Information & Ethics Committee on May 10th, 2018

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Mr. Balsillie, let's talk about all the data gathered by the big players in the world who directly or indirectly have access to our private life. If I use my virtual assistant to make a reservation at a restaurant, by the end of a year, Google will know that I go to Saint-Hubert every two weeks, for instance. It does not stop there. It will know where my favourite garage is and what kind of car I drive. That is a lot of data that can be reused. And yet, I provided it voluntarily by choosing a restaurant.

You said that we need a framework and legislation on the use of personal data, but how can we do that if that data is provided voluntarily? If I give my friends my personal phone number, it is because I want them to call me. Before the courts, the Web giants will say that the data they received was provided to them voluntarily. For instance, someone might post a picture of themselves on Facebook with red hair because they like to dye their hair red. There is nothing we can do to stop that.

What do you think?

[Jim Balsillie]

Thank you for your questions.

If I may, the first thing you have to understand as I go into this is that enormous amounts of data are collected without transparency, without your voluntarily knowing. What they've discovered with GDPR is that these social media platforms have literally millions of pages on you without your knowing it, including all the routing of where you personally moved throughout the year.

Many other things, different datasets, are brought together or “hashed” as they say. There are enormous sets of data that you haven't consented to being given. My main response to that is I'm encouraged by the questions you're asking because it shows me that you're not prepared to be tricked by platitudes like “informed consent” or “anonymization” or “transparency” or “nuance.” Those are trick words. Be very careful when they say they don't resell information because.... Do you exploit information? Understand that enormous amounts of data are collected without your knowing.

Have you heard of Sidewalk Labs? How are you able to opt out of all of that information they collect on you? There was a recent story of how Facebook was working with hospitals by anonymizing your data for your health care but were able to cross-reference that through AI to your personal social media and extract that to know who you are.

So, be very careful with these claims of informed consent and voluntariness in the surveillance state. As was said earlier, this is going much faster than we understand it and we are cascading towards a surveillance state. As you see by the framework I give to you, it touches all aspects of our sovereign citizenship, well beyond the economy.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

In years to come, will it be possible to have a private life, privacy, when all that data is being collected?

In five or ten years, will it still be possible to have a private life?

[Jim Balsillie]

It can, if we have responsible rules and regulations in society. This is what Europeans have had almost 10 years of debate and discussion on. They have discovered; they have come to a nuanced position. There's nothing extreme about GDPR in Europe. They figured out how they can be an open, innovative society as well as protect individual privacy and transparency to benefit their citizens. It is absolutely resolvable, but it takes responsible, expert, technical regulation, which is exactly what Europe spent nine years undertaking.

[The Chair, Conservative, Bob Zimmer]

Thank you, Monsieur Gourde.

Next up for seven minutes is Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you very much.

Mr. McKay, it's good to have you here, and Mr. Balsillie.

Mr. McKay, you talk about deep Canadian roots. You certainly have deep Canadian roots. In my region you compete against all our local newspapers for online advertising. Would you consider deepening your roots by paying the HST so we have a level playing field?

[Colin McKay]

I'll answer that in two stages. Number one, we provide ad technology services to newspapers, and we provide revenue—

[Charlie Angus, NDP, Timmins—James Bay, ON]

Yes, but I don't care about that. Tell me, are you interested in paying the tax?

[Colin McKay]

I want to differentiate because your study is predicated on one company's behaviour. We provide services to newspapers that allow them to increase opportunities to gain revenue from their online viewers.

Your second question about GST, yes. If the government takes the steps to make GST applicable to a company in our situation and other online businesses, then we will take the steps, as we do in every other country, to collect it from our users who purchase things from us.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Is Minister Joly moving in that direction?

[Colin McKay]

I don't think it would be Minister Joly, would it? It would be Minister Morneau. It's up to the government to make that decision.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Up until now there's been talk about how you're not paying the HST, but then you also aren't being covered under section 19 of the Income Tax Act, which if you're not paying HST as a Canadian company, then why should people get a tax deduction for giving advertising? Google has called the questions about paying taxes on these issues of advertising punitive. Are you saying now it's not punitive, that it would be fair?

[Colin McKay]

Number one, we do pay tax on certain of our sales, like hardware and other elements of our sales in Canada.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Yes, I know. That's because you have to.

[Colin McKay]

All I'm saying to you is if the government makes moves to implement legislation that requires us and other online companies to collect HST on behalf of the government, then we will take the steps to comply with that.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Okay.

I notice in the U.K. in 2014 Google's tax was less than $7,000, which is about the average that a U.K. worker pays, and yet you paid out $534 million in bonuses. Your level playing field around the world works pretty well for you.

I want to get into this question about Google's philosophy. I was a big Google believer. When you guys started out I thought this was really awesome. I met Google in New York. I loved that philosophy, “Don't be evil”, but your founder also said that the Google policy on a lot of things is “to get right up to the creepy line and not cross it”.

Can we trust you to decide what's okay creepy, what's too creepy, and what's downright evil, when you're facing a class action lawsuit for illegal data collection? By using the loophole on the iPhone, you've been accused of tracking citizens in real time without their consent. You're facing charges in multiple states. Now there's a complaint about collecting personal information on children under 13 without their parental consent, including location, device identifiers, phone numbers, and their use across different websites. Rather than trusting you to decide what's creepy, shouldn't we just have legislation?

[Colin McKay]

That's why, in my opening remarks, I had a list of tools we have developed that are available to users. You're right. There needs to be transparency around what we're collecting and clarity around why we're collecting it and what benefit it has to the user. Over the years we've learned from our mistakes. We've learned from incidents such as the ones you've cited.

[Charlie Angus, NDP, Timmins—James Bay, ON]

They're not mistakes. These are class action lawsuits. These are charges. If you guys get caught and then you learn lessons, this is the same thing we have from Facebook. If the public policy is to go right up to the creepy line, that doesn't give me much comfort.

[Colin McKay]

The public policy is not to reach a space that is uncomfortable for our users. The policy we have in product development is to develop leading-edge products that provide the greatest range of benefits for our users. There are different rates of adoption and different levels of comfort with adoption.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

Mr. Balsillie, I'm really interested in this discussion on surveillance capitalism. I was deeply against the regulation of Google because I wanted to see it develop. Imagine, me a socialist, and here is an entrepreneur warning us about surveillance capitalism. We are living in an upside-down world.

What concerns me is that in Canada we see Google with their former policy director in the Minister of Canadian Heritage's office. In the United States, Google's patent director is now in the patent office. There are serious questions about the undermining of patent law in the United States by Google because of their enormous power. The Bank of Canada has warned about the power of companies like Google to undermine competitiveness. We see in the tech sector that patent lawyer Michael Shore has said that the U.S. is turning into a “banana republic”, because legislators are rewriting the law to protect the interests of giants like Google. Meanwhile, the U.S. has dropped from first to 12th in global patent strength ratings over the last four years.

For Canada's tech sector, given the very close, comfy, cozy relationship between Google and the present government, where do you see us taking our tech sector in terms of innovation and building a credible relationship with Canadian consumers on issues of privacy?

[Jim Balsillie]

My greatest concern is that I know these partnerships were undertaken without an economic analysis domestically. Quite frankly, we don't know. I know as an entrepreneur that they have deeply negative spillover effects on our innovation outputs. You see that this year Canada slid behind Poland in innovation performance, so we're 22nd in the world, and Poland is 21. Once you're out of the top 20, you're not really considered a credible innovation nation. I would tie our performance directly to the fact that we have not created sovereign innovation positive spillover approaches.

To answer your question, I think we rush into these things. I'm directly aware that they're done with no economic analysis involving no experts on their spillovers. I can't imagine that a business would ever do a partnership without a business case analysis. I think the first thing we need to do is start analyzing the innovation effects of these varying partnerships or relationships and use proper economics, not “lobbynomics”.

The second thing is that competition law and privacy law—as I mentioned regarding Estonia, and the EU is doing some very active competition strategies—work very nicely to the benefits of innovation and the economy and citizenship. They can all work positively together if we approach them with an understanding of their true nature.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Angus.

I was just talking with Jean-Denis. I'm going to push the meeting as close as we can to 11 a.m.. There's another meeting here at 11 a.m.

Without further ado, Mr. Erskine-Smith.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

Mr. Balsillie, you indicated in your opening remarks that you categorized Facebook and Google together amongst other big data companies. Obviously, Facebook and Cambridge Analytica prompted this study, and it was pretty clear to me that sharing the amount of information with third party app developers as Facebook had been doing was contrary to our law. In fact, they were before us and said they didn't particularly agree with that assertion. They did say, though, that it was certainly not appropriate, and they've changed their practices.

Mr. Balsillie, you've put Google and Facebook in the same sentence. Are there particular practices Google is undertaking right now that you would say should be changed, and if so, why?

[Jim Balsillie]

I think there are many practices that should be changed.

One, you have to look at the ethics of the algorithms and how they impact and persuade people's behaviour. You had comments about advertising, and there's been considerable discussion about how algorithms promote certain kinds of divisive viewing on things like YouTube, because the algorithms are designed to get you to watch more, and they nudge you more to extremes the more you watch.

I think we have to properly regulate these things. I think we need proper standards for them. I think you've learned that companies respond after they get caught, and this shows that you need proper and responsible regulation.

It's not the same but it rhymes, in that we heard a lot of these issues in California when they started to legislate for emissions on cars and everybody said that it would be the end of the automotive industry, that you couldn't innovate, and that it wasn't going to be profitable. We now have better cars, less emissions, and record profits from the automotive companies. These things, properly implemented, can all positively reinforce one another. I think there's a very positive societal and capitalist way forward here.