Canadian Heritage Committee on Dec. 5th, 2023

[The Chair, Liberal, Hedy Fry]

Okay. Perhaps what we will do, committee, is to try to reschedule Dr. Peinert, because I think he is giving us valuable information. Perhaps we can get him a different earpiece or a different audio system, so that he will actually be able to talk to us.

Dr. Peinert, would you be willing to come back?

[Dr. Erik Peinert]

[Technical difficulty—Editor]

[The Chair, Liberal, Hedy Fry]

Okay, I know that was static, but it sounded like you said, “Sure.” Thank you.

The clerk will contact you with regard to your return to this committee. Thank you.

Mr. Coteau, go ahead.

[Michael Coteau, Liberal, Don Valley East, ON]

I was going to say that he could just dial in, instead of using the Internet. He could just call in by phone.

[The Chair, Liberal, Hedy Fry]

The clerk is telling me that the committee room does not have phone lines.

[Michael Coteau, Liberal, Don Valley East, ON]

Oh, okay. I thought Zoom automatically had the 1-800 numbers, but if there's a distinct line....

[The Chair, Liberal, Hedy Fry]

Apparently they do, but the interpreters say they won't be able to interpret. Thank you, though.

We will have the clerk and Dr. Peinert speak. I want to thank him for his time and for the valuable information he was giving us at the very beginning.

I think we've finished hearing from witnesses, so we're going to go to the question and answer section. I just want to let you know that the first section will be six minutes, and the six minutes include the question and the answer. Again, I will call out 30 seconds for the questioner and witness when you get close to the closing.

We'll begin with Mrs. Thomas for the Conservative Party for six minutes.

Go ahead, please.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you.

Mr. Menzies, in your opening remarks, you made the following comment:

...in Canada, we now...have a news ecosystem in which most of our journalists could soon have at least half of their pay dependent on the government, Google and any other offshore money the CRTC might come up with.... Given that the two most powerful entities in our society are governments and large data-vacuuming tech companies, this is not where we want to be.

It seems that you are raising concern with regard to big tech and big government colluding to provide $100 million to the news industry, and with regard to the fact that there is, in fact, a power imbalance when big tech is included in the equation.

Can you expand on your comments a bit?

[Peter Menzies]

Sure. Unfortunately, one of the things that didn't get addressed in the way Bill C-18 ended up was the power imbalance issue. I had quite a bit of sympathy for that. Phillip Crawley used to raise that issue quite elegantly before this committee and before the Senate transportation committee. We're left without that.

Google would have to speak with regard to its intention regarding the fund, but putting the media in a position of being dependent on both taxpayers' money and taxpayers' benefits, and on big tech money—the two most powerful entities in our world that we need media to hold to account—which is the path we're going down right now, is just not where we want to be. We want to move forward. That's what I am trying to encourage here: that people think forward as to how we can get past these hurdles with Bill C-18, this roadblock that we've ended up with, this dead-end road that we've ended up with, and move forward to a place where the Unifor jobs can happen, where we can be flourishing and where journalists can be serving who they want to serve, i.e., readers and citizens.

That's basically where we are with that. Also, in terms of that, you don't have to like big tech to realize that. If you look at the National Post's editorial the other day, you will see that it went on about how terrible Google is and about some of the things like the antitrust suits in the States. Then it said that they looked forward to being great partners with Google. That's where we are.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you, Mr. Menzies.

My follow-up to that, then, would be that Google went into a back room, entered into a deal with the government, and said that it would give $100 million to a collective of its choosing.

I find that very interesting. You have a big tech company that is going to ultimately determine which collective, if there are multiple, it is going to enter into this bargaining agreement with. It's going to hand the collective $100 million, and then that's supposed to go towards the perpetuation of news in the nation.

The minister has announced that the CBC has one-third of all the journalists in the country, and according to the regulations, we know that the money is supposed to be allocated according to the number of journalists in each office. The CBC, then, having one-third of the journalists in the country, would stand to gain $33 million. It already gains $1.4 billion in taxpayer money, and then it has access to another $400 million through advertising revenue and now the most recent Liberal announcement of $129 million in tax benefits.

I'm curious about the comment you made in your opening remarks with regard to the CBC and the fact that we actually can't level the playing field until it is omitted in terms of its ability to generate ad revenue. You also stated that it should be excluded from Bill C-18 or the $100 million that Google is granting. Can you comment on that further?

[Peter Menzies]

There is a bunch there, but I'll start with the fund.

In the paper I mentioned that Konrad and I authored, we did suggest that there could be a Canadian journalism fund. We also suggested that the CBC should be excluded from that, because it would be double dipping, and also that only companies whose primary business is the creation of news would be eligible. That would allow the funds to focus directly on those companies that are most exposed on news and not necessarily on companies that do 80% to 90% entertainment programming and then do news on the side. The funds would go directly to that group.

In terms of the CBC, it strikes me as odd that nobody seems to think that when you put your thumb on the scales of an industrial framework to the extent that the CBC public funding does in terms of the commercial competition, that wouldn't distort the marketplace. I can't imagine the auto industry being able to function properly if the government said that there was a level playing field for everybody, but that it was going to give a subsidy to Chrysler, and that Chrysler could compete with the others for car sales in the same way as the others. I can't imagine that in the restaurant industry or the food industry or anything like that.

I'm not opposed to there being a public broadcaster, but we have a two-headed monster. We need to bring that to an end. Nothing good can happen for the news industry until we fix that.

[The Chair, Liberal, Hedy Fry]

The time is up. Thank you very much.

I'm going to go to the Liberals and Ms. Hepfner.

Lisa, you have six minutes, please.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

Thank you, Madam Chair, and thank you to our witnesses for being here today.

Ms. Radsch, I want to go to you.

I'm not sure whether you saw the details of the government's deal with Google that was announced last week. If so, would you give us your reaction?

[Dr. Courtney Radsch]

Yes, I have seen the details. Thank you so much. I have been following these news media bargaining codes around the world.

I think it's beneficial to see what's happening in Canada. I don't think that the amount determined with Google is sufficient or at all on par with what is actually owed. Part of the problem is that there is a myopic focus on the value of referral traffic. I think tech companies have been very successful in arguing that we should have this very narrow conception of how we establish value.

Unfortunately, we didn't hear from Erik. He was talking about a study done in Switzerland that looked at the value that news provides to Google Search simply through its existence, regardless of whether somebody is looking for a headline or clicks through to a headline.

They looked through and said, “Okay, what percentage of people are doing informational searches and what happens to behaviour if you remove news information?” They had two different populations, one who had news and one who didn't have news. They looked at how their behaviour changed. They then basically got to a figure that showed that this percentage of Google's ad search revenue could be attributed to the mere presence of news on the platform.

That is a very valuable way to conceptualize how the value of news should be established. The Canadian legislation, I think, focuses too much on the idea of referral traffic in order to establish value. Similarly, it does not account for generative AI and the role that news plays in large language models and AI systems. I think that looking at a wider array of tech companies that could be covered and required to contribute to the fund would be important.

I share Peter's concern about having a handful of powerful actors funding the news industry, and the dangers of platform capture. However, I think that if you widen the scope of tech companies that come under requirements to pay for the news they are using to build the most valuable products in the world, we would be less concerned about this. You could create—and I think Canada has done this—a lot of transparency around which news organizations benefit, how you define a news organization, and making sure that there is some level of transparency for those deals. It's understanding that they are commercial deals but allowing the regulator to have insight into that.

Also, one of the ongoing problems of establishing value is that there is no real insight into the data that the platforms possess on their own to help determine that value. Even if you wanted to help the news organizations bargain more effectively, it's going to be difficult if they don't have access to data and information that will help them establish that value.

I think I'll leave it there.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

I think you also have done some research in terms of the value of news to big tech platforms.

Would you tell me whether there's any threat to journalistic integrity and independence if tech giants are helping to fund journalism organizations? Indeed, if there are government funds to help with journalism organizations, does that have an effect on journalistic independence?

[Dr. Courtney Radsch]

Yes, certainly funding has an impact on journalists' independence. That's why one of the most important principles is to have a pluralistic array of funding, so that news organizations are not dependent on any one company, one government or one revenue stream. Ideally, you would see an array of mainly advertising-supported funding.

Also, I think there is a role for tax benefits or taxation of the tech platforms, to ensure that they are compensating for use of this data by creating subsidies or incentive programs.

If you have a lot of different sources of funding, then the power of any one source to—

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I have a point of order, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Go ahead.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

We couldn't hear the French interpretation and the interpreter told us that she couldn't provide the interpretation.

Would it be possible for the witness to repeat her answer so that our parliamentary rights can be respected and so that we could understand what she said.

Thank you, Madam Chair.

[Martin Champoux, Bloc, Drummond, QC]

I have a point of order, Madam Chair.

[The Chair, Liberal, Hedy Fry]

I think the important thing here is to ask Dr. Radsch to slow down. The interpreters are suggesting that.

Yes, Martin.

[Martin Champoux, Bloc, Drummond, QC]

I have a point of order, Madam Chair.

I think there's a technical problem this morning.

We've noticed that there seems to be a bad connection every now and then, and I think that's what's causing the problem.

Communication is inconsistent, which causes interpretation problems. I don't think the problem is coming from the witness's end of things.

I agree with my colleague Mr. Godin that we should ask Ms. Radsch to repeat her answer. You could stop the clock for our colleague.

[The Chair, Liberal, Hedy Fry]

I will pause the clock, because I'm being asked to.

Does everyone want her to repeat the answer?

Go ahead, Lisa.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

I noticed, Chair, that there was a bit of a glitch in her response. The audio seemed to cut out momentarily, similar how to how it did earlier today. I was still able to understand what she was saying, but there was a moment when there was a technical glitch.

[The Chair, Liberal, Hedy Fry]

Let's give Dr. Radsch an extra minute on her time for answering, so that she can fill in the gaps that other people found in the translation, etc.

Go ahead.