Canadian Heritage Committee on April 20th, 2023

[Kent Walker]

I would very quickly say that many similar claims filed by state attorneys general have been dismissed in parallel lawsuits, so we'll see how it progresses.

[The Vice-Chair, Conservative, Kevin Waugh]

We go now to the Bloc for two and a half moments with Mr. Champoux.

[Martin Champoux, Bloc, Drummond, QC]

Thank you, Mr. Chair.

Mr. Walker, do think that Google has a share in the responsibility for major advertising revenue losses experienced by traditional media over the last decade?

[Kent Walker]

I believe that the evolution of the Internet has clearly changed the nature of the news publishing industry by commoditizing facts, by making them broadly available.

[Martin Champoux, Bloc, Drummond, QC]

I'll take your answer for a yes.

In Quebec, traditional media lost $850 million of advertising revenue between 2012 and 2020. I didn't even make the effort of calculating it right up to 2023, but you could use the rule of thirds and probably get those numbers. We're talking about $850 million less in advertising revenue for traditional media, while advertisers invested $150 million more in advertising during that period. Clearly, digital media got the lion's share of that amount.

You spoke earlier about 3.6 billion referrals to news content, and you estimated that this represented about $250 million for the media. At the same time, you said that news content isn't worth anything to you, that it's a fraction of your income and a fraction of the clicks on your platform. If it's worth nothing to Google, but it's also lucrative and worth so much to news media, why is it a problem?

[Richard Gingras]

If I might address—

[Martin Champoux, Bloc, Drummond, QC]

I'm listening.

[Richard Gingras]

If I might address the disruption of the newspaper business model, the Internet obviously changed everything. If you look at the primary sources of advertising for news organizations back 30 years ago, there were four categories that were dominant, representing more than three-quarters of their revenue. One was classified ads, which went online, as you know, and not to Google. Another was department stores, which have been a shadow of their former selves with e-commerce. Another was food coupons, which now are loyalty programs by supermarkets. The other was automotive dealers, which have also gone online. So unfortunately, yes, the Internet did, indeed, disrupt the business model. It also provided tremendous opportunities for small businesses. With Google, more than half of our advertisers are small businesses that can now afford to advertise to their markets—

[Martin Champoux, Bloc, Drummond, QC]

You just answered my question, Mr. Gingras.

These small businesses used to invest in local papers, local radio or regional TV stations. They don't do that anymore, because the cost is too high compared to the prices that Google and other platforms can offer.

That's fine. That's the law of the market, but companies like yours still have a responsibility. That's why I was asking you earlier if you thought that Google had a responsibility in all this. And if it's worth nothing for you, but it's worth so much for the media, why is it such a big effort on your part to just sign agreements and make sure that journalism does indeed stay alive?

You're right to say that the news industry and news media can reinvent themselves, but Google, especially, plays a major role there. It's become unavoidable for information sharing. I have a hard time understanding why you're reluctant to participate in this change and to make sure that those who produce information stay healthy.

[Kent Walker]

If I could, we are not resisting participating. We are arguing in favour of having a fund administered by the government rather than a format in which you would have to pay to link, which we believe would have a number of unintended but negative consequences.

The general proposition is right, that digital advertising is more efficient for merchants. There was a U.S. department store owner who, many years ago said, “Half the money I spend on advertising is wasted; [I just] don't know which half.”

Digital advertising solves that problem, but it spreads the money in different ways than traditional publications do, and we collectively need to work with governments to address that challenge.

[The Vice-Chair, Conservative, Kevin Waugh]

Thank you, Mr. Walker and Mr. Champoux.

We move now to Mr. Julian of the NDP for two and a half minutes.

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

Thanks very much, Mr. Chair.

I would like to say to both Mr. Walker and Mr. Gingras that regarding Mr. Bittle's comment about the funding Google puts into organizations for lobbying and advocacy in Canada, I repeat his request to Google to provide that information.

I also would like to know the global amount that Google spends each year on government relations and lobbying.

Could you make that information available to the committee, please?

My questions are around indigenous news outlets. How many contracts have been signed with indigenous news outlets in Australia and Canada?

[Kent Walker]

I could address the preamble to your question, and then perhaps Richard could address the question about indigenous things.

I want to stress that we do not make payments for parties to astroturf. We do not make payments to YouTube creators to lobby on our behalf. We have engaged, I think, in trying to promote a rich civic discourse around these very important questions in democracy.

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

Mr. Walker, I don't have a lot of time. We just want the numbers. That's what we're asking for. It's a reasonable request. I won't use the term astroturf, but there are advocacy organizations that are funded by Google. Please make those amounts available as well as the global amount for government relations and lobbying.

Back to Mr. Gingras, how many indigenous news outlets have had contracts signed with Google?

[Richard Gingras]

I would have to address that in the following fashion. In our efforts, again, through the various methods I have mentioned and, I would hope, with any conclusive effort with regard to Canada, we address communities across Canada as we have to some extent today.

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

Are you saying that there is no funding for specific indigenous news outlets?

[Richard Gingras]

I'm not saying that. What I am saying is that I don't know personally what the ownership is, for instance, or what the audiences are for those outlets that we do have relationships with.

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

I want to come back to the issue of the test, because this committee substantially improved Bill C-18. After the PBO report that came out early in the fall, we enhanced access by community broadcasters, small community newsrooms and indigenous news outlets.

When you ran your test simulation, did it have an impact then? Did you take into consideration the amendments for small community news outlets, community broadcasters and indigenous news outlets when you ran the test?

[Richard Gingras]

If we were accurate in our assessment against the draft provisions in Bill C-18 with regard to eligible news businesses, then I would think so, though I would note that some of those that fall into those classes aren't online, so they weren't affected.

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

You're not 100% sure, so that is something you would need to clarify.

I know the chair is signalling, but my final comment would be this. You have indicated that you are still looking at your options, including running a similar test for the business response on the passage of Bill C-18.

Are you not concerned as Canadians seeing that again as a threat by an extraordinarily powerful and profitable corporation to say, “Well, we're still evaluating our options of how we're going to respond” when you have also not indicated that you're not going to do a denial of service test in the future?

Do you not understand why many Canadians would see that as a threat by a very profitable global corporation?

[Richard Gingras]

I would hope that Canadian citizens see what we have expressed in terms of our concerns as being quite responsible in our efforts to work with key stakeholders, with the government and with Parliament to find the most constructive possible approach to stimulate innovation and sustainability in journalism across local communities throughout Canada.

[The Vice-Chair, Conservative, Kevin Waugh]

Mr. Walker, you were going to add to that.

I will give you 30 seconds.

[Kent Walker]

I think Richard largely covered it, but I would say generally our effort here is to try to be a constructive contributor to Canadian journalism. There is disagreement about the means to do that and the potential unintended consequences, but no there's no disagreement about the goals.

[The Vice-Chair, Conservative, Kevin Waugh]

Thank you.

We move to a five-minute round. Mr. Shields is going to share his time.

Mr. Shields, go ahead for five minutes.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Mr. Chair.

Again, we appreciate the witnesses being here today.

If you put a number to the fund, I think that would make this game a lot more interesting in the sense that we would know what a big number was, and it may bring different consequences if you did, but you're not going to do that, so that's fine.

This is what I am asking for, and I know you have it. Could you tell us the amount of money that the federal government has spent on advertising with you from 2015 to the current date? Could you please give us the amount? I know you're going to have to look for it, but can you tell us the amount of money that the federal government spends on advertising with you?