Canadian Heritage Committee on Dec. 5th, 2023

[The Chair, Liberal, Hedy Fry]

All right.

Go ahead, Mr. Champoux, and then it's Mr. Waugh.

Mr. Noormohamed, is your hand up?

Thank you.

[Martin Champoux, Bloc, Drummond, QC]

Thank you, Madam Chair.

I think that what my colleague Mr. Shields just said about the potential participation of other levels of government, the provincial level in particular, is very interesting. I had the same conversation with my colleague Mr. Waugh, and I answered that question. He also told me he was concerned about involving the provincial governments.

First of all, we aren't forcing them. We're inviting them to join the discussion. The Quebec government has asked to be consulted on this kind of discussion. It has also asked to take part in the present discussion. The Quebec government is also in the process of establishing a media assistance fund. This is certainly an invitation that the other levels of government would welcome with open arms.

I think it's entirely appropriate in the circumstances to include other levels of government that have expressed an interest in joining the discussion.

I also want to emphasize that even the involvement of local governments, such as municipal governments, that would like to have a say that these kinds of hearings would be entirely appropriate. The issue of regional media coverage is currently a major concern. The municipalities have a front seat on that situation.

I absolutely don't think it's ridiculous to add the other levels of government and potentially to invite them to come and express their views at these kinds of hearings.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Champoux.

Go ahead, Mr. Waugh and then Mr. Noormohamed.

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

Thank you, Madam Chair.

As Mr. Champoux mentioned, we had a discussion prior to today's meeting. He filled me in on the province of Quebec. It's interesting when you start to bring in provincial governments.

Mr. Julian, the newspapers you just talked about are probably in crisis because the NDP provincial government is not putting any resources out.

[The Chair, Liberal, Hedy Fry]

Mr. Julian, do you have a point of order?

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

I do.

I would like Mr. Waugh, who I have enormous respect for, number one, to stick to the topic, but, number two, to be fact-based in terms of what he is speaking about. We're talking about fact-based journalism. He has to stay with the facts.

Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Julian.

Mr. Waugh, are you finished?

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

No. I was just going to say that it's interesting when we talk about governments at the national and provincial levels. They're the ones that have caused a lot of the crises in local newspapers. They pulled every ad they could in rural Canada. The crisis has hit, and some of the MPs around this table have really realized that, “Oh, the federal government is putting so much money into Meta and Google, and so on, and less into local newspapers.” We've been saying that, Madam Chair, around this table, particularly Conservative MPs, dealing with Bill C-18. Local newspapers are the ones that are disappearing faster than any other. Finally, everyone else has realized it.

That's all I have to say.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Waugh.

Next, we have Mr. Noormohamed.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

Thank you, Madam Chair.

The addition of inviting the provincial governments to this reflects the aspirations that Monsieur Champoux talked about. For me, it also spoke to some of the concerns that Mr. Shields spoke about regarding the local media in his community, and the challenges that could be met only by provincial governments. They are, perhaps, closer to some of these issues than we might be.

Again, it's an invitation, and they are welcome not to participate if they choose not to. As an important gesture to involve, and to increase the scope of the conversation, lest anyone assume it is dominated by—the expression that our friends across the way like to use—“the Laurentian elites”.... This gives everybody a chance to be at the table and to be part of the conversation if they choose. If they choose not to, that's okay.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Noormohamed.

Go ahead, Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

If the author of the motion had said “invite all levels of government”, it might have made sense, but it doesn't.

[The Chair, Liberal, Hedy Fry]

Mr. Noormohamed.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

I appreciate Mr. Shields' comments. There is an opportunity to provide amendments, but we are where we are.

[The Chair, Liberal, Hedy Fry]

We are dealing with the motion as amended by Mr. Julian. Let's stick to that at the moment. There seems to be no subamendment coming up to change the language as it's written, so unless anyone else has any further discussion, I'm going to call the question on the amended amendment.

(Amendment as amended agreed to: yeas 7; nays 4 [See Minutes of Proceedings])

The amended amendment passes, so now we will go to the amended motion by Mr. Champoux.

Is there any discussion on that, please? If you wish, I will read the amended motion by Mr. Champoux, but you should all have it in front of you. I read it into the record the last time around, but I can read it again if you wish it to be on the record.

I'd like us to vote now on the amended motion by Mr. Champoux.

(Motion as amended agreed to: yeas 7; nays 4 [See Minutes of Proceedings])

Thank you. The motion as amended is passed.

I think we need to move on to the orders of the day, which I think would be meeting with witnesses, so I would ask that we suspend while we get into that second part of the meeting and get the witnesses moved on board.

Thank you very much.

The meeting is suspended.

[The Chair, Liberal, Hedy Fry]

All of the witnesses have been checked. We have witnesses to speak to the study on the tech giants' current and ongoing use of intimidation and subversion tactics to evade regulation in Canada and across the world.

Today we have, from the American Economic Liberties Project, Dr. Erik Peinert, research manager; from Free Press, Nora Benavidez, senior counsel and director of digital justice and civil rights; and from The Hub, Sean Speer, editor-at-large.

We will begin with Dr. Peinert.

You have five minutes.

[Dr. Erik Peinert]

Hello. My name is Erik Peinert. I am the research manager at the American Economic Liberties Project, a Washington, D.C.-based policy and advocacy organization focused on reducing concentrated economic power to broaden opportunity for small businesses, workers and communities. I earned a Ph.D. from Brown University, where my research focused on competition, monopoly and antitrust and has been published in leading academic journals.

Thank you for the opportunity to speak today about big tech’s pattern of coercion in response to regulation, specifically Meta’s recent action to block Canadian access to news articles across its platforms in retaliation for the passage of Bill C-18, the Online News Act. This follows a nearly identical action in 2021 by Meta—then Facebook—to extract concessions from Australia with respect to its news media bargaining code.

This discussion comes at a time when the news industry across the globe is in peril. It’s an industry that I’ve watched closely since I was a child. I was raised by a journalist. My mother began her career as a reporter for a local paper in rural New England in the late 1970s, moving to various editorial roles in minor cities, to the newsroom at The Boston Globe, and then to executive positions at The Boston Globe and GateHouse Media, now Gannett. She now owns several successful, independent local papers in Massachusetts suburbs.

My personal and professional experiences lead me to make two principal points today, the first being about the platforms' business model in this market. Media companies pay to produce and distribute content that a large mass of readers find valuable. Then they sell ads to businesses that want their offerings in front of those readers. On one side, Meta and Google have become the central way that readers access news media, giving them power over journalism outlets, with an implicit threat to cut off readership. On the other side, Meta and Google also have an effective duopoly over digital advertising, and both face or faced antitrust lawsuits for illegal monopolization in this space.

These companies are not providing viewership so much as using their dual control over Internet traffic and advertising to monetize content that journalists produce at considerable expense. Recent research by economists at the University of Zurich indicates that 40% of Google’s total revenue from search advertising would go to publishers and other journalism outlets if it faced more competition. With media companies paying to produce the content and big tech getting the ad revenue, this destroys the model of journalism that a democracy needs.

Google’s decision to broker a deal with the Canadian government last week, to pay about $100 million Canadian per year to journalism outlets and publishers, simply confirms this. It acknowledges the value the platforms gain from journalism. The dispute was over the scale of payments and the terms of negotiation—whether to have one deal or require multiple bargaining groups—rather than whether compensation was owed at all.

This brings me to my second point: why these companies respond to regulatory proposals with bullying, threats and coercion. Rather than making rational business decisions in response to regulatory changes—as Meta claims it is doing with respect to Bill C-18—they see oversight and market governance as an existential threat to their predatory business models, and they react with hostility.

For example, these tech giants have been leveraging trade and investment frameworks to stop governments around the world from regulating them. Their latest strategy is pressuring governments to include digital trade clauses in bilateral and multilateral trade agreements. In this way, big tech companies are better positioned to argue that policies like the Online News Act are violations of trade law because they unfairly discriminate against companies like Google and Meta by virtue of their American origin, ignoring that these companies are targeted due to their size and not their place of incorporation.

This is also even though, as American, multinational companies, their home country is considering many of the same or similar policies, with the journalism competition and preservation act being repeatedly introduced in the American Congress. They succeeded, to a degree, by getting the North American governments to include expansive digital trade clauses in the 2020 CUSMA. U.S. industry associations are already making use of this language to claim that the Online News Act violates Canada’s commitments under the CUSMA.

More egregiously, Meta last week filed a lawsuit against the American Federal Trade Commission, one of its primary regulators, arguing that the commission itself is unconstitutional and, thus, effectively illegal as a regulator, rather than face an amended consent decree based on privacy violations that the company has repeatedly committed over the past decade, which the FTC has found involved children’s data.

Adding little of clear social value but having learned to profit from it nonetheless, Meta repeatedly shows disdain for the rule of law in this space, preferring to destroy the legal system in the United States and elsewhere rather than come up with a business model that is both profitable and socially beneficial.

Having seen the continually worsening struggles of the news industry over the course of my life, I applaud the Canadian government for passing the Online News Act. We hope to see similar policies passed in the United States.

Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you very much. That was really great. It was absolutely on time.

Now I would like to go to the Free Press, and Ms. Benavidez, for five minutes, please.

[Nora Benavidez, Senior Counsel and Director of Digital Justice and Civil Rights, Free Press]

Thank you so much for inviting me.

I'm Nora Benavidez, senior counsel at Free Press—not The Free Press, which is a different entity. I just want to clarify that.

We are a U.S.-based NGO, where I run public accountability campaigns and federal policy reform efforts to ensure that tech is protecting human and civil rights and upholding democracy.

Following years of work by civil society, academics and lawmakers documenting social media harms and urging more accountability, the largest tech companies have responded with disinterest. What's worse, they have increasingly used dangerous tactics to evade accountability. I'll talk a little about that today.

Since the global pandemic, other crises like the January 6 insurrection at the U.S. Capitol, the attempted coup in Brazil in January of this year and the current conflict in the Middle East illustrate the critical role social media platforms play in shaping rapidly unfolding events.

Their failure to vet and remove content that violates their own stated terms of service harms and alienates users. Failure to moderate content inevitably also leads to the migration of lies and toxicity, from online platforms to mainstream media.

Just today, our organization, Free Press, released new research on the backsliding of big tech companies. In the last year alone, Meta, Twitter and YouTube have weakened their political ads policies, creating room for lies in ads ahead of next year's elections around the world. They have weakened their privacy policies to give AI tools access to user data, and they've collectively laid off nearly 40,000 employees.

Massive cuts have occurred across trust and safety teams, ethical engineering, responsible innovation and content moderation. Those are the teams tasked with maintaining a platform's general health and protecting users from harm.

This dangerous backslide has come under scrutiny. Evidence comes from whistle-blowers, from researchers who are looking at algorithmic discrimination; pressure also comes from organizations like ours, urging advertisers to leave Twitter because of Elon Musk's decisions, which make the platform more hateful and violent.

All of this points to the fact that tech companies cannot be trusted to govern themselves. Their response has been far from collaborative. There have been several new tactics that companies have adopted to shut down inquiry and accountability.

The first is cutting off researcher and API access to platform data. Researchers are now suffering various limitations. The NYU ad observatory was denied access by Facebook in 2021 to get its platform services, following months of inquiry analyzing its ad library tools. Twitter has made its API tool almost impossible for researchers to access, because of the high price tag. All of the major platforms require advance notice from researchers, who must be affiliated with universities to get access to their API. This sets up a de facto process whereby the platforms can approve or reject research access if they don't like how the ultimate product might be used.

The second major threat we are now seeing is litigation to silence researchers and critics. Elon Musk has adopted this tactic and has gone after several research entities and NGOs studying the extent to which hate persists and grows on Twitter. Musk has sued several organizations: the Center for Countering Digital Hate—I know their CEO spoke before you as well—the State of California, and Media Matters for America. He has also threatened other organizations.

These suits are dangerous to researchers, but they're also dangerous to the public, who will really be kept in the dark about tech companies' unethical practices.

Finally, the third major concern now is cross-sector attacks, abusing official power to go after researchers studying disinformation. This past summer, U.S. House judiciary chairman, Jim Jordan, led an effort that was demanding documents from leading academics, accusing them of suppressing speech, in particular Conservative speech. These attacks have absolutely led researchers to retreat from doing the necessary work they had been doing.

Big tech doesn't have to go after every tech accountability researcher and campaigner, because these actions are already having a chilling effect. We've witnessed, in plain sight, tech companies run nearly every play in the book to avoid regulation and accountability. Their platforms are undermining democracy, civil and human rights, privacy and public safety. That's why I'm really excited to be here today to talk with you.

We have called on our U.S. government to compel more transparency; to minimize the data that companies collect, use and retain; to outlaw discriminatory algorithms; and to tax online advertising and redistribute those funds to support local, independent, non-commercial journalism.

Thank you so much for your time. I look forward to your questions.

[The Chair, Liberal, Hedy Fry]

Thank you very much, Ms. Benavidez. You too were on time.

I will now go to the third witness, Sean Speer from The Hub.

You have five minutes, please, Mr. Speer.

[Sean Speer, Editor-at-large, The Hub]

Thank you, Ms. Chair.

Thank you, committee members, for inviting me to participate today. As the chair said, I present to you in my capacity as editor-at-large at The Hub, an online Canadian news organization that I co-founded nearly three years ago. We publish a combination of opinion commentary, standard news reporting and a series of podcasts.

We're philanthropically supported. Our audience size, content mix and level of engagement are growing significantly. We view ourselves as an increasingly valuable part of the country's news media ecosystem and a major contributor to its public policy discourse. As an organization, The Hub has generally opposed government intervention in support of the news media industry. I'd like to take my time here to set out how we've come to think about what's occurring within the industry and how policy-makers should respond.

Journalism is clearly going through a process of transformation. Traditional business models have been disrupted by new technologies and the rise of online platforms like Google and Meta, as the other witnesses have set out. This process of creative disruption has created a lot of destruction. It's led to business rationalization, layoffs and even outright closures, but there's also a creative dynamic, of which The Hub is a part. New and emerging players are experimenting with different business models, content forms and relationships with their audiences in order to figure out how to create a sustainable business that's ultimately supported by markets, broadly defined.

Most of these entities will fail. Some will succeed. Some will cover specific subject matters. Others will target geographical areas or particular points of view. Some will operate as for-profit businesses. Others will take the form of non-profits or even charitably funded organizations like ours.

The process I describe is complicated and uncertain, but it isn't a market failure that necessitates large-scale government intervention. It's a market correction that policy-makers should, generally speaking, let play out. It's of course the same dynamic market process that has transformed other parts of our economy over time and ultimately contributed to the country's progress and prosperity.

Now, one might argue that the news media is different, that it's not the same as other sectors, that it plays a more crucial role in our civic and democratic life, and that it therefore should be treated differently. There's something to that argument. We at The Hub believe passionately in the importance of reliable news and information in our democratic society, but we shouldn't let our good intentions interfere with the process of market-led change. Doing so would effectively signal that the legacy business model is the only one capable of meeting our democratic needs. It's ahistorical and fails to reckon with the exciting innovation occurring within the industry.

That said, there may be certain areas where public policy can play a role to better enable the transformation that's occurring within the market, rather than a shaping role that tries to presume in which direction the market should head. One example is to increase the charitable donations tax credit for registered journalism organizations to the same level as a tax credit available for donations to political parties. It would be a logical step to recognize that both institutions—the media and political parties—have key roles to play in the functioning of our democracy. Another example would be to make the subscription tax credit for qualified Canadian journalism organizations refundable and increase its generosity to higher levels.

The virtue of both these suggestions is that they would follow the choice of Canadian consumers. They would be subjected, in that sense, to a market test rather than the dictates of government itself.

I would sum up my comments this way. First, it's premature to conclude that we've reached a market failure that necessitates major government intervention. Doing so would take the onus off the industry to figure out how to create sustainable journalism, and it would impede innovation being led by independent outlets like The Hub. Second, to the extent that government opts to intervene, public policy should generally be neutral and subordinate to consumer signals. I put forward a couple of options, but there are no doubt others.

Let me conclude with this point, committee members. The Hub is currently running a series we're really excited about, called “The Future of News”. We're bringing different voices and perspectives, including some you've heard at the committee, to our pages to talk about how to move forward, specifically how to create the conditions for a sustainable journalism sector.

I can tell you that after three years at The Hub, we're optimistic that entrepreneurs and markets are indeed capable of creating sustainable journalism and would encourage policy-makers to minimize their interference in that process. That approach would be in the best interests of journalism and, I would argue, of our democracy.

Thank you.

[The Chair, Liberal, Hedy Fry]

You were on time as well, Mr. Speer. Thank you.

I will now open this segment to questions and answers. The first segment will be for six minutes. That includes both the questions and the answers—I'd like everyone to note that.

We begin with the Conservatives. The first questioner is Rachael Thomas.

Go ahead, Mrs. Thomas.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you. My first question is for Mr. Speer.

You said that right now in the news sector we're seeing lots of new and innovative approaches being taken and that they're largely being driven by market values. You said that this is a good thing and that government intervention is thwarting or distorting that innovation that's taking place.

I'm curious if you can expand on that a bit in terms of the impact that government interventions such as Bill C-18 have on the innovative news sector and its future.

[Sean Speer]

One of the challenges, MP Thomas, that news start-ups face in terms of building an audience and building awareness in the marketplace is, of course, finding different channels to reach that audience.

Up until now, for The Hub—and I think others have testified similarly—Meta and Google have been a major part of that process. We don't see the platforms as a threat or playing a counterproductive role. They've enabled us to build and grow what are increasingly sustainable news organizations that can start to fill some of the gaps that have been created by the process of disruption, which is at the heart of much of the work the committee is doing.

One of the consequences, of course, of Bill C-18 has been that many of us have lost the ability to communicate, reach our current audience and grow it, because the law has caused Meta to leave the Canadian market. Fortunately, the agreement between Google and the government prevented a scenario whereby Google similarly left the market. Had that happened, I fear that a lot of the progress we're seeing in the new and independent media sector would have been fundamentally disrupted.

I would say that, as you think about the work the committee is doing, I would encourage you to start with the Hippocratic oath to do no harm. Permit entrepreneurs, innovators and, of course, long-standing media organizations to go through the iterative process of trial and error to figure out how we can continue to deliver the news and information that Canadians need, reflecting the changing technological environment.

[The Chair, Liberal, Hedy Fry]

Excuse me, I'm going to stop this for a second.

May I ask that people address the questions and answers through the chair and not directly to each other? Thank you.

Go ahead, Ms. Thomas.