Canadian Heritage Committee on Dec. 5th, 2023

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you.

Right now, under Bill C-18.... I'm sorry; I should not say that.

Google has managed to get an exemption from Bill C-18 and has offered $100 million to the news sector in exchange for that exemption. It is proposed by the PBO, the Parliamentary Budget Officer, that about a third of that funding is going to go to the CBC, which is already a publicly funded broadcaster to the tune of $1.4 billion and has another $400 million in ad revenue and subscriptions.

What does this do to the overall news media market and its future in this country, when big tech and big government collude to give one-third of this money to a public broadcaster?

[Sean Speer]

I would say two things in response, Ms. Chair.

First of all, we can talk about the risks to the public's trust of media organizations, which, on one hand, are responsible for holding to account governments and big tech for many of the reasons outlined by the two other witnesses. One can't help but think that, either in fact or in perception, their ability to carry out that accountability function will be undermined. I think that is something that policy-makers need to take seriously. Indeed, the industry does.

To the broader question, though, I would say that one of the biggest concerns of a model that doesn't follow consumer signals or market signals but instead has either the government or, in this case, an industry association or industry interlocutor between the individual media organizations and, in this particular case, Google, is that someone is ultimately going to adjudicate the distribution of those resources. I think the fear of start-up organizations like The Hub is that those resources will be disproportionally directed to legacy media companies and not the parts of the sector that are growing and innovating.

One of the challenges, of course, is that it is not an inadvertent consequence of the policy framework that has been established; it is inherent in it.

That's why I said in my statement that, if indeed the government or the committee is of the view that action needs to be taken to support the sector, I think the preference ought to be that public funding follows, at least when possible, consumer preference or market signals to minimize the extent to which either government or, in this case, some sort of industry representative ultimately decides the allocation of resources.

[The Chair, Liberal, Hedy Fry]

Next up, we have the Liberals and Ms. Hepfner for six minutes, please.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

Thank you, Chair.

I will start with Mr. Peinert. It's nice to see you again today. I'm glad we can hear you, finally.

You mentioned in your opening statement that tech giants have been able to monetize content that journalists produce at a huge expense, or something to that effect.

Would you expand on that, please?

[Dr. Erik Peinert]

I would expand on that on two levels. One point to emphasize is that journalism, especially local and provincial—or, in the United States context, state-level—requires a fair amount of direct labour to go out and talk to politicians, public officials and members of the community, and there's no way to technologically replace that fact. It is expensive, and you need to hire journalists to do that work. It is always going to be media companies and journalism outlets doing that.

In terms of the other side of the equation, of big tech being able to monopolize this, I want to emphasize that we are not dealing with a situation of abstract market forces or price signals, but rather a group of companies that have developed and, through a series of mergers in particular, created a particular market structure whereby they are able to take an overwhelming majority of the income and profits.

Google owns the ad management tools for both the advertisers buying ads—the online advertising market—and the media companies selling ads. Likewise, in those same markets, Meta and Google have been caught bid-rigging for their ads for those exact advertising tools.

We are not dealing with a technological change that just fell out of the sky. It is a market structure whereby they can determine who gets paid what to maximize their own profits. Google and Meta are neither paying directly toward the media companies nor even employing journalists. Instead, they are using the existence of journalism of which, online at this point, they have created the expectation that it is largely free to be channelled as traffic through their own platforms and not compensated for.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

What I saw over more than 20 years of being a journalist was a massive shrinkage of newsrooms. When I started in 1999, we had hundreds of journalists in a newsroom. Today, the newsrooms are virtual, and there's maybe a handful of reporters producing the content.

What is the effect on our democracy and our society of having such a dearth of voices in journalism today?

[Dr. Erik Peinert]

I can speak broadly to that. It's very bad for democracy overall. I think democracy requires a free press, not just at a national level, to comment on what a prime minister or a president is doing, or what the national legislature is doing, but at local levels and regional levels. Journalism in a democracy requires that you have oversight and people knowing what public officials are doing.

As we've seen over the last 20 or so years, as the number of journalists has dried up, there's simply not a reporter to send to a public meeting to know what's going on. The public is uninformed. There is significant research indicating that as newsrooms close, corruption in public offices increases, because there's simply no oversight to stop it.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

Thank you.

Ms. Benavidez, I will turn to you now. In some of the articles through your platform, you talk about how social media companies have abdicated all responsibility to their users. You've said that certain demographics in particular are targeted by advertisements and discouraged from participating in voting and in censuses.

Would you tell us more about this work that you've done and what it means to our democracy?

[Nora Benavidez]

It's difficult to quantify how users are targeted with different content, because as I mentioned in my opening remarks, there's just so much opacity plaguing these companies, and attempts by researchers or others to glean insights are met with the various tactics I mentioned.

That being said, there are some hallmarks that we've seen over the years. In particular, during election periods, we know that certain user demographics have been targeted with content that makes them afraid to engage and go to the polls. In the United States, users whose identities are Black, Latino or native American have been targeted with laser-like precision by major tech companies: Meta, which at the time was Facebook, Twitter and YouTube. The content that some of these users see really plays into their existing vulnerabilities, fears within communities and distrust of government.

The kernel here is it always feels credible. People see something online and they trust it. They then become fearful, and the content they might be given will play into what their perceived vulnerabilities already are. In the 2020 election in the United States, users were given content that specifically mentioned that certain law enforcement or others might be at polling locations. That also preyed on fears of violence or intimidation.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

Thank you.

Mr. Speer, quickly, you said in your remarks that the tech giants had given you a platform in order to do your work. You also said that you're supported by philanthropy.

Is that sustainable?

[Sean Speer]

I think the answer is yes.

We're building large-scale philanthropy from foundations that support us, and we're also increasingly building a network of individual donors and subscribers who want to pay for our content. We think that's not only a sustainable business but also a useful means of ensuring that our content is responsive to and reflects what audiences want. That's a relationship that we don't want public policy to break.

[The Chair, Liberal, Hedy Fry]

Thank you. Now I will go to the Bloc Québécois.

You have six minutes, please, Martin Champoux.

[Martin Champoux, Bloc, Drummond, QC]

Thank you, Madam Chair.

Thanks to the witnesses for being with us today.

Their opening statements and the answers they give to the questions my colleagues asked are very helpful. They remind me of the discussions we're having now about support that should be granted to the media industry.

We're discussing business models. I think we all agree that the traditional media business model has to be revamped. Furthermore, if a national forum is being proposed, its purpose is to revamp the model and enable media companies, especially in the news industry, to prepare more effectively for present and future challenges.

I absolutely agree on that point. I believe everyone agrees that we have to give industry people tools and enable them to acquire tools to adapt to the digital shift. In most cases, that shift is still incomplete or has been accomplished with limited resources and is therefore not very effective.

News companies must be able to transition to a business model that more effectively responds to the technological reality of today and tomorrow. We talk a lot about assistance for newsrooms, support for the media and business models, but I think we're forgetting to consider the matter from the standpoint of users and consumers.

Mr. Speer, I thought your remarks on tax credits for newsroom contributors were very interesting. I agree with all the innovative ideas that enable newsrooms to flourish and be effective and that they should do their work unburdened, as it were.

However, we often forget that news users and consumers aren't the same at 20, 40 and 70 years of age. People consume news differently depending on age. People 55 and over, for example, still get their news from radio and television. Radio listeners are even younger. People 35 or 40 years of age and older get a lot of news from the radio.

It's clear from demographic data that older people get a lot of their news from newspapers, the print media. Many of those people aren't even equipped with technologies that allow them to get their news from platforms, for example, or simply from the Internet. You can't necessarily force those people to get equipped or to learn how the technologies work.

I think we should also start thinking in those terms, thinking of those people who still need news to be provided in traditional formats. There are countless print media outlets in the regions of Quebec and Canada. My colleague Mr. Shields often talks about the 20 or so small weekly newspapers that are in trouble in his riding, precisely because support for them may be ill-suited or poorly designed. That all needs to be revamped.

Mr. Speer, I think I understand the direction we should take. However, don't you think the transition needs to be gentler? We should support the newsrooms and media outlets that meet the needs of people who still get that kind of news from newspapers, the print media. Government support will eventually be directed toward business models that more effectively meet the needs of tomorrow and those of the younger generation.

I don't know if my question is clear, but I'd like to hear your comments on this.

[Sean Speer]

Respectfully, I think we precisely don't know where we're going. That is why government should be cautious about intervening in the market in favour of one particular content format or business model or approach to journalism. This process is uncertain.

I couldn't begin to tell you what future sustainable journalistic business models will look like. I think everyone from The Globe and Mail to The Hub, and virtually everyone in between, is trying to figure that out, through a combination of subscribers, sometimes venture capital and, in our case, philanthropy.

I ultimately have more confidence, I think, in markets. If there's a critical mass of Canadians who want their news produced and provided to them in a traditional physical newspaper, then I have confidence that entrepreneurs of some sort are going to seize that market opportunity.

I guess it's a long way of saying that precisely because this process is creative and uncertain, I would caution policy-makers not to intervene and preclude it from playing itself out.

[Martin Champoux, Bloc, Drummond, QC]

Thank you.

I understand what you're saying. The problem is that entrepreneurs know that the business model doesn't work anymore because of the digital domination in this industry. That's why I think we should provide this service to the public by supporting those businesses, even if their business model is no longer profitable. Entrepreneurs won't invest in something that's gradually bound to transform and even disappear.

We'll stop there for the moment because my time is up, but I think the discussion is very interesting.

Thank you, Mr. Speer.

[The Chair, Liberal, Hedy Fry]

Thank you.

Mr. Julian for the New Democratic Party is next.

You have six minutes, Peter.

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

Thank you very much, Madam Chair.

I'd like to thank our witnesses. You're providing very important testimony to us this morning.

I want to note very clearly that the government already interferes massively in the marketplace, giving over $1 billion in indirect subsidies each and every year to Meta and Google. Meta and Google, with fat profits and all of the despicable practices they have shown, have been heavily subsidized from the Harper government to today with over $1 billion a year. That obviously has influenced the market and has led in part to the crisis we are experiencing now.

I'd like to start my questions with Madam Benavidez.

Thank you very much for your testimony.

It's chilling, what you're saying. The first part of what you said, which I believe is important to follow up on, was on the rise in hate. As you pointed out, the Center for Countering Digital Hate has pointed to Meta and X contributing to what the Anti-Defamation League and the Southern Poverty Law Center have called “the pipeline of hate”.

We've seen a rise in anti-Semitism, Islamophobia, homophobia, transphobia, misogyny and racism, with racist attacks seen right across North America. They were all provoked by Meta's secret algorithms, which attempt to foster and provoke, through what the Center for Countering Digital Hate calls “malgorithms”, that rise in far-right extremism. We certainly saw last year that every single ideologically motivated mass killing in North America was caused by the far right.

Madam Benavidez, I want to ask you what governments should be doing to counter this pipeline of hate that is contributing to real-world killings as a result of being fostered online by these malgorithms and deliberate policies that help stoke engagement in all of its toxic forms?

[Nora Benavidez]

Thank you so much.

It's excellent to note that platforms alone do not bear the responsibility for content moderation. I believe it's important to elevate how government interventions can blunt many of the harms detailed in my own comments, as well as in those just provided.

There are a few calls that Free Press is making, many of them centring on the use and extraction of our data. I'll give you five core values and principles we are fighting for.

One is regulators codifying reforms to minimize the data companies can collect and retain, in order to protect against the discriminatory targeting of users—as I mentioned before—with tailored content and advertising.

Two is banning algorithmic discrimination by platforms and other Internet services that use AI tools to target users.

Three is requiring regular platform transparency and disclosure reports on a number of things. This includes content virality reports, the results of AI decision-making tools, and the visibility and takedowns of political ads. These reports should be accessible across all languages. We know there are gross asymmetries when it comes to moderation by platforms in languages other than English.

Four is developing a private civil right of action for violations that flow from platforms' use of our personal data.

Fifth and finally, it's leveraging other actions and authorities your government has at its disposal. In the United States, we believe leveraging agency and White House authority are critical. There is a need for better coordination, not less. When we cordon off communication between tech companies and other sectors, we get the environment we are now in. Therefore, our final recommendation is to elevate the ways we collaborate and coordinate, in order to share information, not block off access.

Thank you.

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

Thank you.

As a follow-up question, we heard about the Meta donation to Harvard. Allegations are that this led to a crackdown on disinformation research at Harvard University. You point to the fact that Meta's new policies allow for clearly false political ads in the United States. The fear, of course.... We saw the myth around the election being stolen, which led to a physical attack on Capitol Hill. The same individuals involved in that now want unfettered access to people's homes right across the United States, with political ads that are clearly false. We have seen the role of the Russian disinformation machine, the Internet Research Bureau, both in the election of Trump back in 2016 and in the Brexit referendum—very clear interference that led to profound political decisions, with political consequences.

Are you concerned about all of these impacts on our democratic life and on our ability to make decisions in a free country?

[The Chair, Liberal, Hedy Fry]

You have a very short time in which to answer, Ms. Benavidez.

Thank you.

[Nora Benavidez]

Thank you, Madam Chair.

There are dangerous real-world consequences when companies retreat from their previous commitments. This relationship...as content moves from online discourse to the off-line world. There is ample evidence now that we, as human beings, are informed and motivated by what we see online. We see companies doing less to protect users, and we know bad actors will exploit those openings and network vulnerabilities. We've seen it over the last two months in terms of the Middle East conflict.

I believe that, ultimately, platform integrity leaves democracy in the balance. We have over 40 elections coming up next year and—

[The Chair, Liberal, Hedy Fry]

Thank you, Ms. Benavidez. I'm sorry. You can expand on that later on.

I'm now going to our five-minute round. Once again, I would like to warn everyone that the five minutes include both the questions and the answers.

We begin with the Conservatives and Kevin Waugh.

Kevin, go ahead for five minutes, please.

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

Thank you, Madam Chair.

I think we've lost a generation of news followers. In newsrooms, they don't think about what the consumer wants. Take time shifting: “We can't have the news on other than at 6:00 or 11:00.” They saw viewers coast to coast saying, “I want to watch the news when I have the time.” That's why the platforms won out. That's why websites won out. I look at the news industry. They're still back in the fifties. They haven't grasped what the consumers and eyeballs want. When I look at the news media in the United States, and even in Canada....

Mr. Speer, you made a good point about donations. Even though they're in the United States, PBS television gets thousands of dollars from Canadian viewers. Why is that? It's because we watch it. When they have a telethon, I see hundreds of people in my community donating to PBS.

Perhaps that's the model we need for public television, not only in the United States but also here in Canada, with the CBC.

[Sean Speer]

I would just say two things in response, Madam Chair.

First of all, I'm slightly more optimistic that the industry is transforming itself in a way that connects it more closely to its audience. I think that extends from smaller organizations like The Hub to some of the major legacy players, which may have moved only slowly in this direction but are now moving in it. I think it's a healthy one. A connection between journalism and audience is fundamental to the future of the industry.

The second thing is, in terms of different financial models, I think there are extraordinary opportunities to build value for readers, listeners and so on and to start restoring the expectation that news is something people ought to pay for. Another witness observed earlier that one challenge the sector has faced is that, about 20 years ago or so, it put its content online, mostly for free. That socialized, as you say, a generation of readers and listeners to think news was valueless. I think the way to solve that, and we're seeing this play out in Canada and in the United States, from legacy players to smaller players, is to start restoring that relationship with the audience and to create the conditions for people to, once again, pay for news. I think that's a healthy development.

Ultimately, it seems to me that the role of public policy is to support that process, rather than to shape it in a direction such that, as I said earlier, we can't possibly know where it's going to end up and what types of models are ultimately going to be successful.

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

I think you made a very good point.

The firewalls that news organizations put up, like you said, 20 years ago, didn't work, and then they gave their product away for free, so they made journalism worthless.

When you look at that model now, I'm not going to pay for The Boston Globe, and I'm not going to pay for The New York Times, because I'll get it somewhere for free. That's the issue I think consumers themselves are facing. When they go to the paywalls, they'll say, “Well, do you know what? I'll find it somewhere else. Someone will post it, and I'll steal the information from there.”