Second reading of Bill C-18, Online News Act

By: The Hon. Marty Klyne

Share this post:

Maman statue, Ottawa

Hon. Marty Klyne: Honourable senators, I rise in support of Bill C-18, legislation to enhance fairness in the news marketplace, which was sponsored by Senator Harder.

This bill is a necessary tool to level the playing field for Canadian publishers. For years, the publishing industry has been overrun without government intervention. Governments have stood by as an industry once comprised of local papers, owned by local proprietors and committed to local stories was overtaken by conglomerates and tech giants. These giant companies shuttered community newspapers, consolidated larger papers and established online platforms to become the dominant source of information.

Big tech companies like Google and Facebook have overtaken our Canadian publishing industry and fail to pay our publishers anything close to fair value for the right to share their work. Journalism is a pillar of our democracy, and we must correct this situation. Bill C-18 is a promising start.

The discussion on Bill C-18 has focused on Google, the world’s most popular search engine, and Meta, the company that owns Facebook. Both platforms are used by millions of Canadians, and both offer tools that allow Canadians to connect with friends and family and access information.

They have become conduits between people and news, especially local news. Unfortunately, neither company has lived up to the responsibility inherent in this new role, which includes protecting and promoting freedom of expression and dealing fairly with Canadian publishers in sharing their work.

These tech giants have monetized the work that publishers produce for their own gain, collected data on its readership and have taken steps to dominate the online advertising space.

In reviewing this bill, I draw upon my experience as the former publisher and CEO of two major daily newspapers in Saskatchewan. In this role, I saw first-hand what operating a newspaper looked like in the digital age. The business is simple: publishers — whether they operate online or in a newsprint format — depend on advertising and subscription revenues to fund their operations.

Advertising pays for the newsroom, the equipment and for all the people that get the daily miracle out every day and have done so for over a century.

This system worked well for years, even when the internet came along and turned the industry on its head. Today, however, circumstances have changed, and it has become impossible for publishers to receive fair compensation for their work.

Allow me to dispel some myths about this bill and the publishing industry. First, I’d like to address the fiction that publishers made little effort to adapt their products when the internet began to take over the medium. This is false. Publishers made great efforts to move their products onto multiple platforms. They tailored their news content and advertising, depending on whether a person was reading it on their desktop, their cell phone, their tablet or in newsprint. Unfortunately, these efforts were impeded by Google’s unfair advertising practices, and I’ll talk more about that in a moment.

Second, I’d like to address claims that this bill is being used to subsidize legacy media. Again, this is not true. Bill C-18 is not about trying to preserve old systems. It’s about ensuring that Canadian publishers are properly compensated for their work. Bill C-18 has nothing to do with propping up a legacy media.

Finally, I want to be clear that sharing someone else’s news content without providing proper compensation is not good business. It’s unfair and damaging to the free press. Depriving content creators of proper payment deters creation. That means less content for platforms and less credible news for Canadians.

Of course, using someone else’s work without reciprocity is not new in the publishing industry. Radio stations refined the practice of “rip ‘n’ read” decades ago. With platforms like Google and Facebook, however, that practice is elevated to a whole new level.

Google is not just the world’s leading search engine. It morphed into a dominant online advertising company. That’s not a hyperbolic statement. Google effectively owns the business of online advertising placement, and their anti-competitive practices have made it difficult for publishers to get their fair value for ad placements and hence difficult to thrive and pay for their publishing operations.

Colleagues, allow me to share a short history lesson of Google’s advertising business and, in doing so, help define the problem before us. In the early 2000s, Google began to increase its online advertising presence. Their goal, seemingly, was not just to compete in this space, but to dominate it. As an article in the National Post recently noted, “Google’s strategy wasn’t to remain a search engine, but to expand and control all online advertising.”

But it wasn’t going to be simple. To control online advertising, Google first had to take over its competitors. In the early 2000s they acquired DoubleClick, a company that held a 60% market share in the software that publishers used to sell ads on websites. While Google’s purchase of DoubleClick may have seemed like a simple corporate transaction, it forever altered the way digital ads would be bought and sold. Buying DoubleClick allowed Google to own the market. They now had a huge list of advertisers and owned much of the existing ad space online.

At the same time, they owned AdX, an ad exchange network that connected buyers and sellers. This gave the company a near-monopolistic level of control over online advertising — maybe a quasi-monopoly. That remains true today, and Canadian publishers have tried in vain to compete in a digital world where buyers, sellers and brokers of ads are all working through a limited number of companies under one umbrella.

The numbers don’t lie. The United States Department of Justice suggests that Google has a 90% share of the sell-side inventory on the digital advertising market. In other words, Google controls nearly all the market space that publishers use to sell ads on their websites. By their own estimates, Google collects “. . . on average more than 30% of the advertising dollars that flow through its digital advertising technology products . . . .” I don’t understand why the United States Federal Trade Commission did not block Google’s acquisition of DoubleClick in 2007, but this is the reality publishers must live with.

The situation has become so bad that the United States Attorney General recently launched an antitrust lawsuit against Google for monopolizing digital advertising technologies. The United Kingdom has launched a similar suit. The United States lawsuit argues that Google has engaged in “. . . a systematic campaign to seize control . . .” of the online advertising market, and they further argue:

. . . that Google itself believes “increased competition between (its ad exchange) AdX and publishers . . . would increase publisher revenues by 30 per cent to 40 per cent.”

These statistics underscore one simple fact: Canadian publishers are forced to do business with Google because Google is virtually the only game in town. This allows Google to set the terms, and they’ve been denying publishers their fair share for years.

Critics of Bill C-18 have argued that the bill is being used to prop up failed publishers who had their chance to adapt and didn’t. That doesn’t add up. I know because I was in the business during the years when Canadians were embracing the digital world. Traditional publishers made huge efforts to move online, and many new digital-first publishers were created. Both traditional outlets and the new companies did their best, but they simply could not and still cannot compete in a domain where their ability to receive fair compensation is blocked. Canadian publishers are not unable or unwilling to adapt, nor are they suggesting they have an inherent right to Google’s money. They are simply asking for fair value.

I also want to address Google’s public response to Bill C-18, and to share my concerns with their recent actions. In February, Google made the decision to restrict some Canadian users from accessing news content on their search engine, with the explanation that this was being done as part of test runs in response to the bill. As we learned from Google’s testimony at the Canadian Heritage Committee in the House of Commons on March 10, the tests were targeted at “. . . less than four per cent of Canadian users.” That may seem like a small figure, but when we consider that Google has over 30 million Canadian users, that works out to over 1 million Canadians being restricted from accessing news content.

Google has a right to make changes to its products, to run tests and to modify its services. None of that is up for debate. But when Google decides to block Canadians from seeing news stories from their local publishers, that amounts to intimidation in the public square. We have a responsibility to challenge this behaviour.

We’ve seen this type of aggression from both Google and Meta before. In December 2020, the Australian government introduced legislation that required Facebook and Google to pay local media outlets for the right to share their content. From the time when the legislation was introduced until it was passed, both companies mounted significant efforts in Australia to resist the law. Google threatened to pull its search function tools from the country, and Facebook temporarily restricted Australian news and publications from being shared on their platform. Leaked internal messages from the company show that, during this time, Facebook went so far as to block pages for local police services and government pages containing public health information.

Google’s recent actions seem to suggest that they are looking for a fight. And now, just like it did in Australia, Facebook is threatening to block news content in Canada should Bill C-18 pass. We already have an idea of how this will play out: Google ultimately backed down from their threat to pull their search engine from Australia, and Facebook restored the ability to share news articles in that country after a few days. I had hoped both companies might have learned from their past experiences and would emulate a more responsible approach here in Canada, but that doesn’t seem to be the case.

By threatening to block Canadians from local news even before the legislation has been voted on in the Senate, Google and Facebook have underscored the need for this bill. These companies have a tremendous amount of power over what Canadians see online. By choosing to restrict Canadians’ access, they reminded those same Canadians of the value that local news provides to communities. They reminded them that access to local news and information that is enlightening, engaging and entertaining is vital to them, and that private corporations appear to be messing with that which provides not only information on current events, but in many ways, respite. I think these companies may come to find that declining audiences lead to declining ad revenues.

In an update to their 2017 report The Shattered Mirror, the Public Policy Forum notes that:

Every community in Canada remains keenly interested in its own local affairs. Google and Facebook did not do away with that interest. But between them, Google and Facebook drained advertising from the news publications for which that interest was both the point and the business model. . . .

When we look at advertising revenues for community newspapers, that rings true. News Media Canada estimates that advertising revenue for community newspapers shrunk 66% from $1.21 billion in 2011 to $411 million in 2020.

We know that this legislation can work; we’ve seen it in Australia. Since their legislation was passed, Google and Facebook have signed deals with publishers worth AU$200 million annually. Canada needs Bill C-18 so our publishers can continue to do what they do best: hold powerful voices to account, which, for all intents and purposes, serves as a pillar of democracy.

Colleagues, credible journalism is the cornerstone of our democracy. I support Bill C-18 because it supports investigative journalism’s role in our democratic society. Journalism plays an important role in holding those in power accountable. It helps to foster a well-informed citizenry that can make informed decisions about the policies that affect their lives. In a complex and increasingly globalized society, it is more important than ever to be able to sort through the noise and find reliable sources of information. This means requiring tech giants like Google and Facebook to deal fairly with Canadian publishers and, hence, relevant investigative journalism reports. Parliament can make this happen. As a senator, I am duty bound to support Bill C-18. I believe in fortifying this cornerstone of democracy, and that’s why I established a scholarship fund for journalism at the University of Regina. Colleagues from all groups, I ask you to please help move this bill to committee quickly.

Thank you, hiy kitatamihin.

Share this post: