargaining based on the value of news content to news intermediaries. The bargaining process is contrived, apparent rather than real. Having stripped news intermediaries of legal protections, it is designed, under threat of excessive monetary penalties, to coerce intermediaries to agree to compensate news businesses. It withdraws the exceptions and limitations of copyright law from digital news intermediaries, while leaving those same rights in place for their competitors and for the news organizations themselves.

The government is using its legislative power to force a handful of businesses that have successful advertising-based business models to compensate an industry whose advertising-based business models are failing.

I would like to quickly make a few specific points.

First, Bill C-18 imposes significant costs on making news content through hyperlinks available to the public. Hyperlinks are the quintessential means by which individuals and businesses seek and find news content and all other information online. By imposing a cost on news intermediaries for links to news content, Bill C-18 threatens the efficiency of news retrieval on the Internet and the ability of Canadians to access news content. Bill C-18 will raise the cost, directly or indirectly, of accessing news content in Canada.

Second, the definition of “digital news intermediary” in subclause 2(1) raises complex questions of constitutional facts and law. Facebook and Google, for instance, are likely not subject to federal regulatory authority.

Third, the criteria in clause 6 by which a digital news intermediary must self-identify are vague and inappropriate. They are borrowed from concepts as different from each other as competition law and labour law. The legislation neither defines the relevant markets nor sets forth to what the imbalance of bargaining power relates.

We would urge the government to consider following the Australian model in this regard, in which the minister designates the intermediary according to clearer—not perfect—criteria set out in section 52E of the Australian act.

Fourth, clause 27 has a bifurcated definition of “eligible news business”. Paragraph 27(1)(a) refers to “a qualified Canadian journalism organization”, a definition for the purposes of the Income Tax Act, which requires that an organization qualify by meeting demanding criteria. As numerous intervenors have pointed out, paragraph 27(1)(b) qualifies organizations with no observable journalistic standards. Click farms and foreign agents should not be eligible news organizations. We note section 52P of the Australian legislation as a better model in this regard.

Fifth, clause 24 denies to news intermediaries any reliance on copyright exceptions and limitations. It should be deleted. It nullifies any market-based approach to the determination of the value of news content to digital news intermediaries.

[Dr. Hal Singer, Managing Director, Econ One]

Good morning, and thanks for having me.

It's a privilege to speak to a Canadian audience, and I wish I could testify in person.

On behalf of the News/Media Alliance, a collection of news publishers, I have worked extensively on companion legislation to Bill C-18 in the United States called the Journalism Competition and Preservation Act , or JCPA, and I will speak to those efforts. The economics are the same.

Among other protections for news publishers, the JCPA would grant an exemption to antitrust laws for news publishers so they can better coordinate their dealings with the tech giants.

Before going any further, I want to be clear. Antitrust exemptions are rare, and that's a good thing. Powerful entities should not be immunized from antitrust scrutiny. In some limited circumstances, however, coordination among small suppliers when dealing with a large buyer is necessary to overcome a power imbalance that causes input prices and employment to fall below competitive levels.

This market failure is the basis for the current exemptions for farm co-operatives in particular and labour in general from the U.S. antitrust laws. It is the same basis for extending a new exemption to newspapers in their dealings with dominant Internet platforms.

That the word “preservation” appears in the U.S. legislation is no accident. The news industry has incurred losses in advertising revenue every year since 2006, according to the Pew Research Center.

The effect of shrinking advertising revenues, in part caused by underpayment from dominant platforms, is less cash flow to support journalists and a clear employment effect flowing from the exercise of monopsony power by the dominant platforms. U.S. employment among newspaper employees fell from 71,000 in 2008 to 31,000 in 2020, according to Pew. As a result of the deteriorating news media landscape, hundreds of local newspapers have been acquired or have declared bankruptcy.

Google and Facebook reframe newspaper articles in rich previews containing headlines, summaries and photos. The platforms also curate newspaper content alongside advertisements. This reframing and curation decreases the likelihood of a user clicking on the article, thereby depriving news publishers of clicks while enriching the dominant tech platforms. This appropriation of newspaper content at zero access price also decreases newspaper subscriptions. When the clicks on newspaper content eventually come from the platforms' websites, the associated advertising revenues are taxed by the platforms at excessive take rates.

The best way to correct the exercise of monopsony power is for the government to permit the news publishers to coordinate their dealings with the digital platforms over payment terms and conditions. Given the massive power imbalance, collective bargaining by itself might not be sufficient to achieve competitive payments, in which case some structured bargaining among the parties, for example mandatory arbitration with an enforcement mechanism, is needed as a backstop.

Curiously, some traditional anti-monopoly groups have stated their resistance to granting countervailing bargaining power to newspapers in their dealings with dominant platforms. In a joint statement, the American Antitrust Institute, Public Knowledge, Consumer Reports and Consumer Federation of America argued that a new antitrust exemption “will only hurt consumers, citizens, and businesses that are not invited to the negotiations that this exemption is supposed to facilitate.” It bears noting that some of these groups depend on the dominant platforms for funding.

Instead of the JCPA, these same detractors have called for greater enforcement of antitrust laws against Google or Facebook, but the conduct that is being challenged here, the mere exercise of monopsony power to achieve a reduced rate for newspaper content, is not a cognizable vertical restraint under antitrust law. Scraping, reframing and curation, and appropriation of value do not amount to violations of section 2 of the U.S. Sherman act. Unlike Europe, the United States does not have an abuse of dominance standard.

Moreover, even if one could style something else the platforms are doing as a cognizable restraint, a successful antitrust lawsuit against, let's say, Google, would provide zero relief for publishers in their dealings with Facebook. A successful antitrust lawsuit against Google or Facebook would require several years to adjudicate, and the appeals might not be resolved for nearly a decade. In the interim, newspapers would be left twisting in the wind. Given the newspapers' precarious financial state, it is not clear how long many newspapers could survive without an intervention today.

The JCPA has undergone significant amendments.

[Sue Gardner, McConnell Professor of Practice (2021-22), Max Bell School of Public Policy, McGill University, As an Individual]

Thank you so much for inviting me to speak today.

I was a journalist in Canada for 10 years, working in radio, television and online. I used to run cbc.ca. I used to run the Wikimedia Foundation, which is the non-profit that operates Wikipedia. That makes me the only Canadian to have run a global top 10 Internet property. Last year, I was the McConnell professor of practice at the Max Bell School of Public Policy at McGill University.

I am speaking here in a personal capacity, based on my own knowledge and my own experiences.

I think Bill C-18 is a very bad bill for three reasons that I'm going to unpack for you.

First, Bill C-18 misdiagnoses the nature of the problem. Bill C-18 characterizes as “unfairness” that Google and Facebook have such a large share of the digital ad market. That is a fundamental mischaracterization or misunderstanding.

Imagine it's the 1920s. I make buggy whips and you make cars. Bill C-18 is the government saying that you need to give me money forever because nobody is buying my buggy whips.

The journalism industry used to be profitable because buying ads in the news was the best way—or at least a very good way—to reach audiences. That's less true today. Google and Facebook have created advertising tools that are way more efficient and more effective than the old ones. That is why advertisers are using them. Google and Facebook out-innovated the business side of the news industry. That is not a fairness issue. It's not a moral issue. It doesn't make them villains.

Ben Scott told you that the government is, in effect, “refereeing a contest between big tech and big publishers”. He urged this committee to focus on the public interest instead. I want to say the same.

My second point is that Bill C-18 will not actually support quality journalism. As the former CRTC head, Konrad von Finckenstein, told you on Friday, “If you want to subsidize news publishers, you can do it a myriad of other ways”. He characterized this bill as “unnecessarily complicated”. I think he's right.

If the government's goal is to support quality journalism, the Public Policy Forum laid out a very good path for how to do that. In 2017, the PPF released “Shattered Mirror”, which was its report on the crisis in the news industry. It recommended that the government start collecting sales tax on foreign company ad sales in Canada and that this money be used to establish a journalism fund to be administered by a body independent of the government. That would support quality journalism.

Bill C-18 may attempt to achieve the same goal, but it does it by trying to awkwardly kind of force Google and Facebook into the role of directly funding journalism themselves and that is a really tough fit. Google and Facebook are private sector Silicon Valley megacorporations. Their job is to advance their own business interests. They don't have a mission to serve the people of Canada. We don't elect them and they are not accountable to us.

The government can try to give Google and Facebook very specific direction and stand over their shoulders and try to compel them to do what it wants, but that is not the simple way. The simple way is to take their money and make a fund.

My third point is that Bill C-18 will have significant negative unintended consequences. I'm going to speak here mainly about the Internet and Internet users.

Bill C-18 will encourage the creation of clickbait and nonsense.

Bill C-18 will create an incentive for Google and Facebook to back away from news.

Finally, Bill C-18 will enshrine in law the idea that ordinary Internet linking is “taking value”, and that puts us on a slippery slope. The Internet was designed to be open and to grow organically. The ability to link freely, and not just link but to share, to comment, to annotate and to build upon is at the heart of the Internet's openness. That is well understood.

With Bill C-18, the government introduces friction to linking. That brings us closer to an Internet that is fundamentally commercial, where what we see online is going to be determined by corporate deals. That kind of change happens extremely slowly. It's the accumulated effect of many decisions that, at the time, might not have seemed very consequential in that regard. It is one step on that bad road.

Thank you very much.

[The Chair, Liberal, Hedy Fry]

I call this meeting to order.

Good morning, everyone. Welcome to meeting number 51 of the House of Commons Standing Committee on Canadian Heritage.

I would like to acknowledge that this meeting is taking place on the unceded traditional territory of the Algonquin Anishinabe people.

Pursuant to the order of reference adopted by the House on Tuesday, May 31, 2022, the committee is meeting on the study of Bill C-18, an act respecting online communications platforms that make news content available to persons in Canada.

Today’s meeting is taking place in a hybrid format pursuant to the House order of Thursday, June 23, 2022. Members are attending in person and remotely.

I want to make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. For those on video conference, click on the microphone icon at the bottom of your screen. Then, you will be able to activate your mike.

To get interpretation, you will see a globe at the bottom of your screen. If you click on that, you can get get your interpretation in English or in French, as you desire. You have the choice at the bottom of your screen of floor, English or French. For those in the room, you can use the earpiece and the desired channel.

Remember that all comments should be made through the chair.

I have one comment to make. We have had a very tragic accident with an interpreter because the witnesses were not using the required mikes. I have been asked to ensure that everyone is using the headset that has been sent to them by the clerk. It is very important to remember that, because we don't want to harm people at the other end.

Having said that, I want the committee to know that all witnesses completed the required connection tests in advance of the meeting and are using the required headsets.

We will begin.

On Bill C-18, we have three witnesses today. We have Sue Gardner McConnell professor of practice, Max Bell school of public policy, McGill University, who is appearing as an individual. Appearing by video conference, we have Hal Singer, managing director of Econ One. We also have Philip Palmer, president of Internet Society, Canada chapter, by video conference.

Clerk, I don't see Mr. Palmer.

[Kevin Chan]

Sure. I think the challenge, and perhaps it gets to the heart of Bill C-18, is that what we're talking about when we talk about what's on these platforms and on the Internet is people's speech. People's speech is subject to different considerations, I dare say, than what an editor decides should be in a newspaper.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Yes. It's clear to me that this is a mandate of payment for links, which is not what the Minister of Heritage said. He also testified that he had a list of DNIs, but he would not share them with the group. Now, these digital news intermediaries....

Mr. von Finckenstein, I think you talked about how a better mechanism would be for the minister to be able to designate who was the DNI, because the definition is so unclear and in some cases may be unconstitutional. They say that it's all the digital news intermediaries that are under the control of the federal government, and so far that would mean none.

My question for you is this. If the minister does have the list, as he said he did, do you think it should be shared with this group before we approve Bill C-18?

[Kevin Chan]

Well, what we understand is that Canadians want less news on Facebook, not more. I think you're right that users may want to see good information. That's why we partner, for example, with the Public Health Agency of Canada. That's why we partner with Elections Canada. It's to get good information to Canadians.

I think what you raise, though, is a central concern for us with Bill C-18. We've heard other independent experts say that if there is a requirement not to preference certain publications, which I think Mr. von Finckenstein may be alluding to, then the approach that we have taken to reduce or to down-rank that information will be taken away from us. At least that's what other experts have said; if that's the case, then I worry that Bill C-18 exacerbates the issue and doesn't solve it, with all due respect.

Thank you for the substantive question. I'm trying to give you a substantive answer. I hope that's helpful.