We’re continuing to read the submissions sent to the CRTC in the Online News Act consultation. Today, we’re checking out Google’s response.
The CRTC has held its first consultation in the Online News Act. Ordinary Canadians overwhelmingly opposed the law as they express disgust with how much the new law has caused not only to their personal every day activities, but also the damage it caused to the news ecosystem as a whole. For our part, we sent our own intervention explaining in great detail why the Online News Act is a failure and how the CRTC can begin to course correct in the process.
Today, we decided to go through the submissions again now that the process is closed. One of those responses came from Google and you can read the submission yourself here and it provides a noteworthy position on the Act.
Early on in the document, Google made the following comments:
Google’s mission is to organize the world’s information and make it universally accessible and useful.
Google provides a wide array of products, partnerships and programs intended to support the news industry and a sustainable landscape for journalism. First and foremost, our products link people to Canadian news publishers’ websites, sending them valuable referral traffic they can monetize. In 2022, Google sent more than 3.6 billion visits to Canadian news publishers – at no charge – helping them make money with ads and new subscriptions. According to Deloitte, this traffic drove an estimated CAD$250 million worth of value each year. We offer tools such as Reader Revenue Manager and analytics products to enable publishers to easily convert users into paying subscribers, and underlying advertising technology to enable publishers to monetize their content. When publishers choose to use our advertising services, they reach more advertisers, and they keep a vast majority of the revenue that’s generated. We pay out billions of dollars a year directly to the publishing partners in our ad network.
Google is proud to play an important role in the growth of Canada’s news ecosystem.
So, they are pointing out the value they create for news. What’s more, none of what is said here is really all that surprising. A vast majority of websites get a good chunk of their traffic from Google’s search services. This is because publishers submit their site and additional information to Google in the hopes of getting more traffic. What’s more is that a number of sites typically have a Search Engine Optimization (SEO) strategy to ensure that their results are more visible. No one would be doing this if they didn’t get value from such activity to say the least. Everyone in the web business knows that higher Google search rankings generally equates to more traffic over the long term.
What is particularly interesting in this excerpt, though, is that an actual value was placed on the linking they provide. this is generally quite important information when discussing what value Google provides these publishers.
Google went on to offer these comments:
By establishing linking to news sites as the basis for payment, the Act fails to recognize that the public’s ability to freely find and share links to news content online is critical to free expression, access to information, press freedom, and an informed citizenry. Put simply, it is foundational to how Canadians enjoy the free and open web. Putting a price on free linking to news content is not in the interest of Canadians, nor is it an effective response to the complex challenges facing the evolving Canadian news ecosystem.
The entire framework of final offer arbitration results in an unwieldy process that cannot effectively function, is heavily weighted in favour of the news businesses, and does not appropriately account for the value of traffic provided by Digital News Intermediaries (DNIs), nor provides any overall cap on liability so that businesses can appropriately understand their financial exposure.
So, really pushing back against the link tax concept that is envisioned in the Online News Act. It’s an important reminder that Google isn’t necessarily happy with the link tax law.
The comments about how there is no liability cap is interesting because this is something that Google has long argued throughout the legislative process (and was foolishly ignored by lawmakers which cost publishers access to Meta platforms). Why these comments are so interesting, though, is because the Canadian government folded to Google last year, giving in to the fund model that was originally asked for. So, a $100 million fund model has already been established, yet, here is Google pointing out the lack of a liability cap here again.
One topic that Google covered was the topic of undue preference:
Q21. Should the Commission provide guidance on specific types of undue preference, disadvantage or discrimination that would be prohibited? If so, should this guidance focus on remuneration for online news content or participation by an eligible news business in the bargaining, mediation and arbitration processes? What other conduct should be targeted specifically, if any?
Google submits that the Commission must provide guidance on the specific types of undue preference, disadvantage, or discrimination that are prohibited. “Undue Preference” is a concept built for traditional broadcast models, not today’s open web. It creates the risk of liability for the basic function of ranking content and it would impact our ability to elevate authoritative information in Search results, preventing Google and other platforms from prioritizing trustworthy sources of information over bad actors. This makes Search less useful and less safe for Canadians.
The requirement in Subsection 52(2) of the Online News Act sets out the factors the Commission must consider when deciding whether discrimination, preference or disadvantage is undue, including whether it was in the normal course of business, retaliatory, or consistent with the purposes of that Act, as well as any other factors considered by the Commission in making its decision are helpful. We believe that this requirement should be made clearer, to ensure that ordinary course content ranking decisions are entirely out of scope of this provision. Providing specific guidance on precisely what acts are prohibited would ensure all parties have clarity around how to operate their respective businesses.
As a complaint-based process, clarifying this provision would help ensure that neither the Commission nor DNIs incur unnecessary costs to defend such claims, including providing all parties with much needed guidance on when the Commission would find a claim to be vexatious or made not in good faith.
So, really going after the inner workings of the Act and trying to seek clarity on what the heck “undue preference” ultimately means. If one source is ranked over another, then does that qualify as “undue preference” or not? Google ultimately is seeking clarity on that front and, as far as I can tell, is a totally fair question to be asking.
Another topic that was interestingly covered was accountability of publishers who receive free money from this link tax scheme. As far back as when I was making my submission to the senate about this then called bill, I was advocating for a level of financial transparency in this process. How do we know that the free money received by publishers wasn’t going to the “feed the poor starving CEO” fund? Simply put, it amounts to a blank check to the large media companies. My argument was that publishers should be laying out how they intend on spending that money and show that they are actually using it to fund journalism activity.
You can imagine my pleasant surprise when I saw that Google is now advocating for this very same transparency:
Q25. What data should eligible news businesses be required to provide to the Commission on an annual basis in order to facilitate the auditor’s report and fulfill the Commission’s other duties? Please explain what it would represent and how it could be compiled or calculated by the entity providing it.
Eligible news businesses should provide the Commission with information on their full-time equivalent employees who, in the previous calendar year, were employed by each news business for the purpose of producing, for news outlets operated by that business, original news content that is intended to be made available online. This information must also include supporting information for why those employees were included in this categorization, at minimum an explanation of their role category.
To best position the Commission and the auditor to have a clear picture of the impact of this compensation, eligible news businesses should also be required to produce information related to expenditures. In specific, they should be obligated to report to the Commission a breakdown of how it uses any funding received by way of this Act or any related process.
A single collective, selected to administer funds provided under the process, should provide the Commission with full information on which news publishers have received funds and the amounts they received. It would be appropriate to have the single collective also provide information about the nature of any allocation decisions it had to make or how it elected to adjudicate disputes among its members.
Google seems to have taken a somewhat softer stance where publishers should only be required to say where they plan on putting that money. I personally think it should be a requirement for publishers before they receive that funding. Still, it’s fascinating to see an idea I had come up with a while ago make an appearance in a major submission like this.
I know my idea was more or less dismissed as silly, but ignoring this idea of accountability has already come back to haunt lawmakers. This came in the form of Bell shipping their ill gotten gains to increased dividend payments while slashing 9% of its workforce. Having that level of accountability would’ve helped to avoid this situation – even adding that to the bailouts they were shovelling to these very entities. It’s that very situation that my idea aimed to avoid. Since it was ignored, we found ourselves in that very situation which led to anger from the government and a subsequent hearing where Bell simply chose to play games with lawmakers on top of it all.
So, at the very least, this is a rather interesting document that adds a bit of clarity of where Google is at with this whole situation. Obviously, the CRTC is more or less the poster child for regulatory capture in Canada, so the chances of them listening to anyone other than the Canadian conglomerates are quite low. Still, Google is making their side known here.
On a side note, we’re not seeing any response from Meta. This likely provides a further signal that Meta considers this issue closed. This after they dropped news links in Canada. It’s not exactly surprising to see that they didn’t respond because their pullout should tell you everything you need to know about what they think of the Canadian link tax.
Money is fungible, so trying to report how link tax funds are spent will be an exercise in futility. Recipients will simply go through their financial statements and pick out increases in expenses and decreases in revenue that add up to the funds received.
Furthermore, they will point out that they have to cover any increases in rent, interest, business taxes, etc and any decreases in ad and subscription revenue before they can spend more on journalists.
A better solution is requiring recipients to disclose their financial statements along with some key metrics like the number of journalists and the amount of executive compensation. This would provide a more complete picture of their operations.