Bill C-18, the Online News Act, aka “An Act respecting online communications platforms that make news content available to persons in Canada,” has been passed by the House of Commons and Senate and signed into law.

Now, finally, after desperate demands from Canada’s news media, big tech companies like Meta (Facebook) and Alphabet (Google) will be required to compensate them for use of their news content.

Except, no.

Instead, Meta has already announced that it will choose to block access to Canadian news content on its platforms (including Facebook and Instagram), as it said it would do when the bill was working its way through the legislature. Google has done the same after failed talks with the government. Both have already begun tests of how they would accomplish this, though it’s not entirely clear how they will implement such blocking when they go ahead with it.

On top of that, both have announced that they will end existing programs that help fund news media, including a Facebook deal with The Canadian Press and the Google News Showcase.

This clearly is not what the government or the news media want. Heritage Minister Pablo Rodriguez says the government needs to “stand up for Canadians against tech giants,” while just about every media outlet has issued a statement accusing Meta and Google of censorship.

But while politicians are pointing fingers at each other, perhaps it’s well past time to ask a very simple question:

Why does this law exist, exactly?

In other words, what problem is it trying to solve?

The preamble to the bill says it “regulates digital news intermediaries to enhance fairness in the Canadian digital news marketplace and contribute to its sustainability.”

But why is it unfair?

In all the debate about the bill, it seems its proponents’ arguments can be distilled down to two simple concepts. Let’s tackle them one at a time.

Google, Facebook et al are stealing or making unauthorized use of news content

I found it interesting that in a lot of the arguments, they carefully navigated around the use of the terms “stealing” or “theft” and toward vague terms like “using” or “profiting from” or “making available.”

Perhaps because what they’re doing isn’t stealing content. If it was, there would be a lawsuit, not a new law.

There are some things that Facebook and Google (and other similar platforms) do that might cross the line into copyright infringement:

• Providing excerpts of news stories when linking to them
• Republishing preview images along with those excerpts
• In Google’s case, caching web pages

But if these were truly the concerns, there are other remedies. Both Facebook and Google offer universal opt-outs for these if a page does not want to be indexed. Not only do news providers not do this, they very clearly do the opposite, deploying great efforts to ensure their pages are as highly ranked on Google searches as possible, and manually or automatically posting links to their content on Facebook.

What’s more, news outlets are not the only people who produce content. If this is a copyright issue, why aren’t all media creators being compensated in the same way? Why does news get special treatment?

Perhaps there’s some other logic behind the idea that tech giants are “stealing” or otherwise wrongfully making use of news content, an argument that only applies to news content but not any other type of content, and that requires a new law. But in the months I’ve been following this bill, I haven’t seen that argument articulated.

And if that was the argument, then the news outlets should be happy that these tech giants found a solution: They will just stop using that content.

Google and Facebook have too much market power

The other argument brought up, especially now by news outlets that want the government to step in and do something about the tech giants, is essentially an antitrust one. Google is a near-monopoly when it comes to search, and Meta owns the largest social network — in fact, it owns the four largest social networks that are not strictly video-based. Together, they have a huge part of the online ad market.

There is a legitimate argument here, one that should probably have been explored more thoughtfully when Google bought YouTube or when Facebook bought Instagram. They’ve gotten so big now that some pundits are suggesting they are no longer afraid of governments or their laws (I don’t think that’s true, neither have suggested they would refuse to comply with the law no matter how much they disagree with it or lobby against it).

But once again, how does this affect news media in a way that it somehow doesn’t affect everyone else? How does getting them to sign cheques to media corporations fix the problem of too much market power?

I’m going to propose there’s a third argument, a more accurate one, that the media outlets are hiding behind the other two:

Their business model is killing our business model

Google and Facebook are responsible for the vast majority of online advertising these days. It’s a serious problem, and a big talking point used to make the previous argument. But would news outlets be that much happier if the ad market was instead split more evenly between other tech platforms, or if Google and Facebook’s market power were lessened through forced breakups into more independent platforms? Not really, unless they happened to own some of those platforms.

I know it feels unfair. Big tech and social media platforms get a lot of breaks. They don’t have to moderate their content, they don’t have to take responsibility when someone uses their platforms for evil, and they don’t have to make guarantees about safety like physical industries do. They don’t even have to produce content themselves, just leeching off the work of others. There are some very real issues that need to be looked at by governments.

But the legacy news media going after Google and Facebook because they make money off sharing links is like radio going after television for stealing their sponsors and evening audiences. You don’t have a legally-enforceable right to your business model.

I’m not a dispassionate bystander in this fight either. My employer is one that would stand to benefit financially from this bill. And I don’t include myself in that horde of people who believe that large newspapers can just die because I’ll get all my news from Twitter instead.

But this is a bandage solution that doesn’t solve the real problem. And creates a few of its own.

Problem 1: Who qualifies as a “digital news intermediary”?

The biggest issue in this law is applicability. Who qualifies on either end of this equation?

On the tech side, it applies to any “digital news intermediary” that makes news content available in which “there is a significant bargaining power imbalance between its operator and news businesses.” The bill helpfully defines what making news content available means:

(a) the news content, or any portion of it, is reproduced; or

(b) access to the news content, or any portion of it, is facilitated by any means, including an index, aggregation or ranking of news content.

The first criterion is pretty simple, though “any portion” isn’t specified. Is it a portion beyond what is considered fair dealing in the Copyright Act? The bill seems to imply not, since it says Copyright Act exceptions don’t limit the scope of deals between tech giants and news outlets. Does it include just headlines and links? Does it include properly attributed quotes? Does it include paraphrasing? Does it include where the owner of the news content explicitly consents to it being reproduced by posting it themselves?

The second criterion is very vague. Does it include all links to news content? Or is it just when news content is excerpted? What constitutes “facilitated”? If you’re an “online communications platform” with significant market power that isn’t explicitly exempted from the law (broadcasters, telecom services, private messaging services) and you “facilitate” access to news content in any way, do you have to reach a deal with news outlets too? The bill says it includes indexes (like Google) and social media (like Facebook) but otherwise leaves it open-ended.

For example, Wikipedia bases most of its articles on primary sources like newspaper stories. If it “facilitates” access via links or paraphrasing the content of news stories, will Wikipedia then have to compensate news organizations?

The law provides for exemptions where an intermediary “has entered into agreements with news businesses that operate news outlets that produce news content primarily for the Canadian news marketplace.” But how many news businesses? All of them? A majority? One? It’s unclear.

Problem 2: Who qualifies as a news outlet?

Until recently, the idea of a journalist or a news outlet wasn’t really codified in the law. This was by design: anyone should be able to practice journalism or disseminate news. It’s part of freedom of expression. In practice, limits have been imposed (on who can be a Parliamentary Press Gallery member, for example, or who gets access to the press box during hockey games), but legally there hasn’t been a distinction between journalist and non-journalist.

The pandemic, and emergency aid to journalism organizations, changed that. The federal government, in order to distinguish who gets funding or tax breaks, created the concept of “qualified Canadian journalism organization” to establish who can qualify.

That definition has a lot of restrictions:

1. Crown corporations are not eligible
2. The organization must be Canadian, and legally organized as a corporation, partnership or trust in Canada, with the chairperson and at least 3/4 of the directors Canadian citizens
3. The content must be “designed, edited, and, except in the case of digital content, published in Canada.”
4. The organization must produce original news content on an ongoing basis (this definition is intentionally vague)
5. The news must include “facts and multiple perspectives actively pursued, researched, analyzed, and explained by a journalist for the organization; and produced in accordance with journalistic processes and principles.”
6. The news must reveal facts not previously known by the public
7. The news content “must be primarily focused on matters of general interest and reports of current events, including coverage of democratic institutions and processes.”
8. The news content “should be diverse and include a variety of content such as local news, national news, international news, social issues (such as health, education, faith and ethics), business and economy, sports, culture, science and technology, and the environment.”
9. The organization cannot produce content “focusing primarily on industry-specific content”
10. The writing, editing and formatting must be conducted “by and for the organization.”
11. The reporting must (should?) be “based on first-hand knowledge” of an event.
12. The content must not be translated, reproduced or aggregated from “external sources” including other news organizations or press releases.
13. The organization must commit to “researching and verifying information before publication”
14. The content must provide consistent rebuttal opportunities and alternate perspectives
15. The organization “cannot be significantly engaged in the production of content” that promotes its own interests or those of an association or its members.
16. The organization must regularly employ two or more journalists (full-time or part-time but not freelance) “who deal at arm’s length with the organization in the production of its content.”
17. Those two journalists can’t be related to the employer by family, marriage or common-law partnership.
18. The organization must apply for certification and then re-apply if there are any organizational changes.
19. It’s up to the minister to determine who qualifies, and the minister can revoke that certification.

The Online News Act provides to other ways for a news outlet to qualify for this compensation:

1. If it “produces news content of public interest that is primarily focused on matters of general interest and reports of current events, including coverage of democratic institutions and processes,” and satisfies three other criteria of QCJOs and one new criterion:
   1. employing two unrelated journalists,
   2. operating in Canada,
   3. producing news content “not primarily focused on a particular topic,”
   4. being a member of “a recognized journalistic association and follows the code of ethics of a recognized journalistic association or has its own code of ethics whose standards of professional conduct require adherence to the recognized processes and principles of the journalism profession, including fairness, independence and rigour in reporting news and handling sources.”
2. It “operates an Indigenous news outlet in Canada and produces news content that includes matters of general interest, including coverage of matters relating to the rights of Indigenous peoples, including the right of self-government and treaty rights.”

So for non-Indigenous outlets, the easiest way to qualify is through #1 above. These criteria would exclude things like (a) strictly family organizations, one-person organizations and organizations that rely solely on freelancers, (b) foreign organizations, (c) special-interest publications, and (d) those who are not part of an association like a press council, unless they want to try to qualify as a QCJO.

Why these exclusions? Why does a one-person news organization not have the right to be compensated for the “use” of their content? Why does Google and Facebook get to freely “make available” their content without compensation?

Also, what does “not primarily focused on a particular topic” mean, exactly? Does this mean that publications like The Logic, The Hill Times or The Hockey News are ineligible? If so, why? If they employ journalists and follow rigorous codes of ethics, why do they get excluded from this?

And on the other hand, these criteria could be considered too broad for some. Does it include professional blogs, or all those websites and Facebook pages out there that post clickbait content? If they can argue that they qualify, who is going to stop them? And is it right for them to do so?

Probably the biggest problem with all this is that there’s no real process to ensure organizations are respecting these rules. The minister just has to say they are and they qualify. So if a major news organization ignores ethics codes, or very clearly manipulates news stories to match self-interest, or systematically suppress alternative viewpoints, or gets most of its news by regurgitating paraphrased press releases, who will ensure they have their status revoked? The minister?

The most likely answer is the CRTC, which is given the task of administering the day-to-day of all this presumably because it’s the closest thing the government has to a media regulator. But as this Globe and Mail editorial points out, the result would be the CRTC effectively deciding who is and isn’t a legitimate news outlet for the purpose of these agreements. And if these agreements are critical for a publication’s survival, it means the CRTC would become a de facto regulator of newspapers and online news websites, with the power to effectively kill them if they don’t like how they do their journalism. Is that something we really want?

Problem 3: How many deals do we have to sign?

Rather than talk numbers, the law encourages (and if that fails, forces) the big tech companies to reach agreements with news providers over the “use” of their content. It’s a convenient way for the government to kick the can down the road and pretend it’s found a market-based solution to the problem.

This kind of arrangement has some advantages. But the biggest drawback here is that it requires every news outlet to reach separate deals with each “intermediary” company. That sounds like a great solution for lawyers, but not so much for the little guy who would have to negotiate one-on-one with companies we’ve already argued have too much market power as it is.

The law establishes that news providers can come together to negotiate without breaking competition law. But it’s a big assumption that they would do so in a proper way, and such a group would be reasonable in its criteria for admission when restricting membership might be in its own self-interest.

Large media organizations like Postmedia, Quebecor, Bell Media and the CBC will probably be the first to reach deals. But how long for the Winnipeg Free Press? Or The Suburban? Or The 1019 Report? And what if Facebook and Google decide they can’t be bothered negotiating deals with smaller publications so will only share news content from the big guys they’re partnered with?

Problem 4: How do you arbitrate this?

If the deal-making fails, the law provides for binding arbitration regulated by the CRTC. Arbitration, in which a neutral third party imposes an agreement on two disputing parties, makes a lot of sense in certain situations, like labour disputes.

But arbitration works where there are clear principles and precedents to work from. Here, the most contentious deal would be the first one, and there isn’t a lot of precedent to go on.

The law provides for the following factors to be considered by arbitrators:

1. the value added, monetary and otherwise, to the news content in question by each party, as assessed in terms of their investments, expenditures and other actions in relation to that content;
2. the benefits, monetary and otherwise, that each party receives from the content being made available by the digital news intermediary in question; and
3. the bargaining power imbalance between the news business and the operator of the digital news intermediary in question.

Those aren’t bad factors, but as we’ve seen from the arguments laid out, there is a very wide disparity in how the parties evaluate how much value each gets from news content. An arbitrator would have to sort that out.

Even worse, the law provides for final offer arbitration. FOA is a method whereby, instead of figuring out each clause of a proposed contract and what would be most fair, the arbitrator looks at both offers and picks the most reasonable one in its entirety. The advantage is that it gives both parties a strong incentive to be as reasonable-looking as possible. The disadvantage is that if both sides are far apart, it creates a lot of uncertainty on which way the decision will go.

Google says it wanted to have some sort of upper limit on how much it would have to pay news media, and the government refused to give one. No business is going to agree to a potentially limitless drain on their finances.

Problem 5: Who really benefits more?

The entire basis for this law is that Facebook, Google and other websites are parasites that benefit from professional news media. The logic is that without major news organizations, those websites would lose most of their value. Therefore, they should pay up.

But Facebook and Google have both argued that this is not true at all. Instead, they are the ones who provide a significant amount of traffic to news websites, and the impact on them from blocking such links would be minimal, while the impact on the news media would be significant.

We know a large part of traffic to news media comes from social media and Google. More so than other methods. And just take a look at your Facebook feed to get an idea how much of it comes from professional legacy news media. Maybe more than most if you’re a follower of this blog. But is it a majority? Would Facebook really be useless if it disappeared?

There are still plenty of cat videos and acquaintances’ vacation pics to go around. And as for Google, it still has Wikipedia and YouTube to fill its search results pages.

The Australian model

The Online News Act bases itself off the News Media Bargaining Code, an Australian law that also wants big tech to pay news media. The law’s proponents argue Australia’s experience was successful, and that Facebook and Google took a hard line in Australia but eventually decided to pay up, so we should conclude that their current stance is also a bluff.

They point out that a government review has already deemed the code a success and dozens of news companies are signed up.

I’m not so sure.

One difference between the Canadian and Australian models is that in Australia, the government can decide whether to apply the law to a particular web giant. After Facebook reached deals with media outlets, it decided not to. In Canada, there’s no such flexibility, so it automatically applies.

I’m not sure how important that distinction is, but it’s clearly enough for the web giants to stomach what’s going on in Australia.

Perhaps the Online News Act can be modified, or the minister use his powers, to reach some sort of compromise, a workable though imperfect set of deals like they have in Australia. But so long as people have deluded themselves into thinking that Facebook and Google are stealing news content because they need that content to survive, they’ll continue to be convinced that those big companies are bluffing and if we just wait a bit longer, they’ll eventually fold.

And who knows what kind of damage the news will suffer in the meantime.