Canada Is Going to Make Big Tech Pay to Support Its Flagging Media Industry

Canada seems very likely to pass a law making companies like Facebook and Google pay to support the country's struggling media economy.

LEGO Batman himself, Will Arnett (C), celebrates #InternationalLEGODay across Toronto as he visits Google on January 28, 2019 in Toronto, Canada. (Photo by GP Images/Getty Images for Warner Bros. Pictures Canada)
Getty Images for Warner Bros. P

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Canada’s news industry is falling apart. 450 news outlets have closed there since 2008. And more than 60 have shuttered in the past two years. So now, the Canadian government is advancing a bill that would force Facebook (META) and Google (GOOGL) to keep the country’s news publishers alive.

Inspired by an Australian law passed last year, the Canadian bill—called C-18, or the Digital News Act—would compel big tech platforms to pay news publishers whose links appear on their services, or face arbitration. The Australian law caused an uproar after Facebook shut down news, hospital, and emergency services pages to hamper it. But the Canadian bill is moving forward swiftly, quietly, and now seems inevitable.

“We should see this pass no later than spring or summer of 2023,” Canadian member of parliament Nathaniel Erskine-Smith told me. “Probably even before that.”

After Facebook’s nuclear reaction to the Australian law—which passed after some watering down—other countries seemed uncertain to pursue similar initiatives. Nick Clegg, Facebook’s president of global affairs, appeared confident in his company’s approach in a recent interview. “I don’t think any business would’ve put up with a proposition where we’re just basically being asked to provide an uncapped subsidy to another industry,” he said. “Particularly an industry, in this case, the publishing industry, who derive all the value from us.”

But now, Canada is demonstrating that Australia’s pay-for-news law may be the rule, not the exception. Erskine-Smith said Facebook hasn’t responded as fiercely in Canada as it did in Australia, signaling it accepts what’s coming. “They learned their lesson from really battling in Australia,” he said. “They really just want to make the best of the situation.”

Intriguingly, some of the strongest opposition to the Digital News Act in Canada is coming from news publishers themselves, particularly smaller ones who say the act could entrench larger publications at the expense of upstarts. In a recent open letter, more than 100 Canadian publishers made the case that the bill’s already led to secret backroom deals between the tech platforms and large publishers, and its passage may further separate the industry’s winners and losers.

Google, meanwhile, has criticized the bill, claiming it would break search and potentially lower Canadian journalism standards. Google CEO Sundar Pichai also met with Canadian Prime Minister Justin Trudeau earlier in June, though the meeting was held behind closed doors. The lobbying appears unlikely to change the course of the bill, though. “I don’t think this legislation will ultimately be stopped or significantly slowed down from third-party efforts,” Erskine-Smith said.

There is a flaw in relying on tech giants to save your business, namely that they may not remain giants forever. Meta, for instance, has lost more than 50% of its market cap this year. And if forced to share the wealth, it will have less of it to spread around. Erskine-Smith, though optimistic about the bill, acknowledged this weakness. “I don’t think this legislation is a silver bullet answer,” he said.

Canada Is Going to Make Big Tech Pay to Support Its Flagging Media Industry