How many times is the CRTC going to get sued over Bill C-11? Well, thanks to Apple and Amazon, that number is at least 3.
The Canadian government was warned that this would happen, but the government ignored those warnings. Instead, they used their own reality bubble to believe that everything was fine and dandy with the Online Streaming Act (formerly Bill C-11). The thing is, reality really doesn’t care what reality bubble you choose to hide yourself away in. Sooner or later, reality is going to bite you in the rear end. That is exactly what is happening to the Canadian government.
The first lawsuit the CRTC got hit with came courtesy of Google. In it, the CRTC basically told Google that any revenue generated by user generated content is subject to the Online Streaming Act tax. That money would then get siphoned off of users revenues and sent directly to the cultural elite in Canada. Understandably, Google had a problem as creators should be on the receiving end of that funding and not some hedge fund run zombie production studio – potentially robbing Canadian creators of revenue in the process. As a result, Google sued.
There was a bit of a lull, but the litigation machine was continuing to turn its gears. This month, we found out a second lawsuit was filed against the CRTC. This came courtesy of the Motion Picture Association (MPA). In that lawsuit, they contend that streamers should not have to contribute to a news fund when its revenues have no shot at benefiting from it. It’s a pretty reasonable argument. After all, the only reason news was brought in in the first place was because of the catastrophic failure of the Online News Act and Big Publishing was simply getting the regulatory captured CRTC to execute ransoming the streaming services through the Online Streaming Act to get their free slush fund. So, a lawsuit was pretty inevitable given how weak the arguments were about news being included.
Today, we are learning that the CRTC has incurred its third lawsuit over the Online Streaming Act. This comes courtesy of Amazon and Apple. The reg-walled article on Cartt offers this glimpse:
Amazon and Apple have filed Wednesday separate challenges at the Federal Court of Appeal against the CRTC’s decision to impose a base contribution on foreign streamers, arguing among other issues that it isn’t equitable because it doesn’t require the same for online Canadian streamers that are part of large broadcasting groups and goes beyond Canadian contributions for audio services. Amazon, which has a video and music streaming service, said the CRTC’s mandated five per cent of annual revenues is contrary to section four of cabinet’s policy direction…
So, there’s multiple reasons for this lawsuit, apparently. One of those reasons is the challenge against mandatory base contributions. This on the fact that they are being charged more than what cabinet instructed the CRTC to do. What’s more, Canadian streamers are basically let off the hook on this and are given an inherent advantage over other streaming services. This is something that has been a long running complaint for streamers and why there is a potential trade war looming as a result. It targets foreign services and is discriminatory against US businesses. So, even in the worst case scenario that the courts dismiss this challenge, there will obviously be the fallback plan of using the US government to sanction Canada.
One thing that is worth pointing out here is that when there are multiple lawsuits, one thing the courts can look at is whether to consolidate the legal action where there is overlap. So far, based on what I know so far, I’m not really seeing any overlap between the lawsuits. Each one is challenging the CRTC in different ways.
That, of course, leads to another thought in all of this. Defending against these lawsuits (which is going to be quite the uphill battle) is going to cost the taxpayers a huge amount of money. In a way, this is rather ironic because supporters of these insane laws were contending how these laws were designed to “support” the legacy Canadian media players without costing the taxpayers additional money. Yet, here we are today seeing the government running up the costs for taxpayers just in all this litigation alone. It was no secret that this was an inevitable outcome as the government was repeatedly warned this would happen, but the government chose to ignore those warnings.
Even after all of this, I don’t believe this is going to be the last lawsuit arising from all of this. The critical flaws in this legislation are numerous and legally questionable in the first place. Whether the next lawsuit comes in the form of challenging what has already been decided at the CRTC or challenging some later decisions yet to come down from the regulator, it would be a huge surprise if this was the last lawsuit that comes out of this.
As I’ve said when this was still Bill C-11, the government passing this legislation, though very tricky with so many perspectives condemning it, would invariably be the easy part. Surviving the litigation that comes afterwards is going to be much harder. After all, in the political realm, evidence and the rule of law can be ignored. Playing politics is a viable strategy. In a court setting, those tactics are invariably going to be much less effective.
At any rate, the problems for the government is continuing to stack up. This recent wave of legal challenges is proof of that. What’s more, it’s unlikely these are going to be the last of the challenges, either, judging by the way things are going. So, something to look forward to in future coverage at the very least.
(Via @Fagstein)
Here’s an equation to explain the online streaming act.
Canadian Culture Cash Grab = Courts, Chaos + Consumer Costs
I like that one. If I had to make one adjustment, it might be to tack on “+ trade wars with the US” at the end. 🙂