Evidence of meeting #22 for Canadian Heritage in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was facebook.
A recording is available from Parliament.
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
I hear what you're saying, Mr. Chan, and I'm sorry, but I don't have much time. The question, though, is that the actual difference between the former system—
Conservative
The Vice-Chair Conservative Alain Rayes
Ms. Dabrusin, I'm sorry, but your time is up.
Maybe Mr. Chan will have an opportunity to answer your question at another time.
So I will turn the floor over to Mr. Aitchison.
Conservative
Scott Aitchison Conservative Parry Sound—Muskoka, ON
I want to continue with what I was talking about earlier, about the concept of a fee for membership. I know that the model right now is based on having lots and lots of users and the advertising revenue that's generated from accessing as many people as humanly possible.
I'm wondering, if you charged a membership fee, would that reduce, potentially, the number of eyes that might be on a particular ad and therefore affect ad revenue? Is that a fair statement?
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
No, I think we want to give.... An Internet platform is valuable only to people who want to connect with as many people as possible. That's really the big development in the last little while—this ability for anybody any place in the world to be able to talk to anybody else. The value of Facebook to people and why there are 24 million Canadians on Facebook is precisely the fact that they're able to go somewhere and reach out to all these different people they may or may not even know already.
We think that ability should be free to people, but as Madam Dabrusin was pointing out, obviously we have to be able to.... As you can see from our expenses, it costs billions and billions of dollars to be able to offer this to people, and they value it, so the way we are currently able to pay for that and succeed as a business is through advertising.
Conservative
Scott Aitchison Conservative Parry Sound—Muskoka, ON
I'm not entirely sure I understand what was described at the very beginning of the meeting in terms of the voluntary relationship with local media. Could you get into that a little more, please?
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
My toddler is walking around outside talking to herself, so I'm going to defer to Marc Dinsdale—
Conservative
Scott Aitchison Conservative Parry Sound—Muskoka, ON
That would probably add an adorable element to your testimony. You should just let her do her thing.
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
I really should. I'll come back later, but Marc is really the expert. He talks to publishers all the time.
Perhaps, Marc, you could provide some insight.
Head, Media Partnerships, Facebook Canada, Facebook Inc.
Certainly. What we're seeking to do this year is enter into commercial agreements with news publishers that would see them set up as a service that would allow their publishing system, their publishing platform, to send links of articles that they publish on their websites directly to our back end.
This is a difference, as you've heard, from the way publishers currently share links to Facebook, which is through their page, which then shows up in people's feeds. Instead of publishers sharing links in that way, we'd like to take the links delivered through this service and put them in more places on Facebook, in front of more audiences in the context of places where a news context is important.
For example, we have a COVID-19 information centre that has government information, stats, etc., about the COVID crisis. If we could take links from trusted news sources and put that kind of editorial context—local, national, etc.—within that kind of information centre, that would lead to people being more informed about the pandemic, and when people click on those links, that would drive them back to the publisher directly as well.
The goal is to provide both a broader selection of links from trusted Canadian partners and also to find essentially a new way in which we can support the industry. The value we see to publishers is essentially that this agreement would see them provide and maintain the service and also drive more people back to read the full text of the articles on these important questions.
Conservative
Scott Aitchison Conservative Parry Sound—Muskoka, ON
Could this potentially be the first step in a more structured Facebook as opposed to just a free-for-all of people sharing whatever inane idea they have?
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
Marc, I'm happy to answer that one. That was a very good question, sir, a very astute question. To be clear, I don't know if Marc mentioned, but these are actually very new things. Both surfaces we're talking about, these information centres, are new in Canada since COVID. We have a COVID-19 information centre and we have a climate science information centre. We are trying to connect Canadians with scientific information. In the COVID case we're trying to connect Canadians directly with information from the Public Health Agency of Canada.
Conservative
The Vice-Chair Conservative Alain Rayes
Thank you, Mr. Chan.
If my notes are correct, it's Mr. Housefather's turn.
Liberal
Anthony Housefather Liberal Mount Royal, QC
That's right, Mr. Chair.
I want to circle back to a topic that was brought up by a number of my colleagues. I'm slightly astounded to hear that you cannot tell us what the ad revenues were in Canada in the last quarter or the last annual period. I was an executive of a tech company. I could have told you what our annual revenues were and what our quarterly revenues were. I could have broken it down by market segment. I could have broken it down by country in major countries.
Are you seriously telling us, Mr. Chan, that you do not know what Facebook's quarterly revenues were for Q4 2020 in Canada for advertising?
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
Sir, what I'm trying to say is that, first of all, we don't break these out publicly.
Liberal
Anthony Housefather Liberal Mount Royal, QC
I'm sorry, but I see here Facebook's revenue in Q4 2020, broken down by North America. Canada and the United States is $13.2 billion in ad revenue. I see it published.
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
Again, we don't break it out by country, as you know, in these public documents.
Liberal
Anthony Housefather Liberal Mount Royal, QC
You have broken it down by North America. You basically put Canada together with the United States and said it's $13.2 billion. You're the senior executive in Canada. Don't you know what percentage is Canada?
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
Sir, if the Canada Revenue Agency wishes to make it the case that all these companies report their local revenue to it, we will be happy to comply.
Liberal
Anthony Housefather Liberal Mount Royal, QC
You are a public company. You're governed by SEC rules. You're governed by Nasdaq rules.
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
That's correct.
Liberal
Anthony Housefather Liberal Mount Royal, QC
You make your revenues public. The only reason we don't have Canadian revenues is because you've chosen to consolidate them with the United States revenues. Is that correct?
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
No, sir. It's because of the rules that your system, the system of Parliament and the system of government, has decided to require.
Liberal
Anthony Housefather Liberal Mount Royal, QC
You are a U.S. public company listed on Nasdaq. It has requirements, and the SEC has requirements of public disclosure of financials. You've disclosed financials. You simply disclosed them bundling Canada with the United States on a consolidated basis. That's all the more reason, then, that Mr. Zuckerberg, who is trying to say that he's an American citizen and shouldn't come here.... Well, Canada and the United States are lumped together in the way you report revenues. The only reason we don't have access to Canadian revenues on their own is that Microsoft—sorry, Facebook—has chosen to consolidate them with its U.S. revenues.
Global Director and Head of Public Policy, Facebook Canada, Facebook Inc.
Sir, I'm glad you mentioned Microsoft, because I think if you ask the question of Microsoft, Google, Twitter and TikTok—and now that Reddit will be coming to Canada, you can ask Reddit too—I suspect the answer will be the same. It's not because we wish—
Liberal
Anthony Housefather Liberal Mount Royal, QC
Mr. Chan, is your answer that you don't know, or that you can't tell me because they're confidential? They're two different issues.