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October 7, 2022

Canada’s Online News Act will force Google and Facebook to pay out $329.2m a year, parliamentary report finds

By William Turvill

Google and Facebook could be forced to pay out CA$329.2m a year to Canada’s news publishers after the country passes its Online News Act, according to a new government estimate.

The total, equal to £214m, would cover around 30% of publishers’ editorial costs, a report from the Office of the Parliamentary Budget Officer (PBO) said.

Canada looks set to become the second country after Australia to pass a law forcing certain digital platforms to negotiate cash-for-content deals with news publishers.

Estimates suggest that Australia’s News Media Bargaining Code has resulted in Google and Facebook paying out more than AU$200m (£115m) a year to publishers.

Press Gazette has estimated that a similar law in the UK could lead to publisher payments worth more than £170m a year, or £250m-plus if broadcasters are included, as they are in Australia and under Canada’s plans.

Canada’s legislation, Bill C-18, is currently making its way through Ottawa’s House of Commons. The news industry hopes it could pass into law this year, but it could be delayed until 2023.

The law would seek to force Google and Facebook, now known as Meta at a corporate level, to negotiate “fair commercial deals” with Canadian news companies. It would allow publishers to negotiate collectively, and threaten the technology giants with arbitration if deals are not struck.

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The PBO published its costs estimate report on Thursday.

“The PBO estimates that the Online News Act would provide about $329.2m per annum to news businesses across Canada,” it said.

“It also estimates that news businesses would spend about $20.8m in transaction and compliance costs to conclude their first deals.

“It would be more expensive for smaller businesses to negotiate and comply with the legislation because most would need to hire external expertise, while for large companies, internal capacity likely already exists.”

Google said in a statement to the Canadian media that the estimate “appears to be grounded in a set of assumptions and talking points, with no basis in the legislation itself, the facts of the news industry, the realities of digital advertising or our current value exchange with news publishers”.

Facebook believes the Online News Act does not recognise “value exchange runs in favour of publishers and misrepresents the relationship between our platforms and publishers who choose to post news to reach subscribers and monetize their content”.

Paul Deegan, chief executive of News Media Canada, said the $20.8m estimate for publisher costs “sounds quite high”.

He said: “These are relatively straightforward content licensing agreements. Beyond being in a stronger bargaining position, one of the other benefits of allowing publishers to negotiate collectively is that expenses related to negotiation would be shared across a large group of publishers.

“The need for this legislation is urgent, and we call on Parliamentarians to pass it before the Christmas break.”

Photo credit: Reuters/Peter Power 

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