Front Burner - How the Google news blackout was avoided

Episode Date: December 1, 2023

On Wednesday, the federal government announced an agreement with Google over Bill C-18: The Online News Act. The tech giant had threatened to limit Canadians’ access to news on its platforms — similar to the one Meta imposed. Under the deal, Google will pay news companies $100 million annually. But is it enough? Who got the better deal? And what does it mean for the future of journalism in Canada? Alfred Hermida, a digital media scholar and professor at the UBC School of Journalism and the co-founder of The Conversation Canada, explains. For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts Transcripts of each episode will be made available by the next workday.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Damon Fairless. Earlier this year, Meta blocked Canadians from sharing and accessing news on Facebook and Instagram. It said it would, and now it's pulling the trigger.

Meta, parent company to Facebook and Instagram, has begun blocking news content to Canadians, a process it says will take weeks. As the wildfires spread, Ottawa is now calling on Facebook's parent company, Meta, to lift its Canadian news ban, with some calling the ban during an emergency dangerous. Canadians need to be able to access news. It's fundamental to our democracy. We're not going to put up with Facebook's bullying. The move came after a dispute over Ottawa's Bill C-18, the Online News Act. Among other things, the legislation forces the biggest of the tech giants

to pay Canadian media companies for linking to their content. For a while, it seemed like things would get worse, as Google threatened to follow Meta's lead. But when the ban would come into effect, and what it would look like for the world's most popular search engine as Google threatened to follow Meta's lead. But when the ban would come into effect, and what it would look like for the world's most popular search engine to limit news results was anyone's guess. Well, this week, after months of speculation and worry, a deal was reached.

There is a resolution tonight in the showdown between Ottawa and tech giant Google. After months of threats and a looming deadline, a new deal to keep Canadian news on Google. This is a historic development. It will establish a fairer commercial relationship between digital platforms and journalism in Canada. Today we'll be talking about what's been agreed to, who's come out on top, and what this all really means for the future of journalism in Canada. Here with me now is Alfred Hermita. He's a digital media scholar and a professor at the UBC School of Journalism. He's also the co-founder of

The Conversation Canada, a digital journalism organization. Hey, Alfred, thanks for coming back on FrontBurner. It's my pleasure. Okay, so let's start with this deal. Can you just kind of lay out what the major highlights are for me? So this deal brings to an end a dispute between Google and the federal government over the issue of paying for links related to the Online News Act. Google was opposed to the act because it was mandating them to pay for links that appeared on search, that appeared on their other services. And their main concern was that

it was an uncapped liability. And so they were arguing, we want some clarity around the legislation, and we want to make sure that it's not just like Google is a bottomless purse for the media. But really what this boils down to is about regulation, because what the Online News Act was doing effectively was regulating how platforms like Google and Meta should be operating, particularly related to journalism. And now they've found a way out, which really is a way that both Google can claim victory and also the federal government can claim victory. Yeah, and I want to go into those claims of victory in a bit. But before we do that, can you remind me, what did the Canadian government say

about why Google and earlier why Meta should be compensating Canadian news organizations? What was the rationale there? Well, the Online News Act came about through lobbying efforts by the news industry. What's happened over the last couple of decades is advertising has moved online. So you had a situation, particularly in print media, where 30 years ago, you could have profit margins of 30%. Now those classifieds, those ads for cars, real estate, all of that has moved online. And you have a situation where Google, Meta, and to a certain extent, also Amazon, control more than 80% of the digital advertising market. And so the news industry are arguing, we need some of that revenue back. The Online News Act was an attempt to redistribute some

of that revenue and support the journalism sector in Canada. Nearly 500 media outlets have closed their doors. Thousands of journalists have lost their jobs, and that represents a lot of information that has not been covered by journalists in different regions of the country. All over the world, governments have set up systems to try to establish a more level playing field between tech giants and news organizations, which are essential in our democracies. When we're talking about the Online News Act, too, it's synonymous with Bill C-18, just to remind folks. Okay, so under this deal, what does Google have to do?

And what does the federal government have to do? What are the parameters? Well, this sets an amount that Google has to provide annually to the news industry. Google will be compensating our news organization with $100 million annually, and it will be indexed to inflation. But the devil is always in the detail. Originally, the amount was supposed to be much higher. At one point, the federal government was talking about $170 million. Other estimates to be much higher. At one point, the federal government was talking about 170 million, other estimates put it much higher. So there's money that's going to go from Google to the news industry. But Google has got significant concessions over how this is going to

work. One of the things that we're concerned about is having to do individual deals with lots of different news outlets. And then if these news outlets weren't happy, they could go to arbitration. That is not going to happen. Essentially, they're going to make, they've said, we will make a deal with one body representing the news industry. And then it's up to the news industry to figure out how that money is distributed. So in a way, they've avoided having to go into all these deals and possibly been open to a long, lengthy process involving the CRTC and all the regulation that comes with that. But the other thing to point out is that before this came into effect, Google was already supporting the news industry in Canada,

as well as providing training and services. It also was providing cash. It had funded 150 publications through its Google Showcase initiative. So in some ways, while the top line figure is $100 million a year to the news industry, it's not all new money because some of it was already being provided to news publications through previous deals that Google had made with the news industry. So just to clarify that, the $100 million that we're hearing about, that isn't in addition to the previous contribution to the journalism industry in Canada. That includes that compensation. Yeah, exactly. What happened when the Bill C-18 came in

and the Online News Act became law, what Google did, they essentially cancelled all those commercial deals and threatened to pull news from their services. So since the summer, the money that would have flowed into the news industry from Google simply stopped. This, in a sense, is making up for some of that loss. And I think that's the key thing here is that Google has a long history of investing in media, in journalism, but it wants to do it on its own terms. And I think that's one

of the key issues with the Online News Act. This was a government-mandated scheme to force the platforms to fund journalism. And both Meta and Google, before the Online News Act came to effect, had had different schemes supporting journalism, but they wanted to do it on their own terms. So if it isn't an issue per se of money, it's an issue more of regulation, as you point out. Why? Why are they balking at regulation? Well, both Meta and Google have a long history of trying to avoid government oversight, particularly when it comes to how they make decisions about news information and other content on their platforms. In online spaces, these platforms want to be able to do what is in their commercial interest. And so with Google, we have a long history of essentially it making

these deals where it will say to the French government, the Belgian government, the Australian government, we will make our private deals, we will fund some journalism. But on the flip side, we avoid regulation. And a similar thing happened in Australia. And this is where you really get into the weeds of how this legislation works, and how these platforms are looking for the loopholes, where they can basically essentially pay their way out of regulation. So just to recap, the federal government had asked or had wanted Google to pay a compensation that was closer to $172 million. They settled for $100 million. And despite that smaller amount, Pascal Saint-Ange, the Canadian Heritage Minister, was framing this as a big win for the government.

This is the first time that a transparent system has been created. Many doubted that we would be successful, but I was confident that we would find a way to address Google's concern and make sure that Canadians would have access to news in Canada on their platform. This is a historic development. I guess I'm trying to figure out, is there a winner here? Well, I think the winner here is both the journalism industry in Canada and Canadians themselves, because the threat by Google to withdraw news from its services, effectively, that would mean disappearing from the internet. And we already saw the impact from

Meta making the decision in the summer to take news away from Facebook and Instagram. Many news sites were saying they've lost anything but 10, 20, 30% of their visitors overnight. So the stakes were incredibly high here, both for Canadians and for journalism. So from that point of view, it is a win here for the government, but it's a win on a problem that it created itself through the Online News Act and ended up having to compromise and really agree to essentially Google's terms on how this would work. But we should point out Canada is not the first country to strike a deal like this with Google. We've mentioned Australia. There's also Germany. Can you give me a sense, how does this deal that the Canadian government's reached with Google this week compare to some of

the other deals internationally? Well, the legislation Bill Bill C-18, was based on what Australia introduced a few years ago. Again, same kind of idea, having the platforms pay for links, pay the news industry. In the end, what happened in Australia is the legislation is on the books, but there's a thing called designation. And what that means is the Treasury has to decide who this legislation applies to. means is the treasury has to decide who this legislation applies to. The government said to the platforms, if you make your own private deals with the news media, we will not apply the legislation to you. So what happened in Australia is they made their own private deals. Google made a whole bunch, Facebook made slightly less. And because the platforms didn't make their own deals, effectively, they were exempt from the legislation. So you have the situation where

Australia has a law that would force the platforms to pay for news, but the platforms aren't covered by it. So it becomes more of an incentive for them to give money to journalism to avoid being regulated. And in a way, what's happened in Canada is very, very similar. So they're paying their way out of the legislation while looking as though they're adhering to it. And this is exactly what's happened in other countries where you've had governments talking about legislation. What they've sought to do is to make deals with industry bodies and with the news industry to essentially say, look, we've already solved the problem. You wanted us to support journalism. We're supporting

journalism. There is no need for legislation. And in some ways, I think Canada was always this testbed for the relationship between Google, government, and the news industry. And now with what's happening in Canada and what's happening in Australia, we're really seeing a template for how Google wants to operate. It is happy to spend $100 million to basically avoid being covered by the laws of the country.

So we've been talking about Google, but there's another big player here, which is Meta. Where does this leave Canada and Meta on our Facebook? It's said that in response to what's happened now that nothing has changed. It still opposes this legislation. It doesn't want to be mandated by the government to pay for news. So it's quite happy to keep news off its platform. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here.

You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income. That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Okay, so there's a number of questions about this deal that are yet to be

answered. We won't have all the details until the regulations are released ahead of the bill's launch later this month. But from what you've seen so far, how do you think this could impact players in the news industry, both big and small? I think we can look to what happened in Australia. It was left to the platforms to pick winners and losers. And in Australia, what happened is it heavily benefited mainstream media. It also benefited the ABC, the equivalent of the CBC, but also it really heavily benefited Rupert Murdoch, which dominates the news media in Australia. So that's one of the questions here. The Heritage Ministry has said that the money should be spread across the news industry, that it should support independent news outlets, that it should support indigenous and official language minority communities. But at the same time, the funding is going to be distributed based on the number of journalists.

time, the funding is going to be distributed based on the number of journalists. And that will benefit something like CBC far more than a new digital-born startup in BC has one or two journalists, they're still building up the business. And arguably, they need the money more than CBC or other large media does. And I think that was one of the flaws of this legislation from the start. It really wasn't geared up at saying, what is the type of journalism we need in Canada? What are the type of organizations we need in Canada? And what are the communities they need to serve? Essentially, very much from the get-go, this was legislation designed to prop up legacy media, to make up for the shift of advertising from print and broadcast to digital. And in Canada alone, there have been 150 digital-born startups since the year 2000.

Most of them are still up and running. And often what these small local news outlets are trying to do is they're filling the gaps left by commercial media. They're going to communities where commercial media decided, we're not making enough money, we will close our local community newspaper or our local daily. They're trying to change the way minorities have been reported, change the way indigenous communities have been reported.

And the Bill C-18, the Online News Act, was never intended to try to foster sort of these new shoots of journalism and revitalize the Canadian journalism system. Essentially, it always was about propping existing media. And that's one of the questions now, who will get the 100 million? How much will that go to existing legacy commercial media who are struggling to make their commercial model work? How much of it will go to fostering these new entrants that essentially are building the future of Canadians' journalism? So if this money is basically going to bolster the status quo, if I'm understanding what you're saying, what does this $100 million really mean for the news industry?

Will it make any difference at all? $100 million sounds like a lot of money, and it is significant. But we have to put it into context by putting in the numbers. So Google makes $6.7 billion from advertising in Canada. $100 million accounts for about 1.5% of its digital ad business. So from Google's perspective, it really is a very small cost to get the government of its back. How much difference will it make to the news industry? Well, this will be going to broadcast newspaper and digital. The newspaper industry in Canada alone brought in $2 billion of revenue. So again, the $100 million would really make a difference if you're looking at small digital-born news outlets in local

communities. That's what would make a difference. If you're a large broadcaster or a large newspaper chain, a share of that $100 million will matter. It'll make some difference, but it won't have the same impact as if it was applied to smaller outlets that are struggling to make ends meet. Okay, so finally, before I let you go, I just want to ask. So the government's saying that the Online News Act is basically about leveling the playing field between the tech giants and news organizations. Is it succeeding at doing that? What do you think it's going to achieve in the end? I think the problem with talking about this is leveling the playing field is that that playing field is so uneven to start off with. So it is a band-aid to the news industry. It is welcome support, but it does very little in terms of building up a

sustainable news and information infrastructure for the future. And it does very little in terms of building up a sustainable news and information infrastructure for the future. And it does very little in terms of reining in the power that platforms like Google and Meta have in terms of running and controlling how Canadians learn about the world, how they communicate with each other, and how they get the news that they need in their communities. All right, Alfred, thanks so much for talking with me about this today. Thank you, Damon. That's all for today. FrontBurner was produced this week by Rafferty Baker, Shannon Higgins,

Jyotish Shagupta, Lauren Donley, and Derek VanderWijk. Sound design is by Mackenzie Cameron and Sam McNulty. Music is by Joseph Shabison. Our senior producer is Elaine Chow. Our executive producer is Nick McCabe-Locos, and I to cbc.ca slash podcasts.