Canadian Heritage Committee on Nov. 1st, 2022

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you, Madam Chair.

Thank you to the witnesses for being here today.

It's clear to me that Bill C-18 is not going to meet its desired goal of helping small local newspapers because we've excluded any that have less than two full-time journalists, and it's clear that Bell, CBC and Rogers are going to get the lion's share of the money.

I'm going to focus my time on amendments that we could make to the bill, because the NDP-Liberal coalition is going to force it through and I want to reduce the harm as much as possible.

Mr. Palmer, you talked about how we should delete the undue preference part of the bill because it's problematic and how 52D from the Australian act would be better.

You also mentioned another part of the bill that should be deleted, but I didn't catch that. Could you let me know what that is?

[Philip Palmer]

Madam Chair, I believe I was speaking about clause 24, which strips from the digital news intermediaries their ability to rely on copyright law defences. This is simply a stacking of the decks in a way that distorts and prevents people from actually looking at the value of what Mr. Singer refers to as “this appropriation”. If there is an appropriation taking place, the concept should be to determine it on market value with all the factors taken into place, including common law, at least copyright law, and other—

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you.

I appreciate your comments as well about how there's likely to be a constitutional challenge on the DNI definition as it exists.

Also, you mentioned that we could improve in the area of defining what is quality journalism, and I like the recommendation of using the Income Tax Act definitions for journalistic outlets.

One of the other ideas that I heard was from Mr. Singer, and it was about how there's a size limit that was an amendment.

Mr. Palmer, is there an opportunity for us to do something to limit the size of organizations so that Bell and Rogers and CBC don't get the lion's share and so that we actually direct that aid where we want it: at the local, smaller news media outlets?

[Philip Palmer]

There is certainly nothing in the legislation that does that at the moment, and it would require an amendment. Certainly, yes, at the moment the danger is that the large organizations will scoop up all the dough and that there will be nothing left for the minor players.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Indeed, Mr. Singer, could you let us know on which portion of the JCPA there was a size limit amendment and what that amendment was?

[Dr. Hal Singer]

What happened with the JCPA, unfortunately, is that large news publishers were excluded from participating in some of the protections. This would be like The New York Times, The Washington Post, maybe The Wall Street Journal. The rationale was that they are big enough to negotiate their own compensation, thank you very much. However, it turns out that even they, as large as they are relative to other newspapers, are atomistic with respect to Google and Facebook, so in my opinion, this was a mistake in the JCPA.

You don't want to exclude the “bigs” from the negotiation for the same reason that you don't want to exclude, for example, LeBron James from the players union. It's possible that LeBron James doesn't benefit as much as some of the rookies or veterans, but just having him in the coalition strengthens the coalition in its dealings against the individual NBA owners. I understand the politics, but I think if an economist could have designed it, the big news publishers would have stayed in, so when we go to the negotiations—

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you. I have a limited amount of time.

I have one more question for Mr. Palmer.

You talked about how it would be better in terms of determining who can benefit if the minister designated it as in section 52E of the Australian act. Can you elaborate on that?

[Philip Palmer]

Yes, the Canadian legislation requires a person to self-identify against criteria that is very deficient. It requires that a person come forward and say, “I have an imbalance of bargaining power in my favour. I dominate a market.” There's no definition of “market”. Is this the advertising market? Is this market for eyes and ears? What is it? That's very unclear.

It seems to me that it would be far better to have objective criteria and that a government official, a minister, decide who is [Technical difficulty—Editor]. Let them fight it if they want to, but I think it would be cleaner. It would be far more coherent, and it would lead to quicker results.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you.

I think that's the end of my time.

[The Chair, Liberal, Hedy Fry]

Yes, that is the end of your time.

Thank you, Marilyn.

I will now go to the Liberals and Mr. Anthony Housefather.

You have five minutes, please.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you very much, Madam Chair.

I want to start with Dr. Singer.

I had the pleasure of being in Congress. We did hearings for our interparliamentary task force on online anti-Semitism. We got to have hearings where we had Meta, Google, TikTok and Twitter.

I had a chance to talk to a lot of legislators, at least at the House level, and I found real consensus amongst Democrats and Republicans on both sides, whether it related to section 230 or to monopoly of the platforms, that there needed to be more done to deal with the practices and techniques of these tech giants.

I know that the House of Representatives antitrust subcommittee recently accused platforms like Amazon, Apple, Google and Facebook of abusing their monopoly power.

How do these tech giants consolidate their market power? What practices and techniques are they using that prompt all these concerns?

[Dr. Hal Singer]

That's a pretty expansive question. You're probably aware of all the antitrust litigation.

[The Chair, Liberal, Hedy Fry]

I'm stopping for a second. There is a problem with feedback.

I would like those in the room to please mute their microphones when they're finished speaking. It would be very helpful.

Can we try that again? I've stopped the clock.

[Dr. Hal Singer]

Looking at some kind of common denominator across the various types of conduct that's being challenged, I would say that the fundamental strategy the platforms have employed is some variation of an anti-steering restraint or what's called a most favoured nations clause.

This ensures that any broker or dealer, say an app developer or a merchant on the Amazon site who wants to go off their platform and sell their wares at a lower price is barred from doing so. That is, you cannot sell at a lower price outside of the dominant platform than you can inside the platform.

Google is doing this with anti-steering provisions. Amazon achieves this with the most favoured nations clause. They are making sure that no coalition or individual or coalition of developers or merchants could support a rival platform. If they could steer by offering their consumers lower prices for going off the dominant platform, that could engender a certain amount of multi-homing and competition across the platforms, and that in turn would force Google and Amazon to lower their take rates on app developers and merchants respectively.

They figured out that, if they can stop that sort of conduct, if they can stop the steering, then they can keep artificially high take rates. These artificially high take rates, at least with respect to Amazon, have been going up over time. They all get impounded in the price of everything you buy.

There is a lot of anti-competitive things that are going on right now, but I know I don't have time to hit them all. To me, that is the highlight, and you have to attack that. I do think that squarely falls under the antitrust ambit. We should give these antitrust cases a little chance to play out on that score.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you very much. That's very helpful.

I have a very short question for you.

When Facebook was here on Friday, they repeated their threat to turn off news content being uploaded by Canadian users, which is what they did in Australia.

Have they ever threatened the United States in a similar way or do just small peon countries like Canada or Australia get threatened like this?

[Dr. Hal Singer]

No, don't feel bad. They threaten everyone. They threatened to do bad things in the U.S., too, when the bill, the JCPA, appeared to be on its way to getting voted on at the Senate judiciary committee.

Whether they want to admit it or not, I think Facebook and Google recognize that newspapers and quality journalism actually prevent their platforms from becoming a cesspool. Imagine if all of this stuff came out, as they're threatening to do, and they take out the quality and just leave in the low quality or the misinformation. The whole platform becomes a cesspool. That's going to cause advertisers to leave. It's going to cause users to leave.

We should take their threats seriously, but I don't think the threats amount to anything at the end of the day. They need the news publishers, but they don't have to pay for it right now because the power imbalance is so shifted in the favour of the platforms, right?

What we're asking for is to create a structure so that an arbitrator could make a call as to what the fair market value is, and then we could go on about our way. Once that payment is made, there's no link tax, respectfully; Ms. Gardner talked about a link tax. You don't pay extra for each time someone clicks or for each link that gets posted. You pay a one-time lump sum fee for access. After that, you're free to do with the content whatever you want, subject to the applicable copyright law.

[Anthony Housefather, Liberal, Mount Royal, QC]

I imagine that my time is over, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Yes. You have 18 seconds left, Anthony. Thank you.

I'm going to Martin Champoux.

You have two and a half minutes, please.

[Martin Champoux, Bloc, Drummond, QC]

I will also have the 18 seconds of speaking time that Mr. Housefather didn't use.

Thank you, Madam Chair.

Mr. Palmer, let's go back to the brief that you submitted to the committee last week.

In the brief, you talk about the definition of news content being too broad and unclear. In your view, the act could apply to podcasting services like Apple and Spotify, voice assistants like Alexa and Siri and potentially even app stores. However, you don't explain how that might be the case in your brief.

If you read section 27(1) of the bill, which specifies what businesses are eligible, how do you match these businesses with those criteria?

Can you clarify that for me?

[Philip Palmer]

Yes. Thank you. I welcome that opportunity.

As crafted, paragraph 27(1)(b) is the relevant provision. Paragraph 27(1)(a) is very precise. It follows the Income Tax Act. It incorporates by referencing the Income Tax Act definition.

Paragraph 27(1)(b) is an entirely different kettle of fish. If you had, for instance, a podcast—Joe Rogan, for instance, probably has a good deal more than two employees—

[Martin Champoux, Bloc, Drummond, QC]

I'm interrupting you because in your brief, you're saying that voice assistants and app stores could be subject to regulations. I don't understand how they could become news businesses.

[Philip Palmer]

You'll have to excuse me—

[Martin Champoux, Bloc, Drummond, QC]

Mr. Palmer, perhaps you could respond in writing later on. I have about 30 seconds left. I really have very little time.

Ms. Gardner, let's put aside our differing opinions on how appropriate Bill C‑18 is.

I know that you want to protect quality journalism. However, I must tell you that I don't entirely disagree with challenging the two journalists per media outlet rule. I don't think that's true for the new journalism models that define what quality media is. Nor do I feel that's what's going to protect regional media.

Do you feel we should place more emphasis on journalistic quality criteria and base it on journalistic standards rather than the number of journalists? Would that criterion be acceptable to you?

Please take only a few seconds to respond, because I have very little time left.

[Sue Gardner]

I'm sorry. I'll try to answer quickly.

It's hard to define quality. I think that in previous meetings people talked about standards and practices, and there are ways in which journalism organizations adopt standards and practices. Perhaps that is one way to define quality.

I think that excluding the very small organizations is a bad idea, because sometimes they are the only players, and sometimes they play a very important role.

[Martin Champoux, Bloc, Drummond, QC]

Thank you for keeping your answer short and to the point.