Canadian Heritage Committee on March 29th, 2021

[The Vice-Chair, Conservative, Alain Rayes]

I call this meeting to order.

Good morning.

Welcome to meeting number 22 of the Standing Committee on Canadian Heritage.

Pursuant to the order of reference made on Wednesday, September 23, 2020, and the motion adopted on Monday, November 16, 2020, and Friday, February 26, 2021, the committee is meeting on its study on the relations between Facebook and the federal government.

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Today we have representatives from Facebook Canada. They are Mr. Kevin Chan, global director and head of public policy; Mr. Marc Dinsdale, head of media partnerships; and Ms. Rachel Curran, policy manager.

You will have 10 minutes to make your opening remarks, which will be followed by a question and answer period.

Mr. Chan, you have the floor.

[Kevin Chan, Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.]

Thank you very much, Mr. Chair.

Mr. Chair and committee members, thank you for inviting us to your meeting. We understand that the committee wishes to learn more about our decision to restrict access to news content in Australia last month. I'm happy to address this to the best of my ability. As you may know, news has since been restored on Facebook following key amendments in the Australian news bargaining code legislation.

The decision to restrict access to news was made with a heavy heart and came after years of working to find a solution in Australia that recognizes the realities of how our services work. Unfortunately, the proposed legislation did not acknowledge basic facts about the Internet, did not recognize the value that platforms provide to news publishers, stood to benefit only large media conglomerates and not independent media outlets, and sought to penalize Facebook for content it didn’t take or ask for.

We are pleased that we have now reached an agreement in Australia that recognizes the value that Facebook brings to publishers. The agreement provides the flexibility for us to support small and local publishers whose work is critical to public interest journalism. The agreement also allows Facebook to retain the ability to decide if news appears on our platform, so that we won’t automatically be subject to a forced negotiation.

Since we entered into this agreement, we have signed agreements with four publishers in Australia. As is the case elsewhere in the world, we will continue to invest more in the long-term sustainability of journalism, not because it is good for our business, but because it is good for democracy and society.

It is important to make clear that we recognize that these difficult times are having a very negative impact on the Canadian media industry. The last two decades, as consumers have shifted from print to the Internet, have been very tough on the media. My colleagues and I are working hard every day to do our part to help publishers adapt.

We work directly with Canadian news publishers, large and small, to help them maximize the value that free Facebook tools provide for their businesses. This includes free distribution of the news links they share on Facebook, which send people directly to their websites, a value we estimate to be in the hundreds of millions of dollars per year for the Canadian news industry alone.

Jeff Elgie, the CEO of Village Media, based in Sault Ste. Marie, estimates that in the month of January 2021 alone, Facebook and Google generated 24 million page views for Village Media for free, which he calculates was worth about $480,000 to his news business that month.

Over the past four years, we have gone further by directly investing over $10 million in partnerships and programs to encourage and support the development of sustainable business models for news organizations here in Canada. Just last week, we announced our plans to continue this work with an additional $8 million in news programs over the next three years.

Marc Dinsdale, our head of news partnerships in Canada, will provide you with some highlights from these investments.

[Marc Dinsdale, Head, Media Partnerships, Facebook Canada, Facebook Inc.]

Thanks, Kevin.

One of our signature investments is the Facebook-Canadian Press news fellowship, which began in 2020 as a program of $1 million to create eight new local journalism positions across Canada. CP publishes the fellows' stories to its wire service, making the work available for distribution to more than 1,000 Canadian news outlets in the CP network, in both official languages.

In January 2021, based on the early success of this program, we expanded it to include two new positions for emerging indigenous reporters, bringing the total net new journalism positions we've created to 10. Last week, we announced a three-year renewal of the Facebook-Canadian Press news fellowship.

For COVID, we announced in April 2020 a total of $1 million in grants to support Canadian and U.S. local news organizations covering the coronavirus. Eighty-one Canadian publishers each received a $5,000 U.S. grant to cover unexpected costs associated with reporting on the crisis in their communities. They included The Coast, Halifax's weekly; The Temiskaming Speaker from New Liskeard, Ontario; Peterborough Currents; La Gazette de la Mauricie, from Trois-Rivières; Autour de l'île, from Sainte-Pierre-de-l'Île d'Orléans; Clark's Crossing Gazette, in Warman, Saskatchewan; Le Franco, from Edmonton; and Medicine Hat News.

Facebook's accelerator program helps news publishers navigate the digital transition to build sustainable businesses. Since May 2019, 15 Canadian publishers have participated in the accelerator program, including Postmedia, The Globe and Mail, La Presse, The Brunswick News, the Winnipeg Free Press, Le Soleil, Glacier Media, The Discourse, the Daily Hive, Northern News Services, The Tyee, The Narwhal, The Sprawl and Village Media.

Paul Samyn, editor-in-chief of the Winnipeg Free Press, has stated, “The key impact to date” of working with the accelerator program “is that we've been able to share a new vision for a profitable future based on online audience growth at both the executive level of the company, as well as with our board of directors and ownership group.”

I'll now turn it over to Kevin for some closing remarks.

[Kevin Chan]

Thank you, Marc.

As you can see, Facebook is deeply committed to supporting news in Canada, and we have been doing so for years. As noted earlier, we intend to do even more. Over the next three years, we will be making an additional investment of $8 million into the Canadian news ecosystem to increase a three-year renewal of the Facebook-Canadian Press news fellowship and provide new funding to increase the capacity of under-represented voices in journalism. This brings our total investment to date in the Canadian news ecosystem to $18 million over a period of six years.

We also announced that we hope to partner with Canadian publishers on commercial deals that allow us to experiment with ways to connect people to more news on Facebook. It is important for me to be clear on what this type of paid partnership could be and what it is not.

Currently, when Facebook users see news content in their feeds, they typically see a short preview text generated by the publishers themselves and then a link to take the user from Facebook to the publisher’s own website. We do not pay publishers for sharing this kind of content on Facebook. They choose to do so because it drives value to them. As noted earlier, Village Media assesses the value of traffic from Facebook and Google to be close to half a million dollars in one month alone. Another example is The Globe and Mail, which achieved record digital subscription growth in 2020, in part by combining its AI platform and publishing strategies with Facebook’s tools. The committee has a package that's been translated and that you will receive tomorrow, from what I understand from the committee clerk. It includes this case study with The Globe and Mail.

In some cases, we may see additional value in partnering with publishers to provide links to more stories on our platform for user experiences beyond what is already being shared by publishers themselves. If we are actively seeking to provide a certain kind of user experience that requires more from publishers, then we would proceed by striking a commercial agreement with the publisher in order to use the additional article links for that purpose. We hope to partner with Canadian publishers on commercial deals that allow us to experiment with ways to bring more value to them.

In conclusion, finding a sustainable and equitable way to foster a robust media ecosystem in Canada requires goodwill and co-operation from publishers of all sizes, digital platforms, government, and people who value news and are willing to pay for it. Facebook can play a role in this, but it cannot do it alone.

To date, discussions between the parties have been too infrequent, and it's time to come together to ensure that journalism is set on a long-term sustainable path.

With that, Mr. Chair, we would be happy to answer any questions from the committee.

[The Vice-Chair, Conservative, Alain Rayes]

Mr. Chan and Mr. Dinsdale, thank you for your statement.

Without further ado, I yield the floor to our first member.

Mr. Waugh, you have the floor for six minutes.

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

Thank you to our new chair. It's a pleasure to see you in that chair this morning.

Thank you, Mr. Chan and Mr. Dinsdale.

You know, I'm a little cynical about the $8 million you announced on Thursday or Friday. You knew you were coming to this committee on Monday, and then all of a sudden you bring out another $8 million to support your news fellowship. Maybe you could just talk about that.

Marc, I guess this question would be for you. Why the timing on Friday with the announcement of an additional $8 million from Facebook?

[Martin Champoux, Bloc, Drummond, QC]

Mr. Chair, on a point of order, if I may.

I believe that Mr. Waugh's camera is not the one that is selected. I can't see his pleasant face.

I can see it now. Thank you.

[The Vice-Chair, Conservative, Alain Rayes]

Thank you, Mr. Champoux.

Mr. Waugh, we were very worried that you had gone missing.

[Marc Dinsdale]

Mr. Waugh, the way we look at these investments is that they are a continuation of what we've been doing for several years. We can go back to 2017, at the beginning of these commitments, with the digital news innovation challenge that helps publishers like The Sprawl grow their presence and build a more sustainable future. We have been doing these types of engagements since then, through the accelerator programs, through COVID grants, etc. These programs and these commitments we're making—in the future as well—have been planned for a long time and have been under negotiations and discussions with partners for a long time.

The purpose of our commitment is to make sure we're able to help publishers build toward a sustainable future.

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

I just thought the timing was a little ironic. You know, you're coming to committee and.... I realize you committed $10 million before the additional $8 million, but that's fine.

Mr. Chan, Rupert Murdoch played a big part in Australia in getting news platforms to get paid by Facebook. I know you talked here on January 29 and you talked here this morning about how Facebook in your opinion generates hundreds of millions of dollars' worth of flowthrough traffic to Canadian journalism organizations. You mentioned Village Media here today.

What evidence can you share that supports this statement, which you made again here this morning? Facebook is not going to pay for news links, as you mentioned, or content the publishers voluntarily put on Facebook, so I would like to hear the numbers that Facebook is.... I mean, give me some financial numbers that news publishers are getting.

[Kevin Chan]

The best answer, and probably the one that's going to be most solid, will be answers that come from the publishers themselves, so today we are sharing with the committee the impact, if you will, from two publishers, one big and one small. I hope Jeff will forgive me if I say that he's small. I'm sure he is doing well in Sault Ste. Marie and in the markets he's operating in, but obviously it's not a national outlet.

If we look at Jeff Elgie and Village Media, which is involved in various local news markets in northern Ontario, they themselves.... I think that's the best way to get the numbers. Don't take it from Facebook. You should take it from the publishers themselves. He is saying that in January 2021, free distribution from two platforms alone, Google and Facebook, accounted for 24 million page views back to his site. More concretely, as a business, if you were to ask him the value of those 24 million page views, his estimate is close to half a million dollars in January 2021. That's the Village Media case.

In the Globe and Mail case, as I said, the package is with the committee. It is translated into both official languages, but I was told the committee would not receive these until tomorrow. I regret that, but I understand there is no way around it even though we submitted it earlier last week. The Globe and Mail case study shows a publisher that is pursuing a different strategy—not just ads but also subscription, which is very important, if I understand correctly—by combining by their award-winning Sophi AI technology with free Facebook tools. In part due to these Facebook tools, they had a record subscription year in 2020.

We did a joint case study with them, so they obviously signed off on it. You can read up on the case study to understand how they feel they found success on Facebook. Of course, we hope these case studies.... We put them out there to the public and they're also available online so that other publishers, including publishers in Canada, can learn from the success of The Globe and Mail.

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

Who controls the data around the news that is used by your organization, Facebook? Who controls that data?

[Kevin Chan]

Sir, I will answer your question, but perhaps I should just clarify that when a publisher shares news links onto Facebook, people may see these news links in their own feeds. They click, sir, and then they go back to the site, and then they can build that direct relationship with publishers. One of the key things we have heard from publishers, in fact, is that they want to be able to develop that direct relationship with their readers and their potential customers. By redirecting traffic back to them, we enable them to do that.

If I may say so, sir, it's also not that different, for example, from maybe—

[The Vice-Chair, Conservative, Alain Rayes]

Thank you, Mr. Chan. I must interrupt you. You may have another opportunity to complete your answer.

Thank you, Mr. Waugh.

I now yield the floor to my honourable colleague Mr. Housefather.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you, Mr. Chair.

Thank you to the witnesses. For the record I want to say I hold all these witnesses in very high esteem and I appreciate your being here. I believe elected officials and social media providers need to work together on sound public policy.

That being said, my job is to get answers for Canadians. I have a lot of questions. Again, I would appreciate succinct responses.

Mr. Chan, unless otherwise mentioned, my questions are for you.

Mr. Chan, who is the CEO of Facebook?

[Kevin Chan]

That is Mark Zuckerberg.

[Anthony Housefather, Liberal, Mount Royal, QC]

Mr. Chan, Facebook is a closely held public company. That's because there is one individual who controls the majority of the voting shares.

Who is that person?

[Kevin Chan]

The majority shareholder is Mark Zuckerberg.

[Anthony Housefather, Liberal, Mount Royal, QC]

As a result of holding the majority of shares, Mr. Zuckerberg also controls who's on the Facebook board of directors. You currently have nine directors. Seven of them are independent directors and two of them are Facebook employees.

Who are the two Facebook employees who are directors?

[Kevin Chan]

I haven't checked recently, but I believe it's Mark Zuckerberg and Sheryl Sandberg.

[Anthony Housefather, Liberal, Mount Royal, QC]

You are correct.

Mr. Zuckerberg is also the chairman of the board. Is that correct?

[Kevin Chan]

I believe that to be true.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you very much.

Under the corporate governance guidelines published on Facebook's website, the board of directors acts as the management team's adviser.

Mr. Chan, did the board of directors advise Facebook's management team on Facebook's decision to block Australian users from sharing news articles on February 17, 2021?

[Kevin Chan]

Sir, I'm not privy to that information.

[Anthony Housefather, Liberal, Mount Royal, QC]

You're not privy to that because you're not on the board of directors and you don't attend the board meetings. Would that be correct?