:
I call this meeting to order.
Good morning, everyone. Welcome to meeting number 51 of the House of Commons Standing Committee on Canadian Heritage.
I would like to acknowledge that this meeting is taking place on the unceded traditional territory of the Algonquin Anishinabe people.
[English]
Pursuant to the order of reference adopted by the House on Tuesday, May 31, 2022, the committee is meeting on the study of Bill , an act respecting online communications platforms that make news content available to persons in Canada.
Today’s meeting is taking place in a hybrid format pursuant to the House order of Thursday, June 23, 2022. Members are attending in person and remotely.
I want to make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. For those on video conference, click on the microphone icon at the bottom of your screen. Then, you will be able to activate your mike.
To get interpretation, you will see a globe at the bottom of your screen. If you click on that, you can get get your interpretation in English or in French, as you desire. You have the choice at the bottom of your screen of floor, English or French. For those in the room, you can use the earpiece and the desired channel.
Remember that all comments should be made through the chair.
I have one comment to make. We have had a very tragic accident with an interpreter because the witnesses were not using the required mikes. I have been asked to ensure that everyone is using the headset that has been sent to them by the clerk. It is very important to remember that, because we don't want to harm people at the other end.
Having said that, I want the committee to know that all witnesses completed the required connection tests in advance of the meeting and are using the required headsets.
We will begin.
On Bill, we have three witnesses today. We have Sue Gardner McConnell professor of practice, Max Bell school of public policy, McGill University, who is appearing as an individual. Appearing by video conference, we have Hal Singer, managing director of Econ One. We also have Philip Palmer, president of Internet Society, Canada chapter, by video conference.
Clerk, I don't see Mr. Palmer.
:
Thank you so much for inviting me to speak today.
I was a journalist in Canada for 10 years, working in radio, television and online. I used to run cbc.ca. I used to run the Wikimedia Foundation, which is the non-profit that operates Wikipedia. That makes me the only Canadian to have run a global top 10 Internet property. Last year, I was the McConnell professor of practice at the Max Bell School of Public Policy at McGill University.
I am speaking here in a personal capacity, based on my own knowledge and my own experiences.
I think Bill is a very bad bill for three reasons that I'm going to unpack for you.
First, Bill misdiagnoses the nature of the problem. Bill C-18 characterizes as “unfairness” that Google and Facebook have such a large share of the digital ad market. That is a fundamental mischaracterization or misunderstanding.
Imagine it's the 1920s. I make buggy whips and you make cars. Bill is the government saying that you need to give me money forever because nobody is buying my buggy whips.
The journalism industry used to be profitable because buying ads in the news was the best way—or at least a very good way—to reach audiences. That's less true today. Google and Facebook have created advertising tools that are way more efficient and more effective than the old ones. That is why advertisers are using them. Google and Facebook out-innovated the business side of the news industry. That is not a fairness issue. It's not a moral issue. It doesn't make them villains.
Ben Scott told you that the government is, in effect, “refereeing a contest between big tech and big publishers”. He urged this committee to focus on the public interest instead. I want to say the same.
My second point is that Bill will not actually support quality journalism. As the former CRTC head, Konrad von Finckenstein, told you on Friday, “If you want to subsidize news publishers, you can do it a myriad of other ways”. He characterized this bill as “unnecessarily complicated”. I think he's right.
If the government's goal is to support quality journalism, the Public Policy Forum laid out a very good path for how to do that. In 2017, the PPF released “Shattered Mirror”, which was its report on the crisis in the news industry. It recommended that the government start collecting sales tax on foreign company ad sales in Canada and that this money be used to establish a journalism fund to be administered by a body independent of the government. That would support quality journalism.
Bill may attempt to achieve the same goal, but it does it by trying to awkwardly kind of force Google and Facebook into the role of directly funding journalism themselves and that is a really tough fit. Google and Facebook are private sector Silicon Valley megacorporations. Their job is to advance their own business interests. They don't have a mission to serve the people of Canada. We don't elect them and they are not accountable to us.
The government can try to give Google and Facebook very specific direction and stand over their shoulders and try to compel them to do what it wants, but that is not the simple way. The simple way is to take their money and make a fund.
My third point is that Bill will have significant negative unintended consequences. I'm going to speak here mainly about the Internet and Internet users.
Bill will encourage the creation of clickbait and nonsense.
Bill will create an incentive for Google and Facebook to back away from news.
Finally, Bill will enshrine in law the idea that ordinary Internet linking is “taking value”, and that puts us on a slippery slope. The Internet was designed to be open and to grow organically. The ability to link freely, and not just link but to share, to comment, to annotate and to build upon is at the heart of the Internet's openness. That is well understood.
With Bill , the government introduces friction to linking. That brings us closer to an Internet that is fundamentally commercial, where what we see online is going to be determined by corporate deals. That kind of change happens extremely slowly. It's the accumulated effect of many decisions that, at the time, might not have seemed very consequential in that regard. It is one step on that bad road.
Thank you very much.
:
Good morning, and thanks for having me.
It's a privilege to speak to a Canadian audience, and I wish I could testify in person.
On behalf of the News/Media Alliance, a collection of news publishers, I have worked extensively on companion legislation to Bill in the United States called the Journalism Competition and Preservation Act , or JCPA, and I will speak to those efforts. The economics are the same.
Among other protections for news publishers, the JCPA would grant an exemption to antitrust laws for news publishers so they can better coordinate their dealings with the tech giants.
Before going any further, I want to be clear. Antitrust exemptions are rare, and that's a good thing. Powerful entities should not be immunized from antitrust scrutiny. In some limited circumstances, however, coordination among small suppliers when dealing with a large buyer is necessary to overcome a power imbalance that causes input prices and employment to fall below competitive levels.
This market failure is the basis for the current exemptions for farm co-operatives in particular and labour in general from the U.S. antitrust laws. It is the same basis for extending a new exemption to newspapers in their dealings with dominant Internet platforms.
That the word “preservation” appears in the U.S. legislation is no accident. The news industry has incurred losses in advertising revenue every year since 2006, according to the Pew Research Center.
The effect of shrinking advertising revenues, in part caused by underpayment from dominant platforms, is less cash flow to support journalists and a clear employment effect flowing from the exercise of monopsony power by the dominant platforms. U.S. employment among newspaper employees fell from 71,000 in 2008 to 31,000 in 2020, according to Pew. As a result of the deteriorating news media landscape, hundreds of local newspapers have been acquired or have declared bankruptcy.
Google and Facebook reframe newspaper articles in rich previews containing headlines, summaries and photos. The platforms also curate newspaper content alongside advertisements. This reframing and curation decreases the likelihood of a user clicking on the article, thereby depriving news publishers of clicks while enriching the dominant tech platforms. This appropriation of newspaper content at zero access price also decreases newspaper subscriptions. When the clicks on newspaper content eventually come from the platforms' websites, the associated advertising revenues are taxed by the platforms at excessive take rates.
The best way to correct the exercise of monopsony power is for the government to permit the news publishers to coordinate their dealings with the digital platforms over payment terms and conditions. Given the massive power imbalance, collective bargaining by itself might not be sufficient to achieve competitive payments, in which case some structured bargaining among the parties, for example mandatory arbitration with an enforcement mechanism, is needed as a backstop.
Curiously, some traditional anti-monopoly groups have stated their resistance to granting countervailing bargaining power to newspapers in their dealings with dominant platforms. In a joint statement, the American Antitrust Institute, Public Knowledge, Consumer Reports and Consumer Federation of America argued that a new antitrust exemption “will only hurt consumers, citizens, and businesses that are not invited to the negotiations that this exemption is supposed to facilitate.” It bears noting that some of these groups depend on the dominant platforms for funding.
Instead of the JCPA, these same detractors have called for greater enforcement of antitrust laws against Google or Facebook, but the conduct that is being challenged here, the mere exercise of monopsony power to achieve a reduced rate for newspaper content, is not a cognizable vertical restraint under antitrust law. Scraping, reframing and curation, and appropriation of value do not amount to violations of section 2 of the U.S. Sherman act. Unlike Europe, the United States does not have an abuse of dominance standard.
Moreover, even if one could style something else the platforms are doing as a cognizable restraint, a successful antitrust lawsuit against, let's say, Google, would provide zero relief for publishers in their dealings with Facebook. A successful antitrust lawsuit against Google or Facebook would require several years to adjudicate, and the appeals might not be resolved for nearly a decade. In the interim, newspapers would be left twisting in the wind. Given the newspapers' precarious financial state, it is not clear how long many newspapers could survive without an intervention today.
The JCPA has undergone significant amendments.
The Chair: You have 30 seconds.
Dr. Hal Singer: The current version wisely introduces baseball-style arbitration, guarantees that publishers of all viewpoints are eligible to participate in negotiations and imposes a size limit—incorrectly, in my view—to focus support on small and local outlets.
My last point is that a more recent amendment ensures that a significant share of the funds—65%—collected, pursuant to the JCPA, would be allocated to news publishers based on their pro rata share of a newspaper's spending on journalists. In other words, newspapers that shed journalists would be punished under the allocation mechanism as their pro rata share of the global award would be reduced.
Thank you for your time, and I'm happy to answer any questions.
:
Thank you, Madam Chair.
On behalf of the Internet Society Canada Chapter, I would like to thank this committee for the opportunity to address this important subject.
As a preliminary observation, the Internet Society supports initiatives to financially bolster news organizations as they transition to the Internet era. We believe that a broader levy applied to all social media platforms and search engines, coupled with a truly independent body to apportion funding, would have been fairer and a more reliable source of funding than the illusory bargaining scheme that is at the heart of Bill .
Neither Bill nor the Australian legislation on which it's based represents bargaining based on the value of news content to news intermediaries. The bargaining process is contrived, apparent rather than real. Having stripped news intermediaries of legal protections, it is designed, under threat of excessive monetary penalties, to coerce intermediaries to agree to compensate news businesses. It withdraws the exceptions and limitations of copyright law from digital news intermediaries, while leaving those same rights in place for their competitors and for the news organizations themselves.
The government is using its legislative power to force a handful of businesses that have successful advertising-based business models to compensate an industry whose advertising-based business models are failing.
I would like to quickly make a few specific points.
First, Bill imposes significant costs on making news content through hyperlinks available to the public. Hyperlinks are the quintessential means by which individuals and businesses seek and find news content and all other information online. By imposing a cost on news intermediaries for links to news content, Bill C-18 threatens the efficiency of news retrieval on the Internet and the ability of Canadians to access news content. Bill C-18 will raise the cost, directly or indirectly, of accessing news content in Canada.
Second, the definition of “digital news intermediary” in subclause 2(1) raises complex questions of constitutional facts and law. Facebook and Google, for instance, are likely not subject to federal regulatory authority.
Third, the criteria in clause 6 by which a digital news intermediary must self-identify are vague and inappropriate. They are borrowed from concepts as different from each other as competition law and labour law. The legislation neither defines the relevant markets nor sets forth to what the imbalance of bargaining power relates.
We would urge the government to consider following the Australian model in this regard, in which the minister designates the intermediary according to clearer—not perfect—criteria set out in section 52E of the Australian act.
Fourth, clause 27 has a bifurcated definition of “eligible news business”. Paragraph 27(1)(a) refers to “a qualified Canadian journalism organization”, a definition for the purposes of the Income Tax Act, which requires that an organization qualify by meeting demanding criteria. As numerous intervenors have pointed out, paragraph 27(1)(b) qualifies organizations with no observable journalistic standards. Click farms and foreign agents should not be eligible news organizations. We note section 52P of the Australian legislation as a better model in this regard.
Fifth, clause 24 denies to news intermediaries any reliance on copyright exceptions and limitations. It should be deleted. It nullifies any market-based approach to the determination of the value of news content to digital news intermediaries.
The Chair: You have 30 seconds.
Mr. Phillip Palmer: Lastly, clause 51 incorporates from telecommunications law the concept of unjust discrimination and undue preference. It has no relevance to the functions of news intermediaries. This provision should be deleted. Section 52D of the Australian act seems to address these issues with far greater clarity.
Thank you very much, and I welcome your questions.
In my opinion, the debates about whether Bill literally constitutes a link tax are hairsplitting. They are a bit beside the point.
The whole basis of the legislation is the notion that making available material or facilitating access to it is taking value from the party that made the thing, and that notion flies in the face of the entire Internet, because the entire Internet is built on the concept of linking, sharing, annotating, commenting and building on the work of others. That is what makes the Internet fantastic. There are limits to that. We do have copyright law, but there is no need and it is not beneficial to take the position that linking or making available is taking value, because it's not.
I know that people tend to dislike the phrase “breaks the Internet”. I dislike it, too, because it always sounds like hyperbole, and I am not trying to say that if this bill becomes law, the Internet is immediately different or immediately broken, but it is consistent with breaking the Internet, and it is a step on the road to breaking the Internet.
I would like to urge the committee to take a long view on this. The Internet is still quite young. It's going to be with us for a long time. I think the actions we take today that may seem small and of little consequence will shape it and will shape how it develops in ways that I think we could come to regret, and this is one of those ways.
:
I don't give much thought to it. In fact, I've studied the issue through surveys as to how much value is being created by news publishers collectively to the individual platforms. The answer comes out to something in the billions of dollars, at least in the United States. It's probably similar in Canada as well.
There is some value returned in kind, but remember that's only when the user actually clicks on the links and follows back through. Even then, the news publisher is going to be subjected to some supercompetitive take rate or tax on those revenues.
The point is that when we get to an arbitration, the news publisher collective is going to be able to put forward a study, potentially surveys, that are going to show how much value is being appropriated by the platforms from the news publishers. Google and Facebook are going to get to hire their own economist and she or he is going to put forward a counter study. At that point, the arbitrator will have to decide whose estimate of the valuation being generated by the news publishers is fairest of them all. What's the fair market value that would emerge in a voluntary negotiation, absent the power imbalance, right? That's what we're trying to get at here. The market forces are giving a zero access fee. That's what the market has determined, and that's because Google and Facebook are just too big in this negotiation. The question is what would be the competitive rate for this access? You'll only find out through this arbitration process.
:
That's right, and that's exactly the question we're trying to get at in these valuation studies: What brought you there? What are you doing in the search? Is it news or something else?
We can perform surveys and we can use other tools to try to estimate, as best we can, the value contribution of the news publishers to the search engine or to a social media site. That's exactly what we're going to try to do at these proceedings. It's going to be incumbent on the expert for the news publishers to come up with the best estimate possible, but then Google and Facebook are going to have an opportunity as well. It's conceivable that at the baseball-style arbitration they would prevail, and the number that would come out of the outcome would be small.
No one should accept this as a guarantee that newspapers are going to win at the proceeding, but I do think that baseball-style arbitration will induce both parties to come up with the best estimate possible. After all, if you come up with an insane or very extreme valuation, if Google puts forward a valuation of zero for what newspapers are contributing to them, then the arbitrator would be inclined to go with whatever the news publishers have offered.
:
Well, in terms of quality, what we're trying to figure out in our studies is this. We ask people who are on the various platforms why they're there, what they are consuming and what brought them there in the first place. I think quality is going to be picked up in these two different measures when it comes to the allocation phase.
In the first phase, we're trying to figure out how much value is being generated by proxies, i.e., how much time is being spent consuming news and what brought them there. In the second phase, we're trying to allocate according to two measures. One, at least in the U.S., is the amount of traffic you generate, your pro rata share of traffic, which in part will be a measure of quality. Two, and most importantly, our Congress has set aside 65% of all the proceeds to be allocated in accordance with each news publisher's pro rata share of journalists under their employ. That is a direct measure of quality, right? The more journalists you have under your employ, the bigger the share or slice of the revenue pot you're going to receive.
I feel like that's a way to get at this quality issue: Make sure that the award is allocated in accordance with the number of journalists. After all, at the end of the day, what we're trying to do is breathe life back into journalism. The way we do that is by incentivizing the publishers to go back and hire journalists, just as they have in Australia and other places that have received this recent infusion of cash.
:
This remedy would not affect the free Internet.
Here is why: Google is not going to suddenly start charging consumers for search because it now has to pay a lump sum transfer to newspapers once a year. That lump sum transfer is not going to enter their pricing calculus. It would completely destroy their business model if they said that, instead of making money off of advertising, which is the heart of their business and what they've been doing for a decade or more, they're going to start charging for search. They're not going to do that.
It's the same calculus for Facebook. If Facebook has to write a lump sum cheque once a year that doesn't vary with output and doesn't affect their marginal costs.... As a micro-economist, I can tell you that it's not going to change their pricing optimization and it's certainly not going to cause Facebook to deviate from its model of free social media in return for monetizing the eyeballs in advertising.
I hope this answers your question at a few different aspects. The part that is sticking with me is whether it is going to cause the Internet to somehow no longer be free. It is not going to affect the pricing decisions of the platforms at all.
Search will forever be free. Social media will forever be free and a lump sum transfer at the end of the year will not affect that.
:
Thank you very much, Madam Chair.
[English]
Thanks to our witnesses.
I'd like to go back to you, Mr. Singer.
We've had a variety of witnesses over the last few weeks. The vast majority are strongly in favour of Bill , including—and I thought this was an interesting point and kind of a watershed moment—the community newspapers of Alberta and Saskatchewan. This is where half of our Conservative caucus is found. The community newspapers in those provinces are very strong advocates for Bill C-18, though they want to see improvements in the legislation.
Certainly in my community of New Westminster—Burnaby, we've seen a hemorrhaging of local news content as a result of what so many would say is unfair competition.
I am interested in coming back to the Journalism Competition and Preservation Act in the United States. I want you to tell us a bit about what would happen if this is not put into place.
The Australian model is something that a lot of other countries are looking at because their local community news has been decimated.
What would happen without the Journalism Competition and Preservation Act? How would you see journalism evolving in the United States?
:
Yes, it's possible that the very largest publishers will be able to extract some payments unilaterally, but that's not what the bill is about. That's not what we're trying to do.
What we're trying to do is breathe life into journalism writ large, including these community newspapers that you mentioned. There's no way that in a bilateral negotiation between a community newspaper and Google or Facebook that the newspaper is going to be able to extract any payment. The payment for access for their content is always going to be zero.
You think about what the collective is going to create, what this union, if you will, is going to create of newspapers. It's going to lift up the smallest papers in the coalition by leveraging their power and allowing them to negotiate collectively as one unit against Google and Facebook. Those are the real beneficiaries.
My critique of what I've seen abroad is that while their heart was in the right place and it's a move in the right direction, the whole purpose is to lift up the smalls, and if you can't do that, it's not even worth doing, in my opinion.
They're going to join the coalition. They're going to show up as one cohesive unit at the bargaining table. This is assuming that we don't reach a voluntary negotiation. I'm very skeptical that we will. There's a period of time in which a voluntary negotiation takes place.
If that fails, then it moves to binding arbitration. At that point, they're going to put forward one number. It's going to be the number of the value contribution by all newspapers collectively for Google and Facebook. Google and Facebook are going to have their opportunity to knock it down and put forward their own counter-studies and experts. The arbitrator will decide whose value is fairest of them all.
It's a long way of saying yes, the smaller newspapers are going to benefit because of this design. We're going to ensure that everyone's coming along. No one can be discriminated against, based on the kind of content they write or the positions they take. They're all coming along. At the back end we're going to have an allocation that is going to be predominantly dictated by the number of journalists you have under your employ.
:
Let's talk about timelines.
You did raise the issue of antitrust legislation and going against big tech. You mentioned in your opening remarks 10 years to work through appeals that big tech could bring to stop antitrust legislation. They have with their power the ability to stop up the works for a decade. I think all of us understand the power that big corporations have.
On the timelines around the JCPA and Bill , we're currently discussing the thresholds to make sure that this actually goes through, that negotiations are compelled, there is final offer arbitration and that there is a clear movement. What do you feel are appropriate timelines?
Many have said that there should be shorter timelines of three months for a negotiated period, arbitration, then final offer arbitration. That would all be taking place in a relatively short span of time and it forces big tech companies to actually work in good faith, rather than drawing things out, as they certainly would with antitrust legislation.
How important is it that there are relatively short timelines around negotiation, arbitration and final offer arbitration?
:
I think it's very important. The reason is the dire straits the newspapers are in.
Look, if these guys could make it another couple of years, then maybe we could afford to let this roll out for a year. We don't have years.
What I would say if I could script it is I think each of these break points ought to occur in a span of months. Set up a voluntary negotiation period. Give them a month to try to hammer something out. If they can't, then they move into binding arbitration.
When you go into arbitration, you're going to have to have discovery. There are going to be expert reports written. Google is going to get to depose the expert, presumably, before we get into the hearing room. They have to be on notice as to how your evaluation methodology is going to work. That could take some time. I think that should be a matter of months and certainly not a year. This thing needed to be solved yesterday.
:
Thank you, Madam Chair.
I'm sitting here smiling because Mr. Singer has no idea what Bill is all about. It's about the exact opposite of what he's talking about.
The CBC, Rogers and Bell get most of the money. The newspapers get the crumbs. We're not like the United States in this bill. We have pointed that out on this side numerous times. Small and medium newspapers get absolutely nothing.
I'm going to move to you, Mr. Palmer, because you have some recommendations.
I sit here laughing at Mr. Singer, because he has absolutely no idea what this bill is all about. It's not about the newspaper industry in this country. I've said that for months. They're getting crumbs. I believe the local CBC, the public broadcaster, should be excluded from this bill.
What are your thoughts, Mr. Palmer?
:
I think we heard that from Google. They already have 150 agreements, and I'm sure they don't have any agreements from the small or medium newspapers in this country. I think you would agree about that.
We've been harping on this side for months that not only Alberta and Saskatchewan, but I'm going to say a lot of newspapers in Ontario, Quebec, the Maritimes and even B.C., where Mr. Julian comes from, are excluded from this.
I have a note here from CACTUS, the Canadian Association of Community Television Users and Stations, that says they're almost going to be excluded from this bill.
There are so many exclusions in this bill that it's going to take days to get the amendments needed to make this bill even half-presentable when we do work this thing out.
What are your thoughts?
:
Yes. I think it would do the opposite. If you infuse these local newspapers with cash for the first time, this access fee that would be negotiated, I think the very first thing they'll do is turn around and invest in journalists. We've seen this happen in Australia.
Second, they're going to be incentivized. If you do the award correctly, they will be incentivized to grow their jobs in the news business, because doing so will mean that they will get a bigger slice of the pie at the next round of the allocation.
So I think they have private incentives to want to grow output and do quality journalism with an infusion of cash that comes in, but if you get this incentive right, when it comes to the allocation award, you can hyper it. You can make them even more sensitive to this duty, to this social obligation, to go out and hire journalists. That's what we want them to do. I feel that a smart, intelligent allocation design can get us there.
:
You're quite right, this is my two and a half minute turn. I'll gladly take it. Thank you very much. It was me who got mixed up this time.
Mr. Palmer, you submitted a brief to this committee a few days ago. In it, you talk about alternatives to Bill C‑18. One thing you mention is creating a fund, which I imagine would be taken directly from the reported revenue of businesses. That would restore balance, depending on the needs of the market.
How do you see a fund like this being viable, given that we have a government that tends to encourage tax avoidance and the use of tax havens by big corporations instead?
Aren't you concerned that the web giants are not actually reporting the revenue they generate in Canada?
Wouldn't this open the door to endless litigation over how much money could go into this fund?
:
Madam Chair, this is a key question. I think there are a number of actual benefits to a fund as opposed to a regulatory approach.
The first one, which will save an immense amount of litigation, is that the raising of revenue is clearly a federal power. It is not clear at all that the federal government has regulatory authority over Google and Facebook. In fact, my opinion would be the contrary, so I think you're on safer constitutional ground. It avoids, say, four years of litigation to get to the Supreme Court of Canada.
Second, it means that you can bring into the fold all of the groups who are deserving at once. You're not reliant upon the major newspapers, say, or news organizations getting together, going into the bargaining process on their own behalf and leaving out all the small players that don't have the resources to fully compete in a bargaining process.
I think a levy or a fund of some kind is actually a very attractive alternative to this kind of process.
:
Thank you very much, Madam Chair.
Mr. Singer, I found Mr. Waugh's comments somewhat insulting and inappropriate, and I'd like to apologize on behalf of the committee. He needs to be understanding, I think, more importantly the role that community newspapers play, including in his community, where he's got the Saskatchewan and Alberta weekly newspapers associations asking for legislation like this.
I'd like to come back, Mr. Singer, to your comments about community news, because you are absolutely right to identify that one of the reasons why we're seeing the rise in hate in all of its toxic forms—more anti-Semitism, more racism, more homophobia and transphobia, more Islamophobia, more misogyny—is in part that those links that community journalists play, that community newspapers play, are being exploded as big tech tries to profit from hate.
As you know, in the United States, a major campaign that involves a whole range of organizations fighting back against hate is Stop Hate for Profit. Could you re-emphasize the importance of having a community journalistic sector that helps to counteract how big tech has shamelessly exploited hate to pad its bottom line, so that there is some counterbalance and we can start to re-establish community links right across North America?
:
I certainly blame big tech for a lot of things, but I don't necessarily want to blame them for directly causing this.
Let me suggest that the effect might be indirect. In other words, their business model is hurting the local community papers and when those community papers go down, basically misinformation kind of fills the void. All the bonds that the community newspapers used to create are now shrivelled, people feel isolated and they lash out. They no longer feel a connection to their community.
Whether or not that is a scheme.... I don't want to suggest that big tech is scheming for that end and that was the objective. They're not evil, I don't think, but I do think that evil has occurred.
I think that the most important thing now is, rather than trying to castigate or throw stones, that we should just figure out how we get money back into the pockets of the local newspapers.
To me, the most efficient route to doing so is to set up a design mechanism in which the two platforms can write a cheque for the value they're appropriating. It will be determined by an arbitrator. That money should flow back to these community newspapers and hopefully they can restore all the great things they did before they were taken out.
:
Thank you, Madam Chair.
I appreciate the witnesses being here today.
Going to weekly newspapers in Saskatchewan and in Alberta in particular, I know that in my riding we have probably a dozen weeklies. They don't belong to that association or agree with that position because they're owner-journalists. They may have one...and they don't see the value in this. They're very clear. When it's said here that all of Alberta and Saskatchewan.... No, they don't have that same view. Let me tell you that.
They feel they've been excluded from this. They don't feel they're a part of it. They feel that this piece of legislation is going to kill them and they will be gone because there's nothing left for them.
When you talk about negotiations, they can't afford to get into negotiations. They're not part of the organizations' negotiations and the money, as we know, is almost gone.
Ms. Gardner, what are the unintended consequences for small, weekly papers with an owner-journalist? I have a number of them.
I would throw in there, too, the indie publishers and the digital start-ups—all the little guys, whether they're operating at a local level or not.
Originally, the indie start-up folks opposed Bill . Then when it became pretty clear that it was likely to go through—and I think this has happened with a lot of entities—I think they shifted their focus to try to tweak it and have some amendments made so that they would be less disadvantaged by it.
They do not want it and it doesn't surprise that local news operations don't want it either, especially those that are explicitly excluded from it because they have fewer than two full-time journalist employees.
The unintended consequences—
I'm sorry. Go ahead.
:
Right. I have had those questions myself.
I think it's so important that this kind of legislation be considered in the context of what is actually happening in the news industry and not just in the context of the news industry needing dollars because one thing that has been happening in news is a fragmentation of audiences.
I'll try to keep this brief, but it used to be the case that we all watched the same television news. We all read pretty much the same newspapers. We all got the same view of the world. That was good for social cohesion, but it was also exclusionary and marginalizing for lots of different kinds of people. They didn't see themselves reflected.
What we're seeing now is a flowering of many hyper-specific and somewhat specific news operations aimed at indigenous people and aimed at people who are particularly concerned about climate change. There are start-ups aimed at, I think, Asian diaspora in North America, and millennials.
There are a lot of different kinds of operations today. This legislation wants to be and should be responsive to that. You could take a number of different views on that. You could decide that it is important that there be general interest publications for social cohesion in the sense of a country as a whole and/or you could decide to have a policy objective that follows that trend and supports smaller news operations for distinct identity groups and distinct sets of interests.
That's the kind of thing you don't get with this bill, but that should be considered in anything that is trying to support quality journalism in Canada because that's part of the question of what is quality journalism.
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They are. There's legislation in the U.S., the self-preferencing bill, for example, the ban on self-preferencing that made it through the Senate on the judiciary committee—I think it was 16 to six. By the way, the JCPA made it through the Senate judiciary committee. It was very popular. I think it was 15 to seven. It had Republican support as well.
I think Congress recognizes that there are some aspects of the platform's conduct that escape antitrust scrutiny. In particular, when you think about what the self-preferencing is doing, it's conduct that's occurring within the firm's boundaries. It doesn't cross a boundary. There's no contract to say that a supplier or a customer that's exclusionary.... The other thing, too, is that it doesn't generate an immediate short-run price effect. When Amazon steers a search to its own wares in the Amazon store, it will typically replace an independent with something cheaper, so there's no price effect to be found, either. These would be horrible fact patterns to go into an antitrust courtroom with, where judges are following case law that's looking for conduct that crosses a firm boundary and conduct that generates an immediate short-run price effect.
I would submit that in this newspaper matter as well, it would also make for a horrible fact pattern. No judge is going to recognize scraping, indexing, curation and appropriation, which is basically just flexing your monopsony muscle as a cognizable antitrust offence. It's certainly not a violation of section 2 of the Sherman act.
I think what Congress recognizes is that they're acts of aggression, anti-competitive acts by the platforms that escape antitrust scrutiny. Rather than try to force everything through an antitrust funnel, we're going to write new laws that get at these anti-competitive acts outside of antitrust, that is, to use tools that operate outside of antitrust, as we're doing for the JCPA.
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Thank you, Madam Chair.
Thank you to the witnesses for being here today.
It's clear to me that Bill is not going to meet its desired goal of helping small local newspapers because we've excluded any that have less than two full-time journalists, and it's clear that Bell, CBC and Rogers are going to get the lion's share of the money.
I'm going to focus my time on amendments that we could make to the bill, because the NDP-Liberal coalition is going to force it through and I want to reduce the harm as much as possible.
Mr. Palmer, you talked about how we should delete the undue preference part of the bill because it's problematic and how 52D from the Australian act would be better.
You also mentioned another part of the bill that should be deleted, but I didn't catch that. Could you let me know what that is?
I appreciate your comments as well about how there's likely to be a constitutional challenge on the DNI definition as it exists.
Also, you mentioned that we could improve in the area of defining what is quality journalism, and I like the recommendation of using the Income Tax Act definitions for journalistic outlets.
One of the other ideas that I heard was from Mr. Singer, and it was about how there's a size limit that was an amendment.
Mr. Palmer, is there an opportunity for us to do something to limit the size of organizations so that Bell and Rogers and CBC don't get the lion's share and so that we actually direct that aid where we want it: at the local, smaller news media outlets?
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Thank you very much, Madam Chair.
I want to start with Dr. Singer.
I had the pleasure of being in Congress. We did hearings for our interparliamentary task force on online anti-Semitism. We got to have hearings where we had Meta, Google, TikTok and Twitter.
I had a chance to talk to a lot of legislators, at least at the House level, and I found real consensus amongst Democrats and Republicans on both sides, whether it related to section 230 or to monopoly of the platforms, that there needed to be more done to deal with the practices and techniques of these tech giants.
I know that the House of Representatives antitrust subcommittee recently accused platforms like Amazon, Apple, Google and Facebook of abusing their monopoly power.
How do these tech giants consolidate their market power? What practices and techniques are they using that prompt all these concerns?
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Looking at some kind of common denominator across the various types of conduct that's being challenged, I would say that the fundamental strategy the platforms have employed is some variation of an anti-steering restraint or what's called a most favoured nations clause.
This ensures that any broker or dealer, say an app developer or a merchant on the Amazon site who wants to go off their platform and sell their wares at a lower price is barred from doing so. That is, you cannot sell at a lower price outside of the dominant platform than you can inside the platform.
Google is doing this with anti-steering provisions. Amazon achieves this with the most favoured nations clause. They are making sure that no coalition or individual or coalition of developers or merchants could support a rival platform. If they could steer by offering their consumers lower prices for going off the dominant platform, that could engender a certain amount of multi-homing and competition across the platforms, and that in turn would force Google and Amazon to lower their take rates on app developers and merchants respectively.
They figured out that, if they can stop that sort of conduct, if they can stop the steering, then they can keep artificially high take rates. These artificially high take rates, at least with respect to Amazon, have been going up over time. They all get impounded in the price of everything you buy.
There is a lot of anti-competitive things that are going on right now, but I know I don't have time to hit them all. To me, that is the highlight, and you have to attack that. I do think that squarely falls under the antitrust ambit. We should give these antitrust cases a little chance to play out on that score.
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No, don't feel bad. They threaten everyone. They threatened to do bad things in the U.S., too, when the bill, the JCPA, appeared to be on its way to getting voted on at the Senate judiciary committee.
Whether they want to admit it or not, I think Facebook and Google recognize that newspapers and quality journalism actually prevent their platforms from becoming a cesspool. Imagine if all of this stuff came out, as they're threatening to do, and they take out the quality and just leave in the low quality or the misinformation. The whole platform becomes a cesspool. That's going to cause advertisers to leave. It's going to cause users to leave.
We should take their threats seriously, but I don't think the threats amount to anything at the end of the day. They need the news publishers, but they don't have to pay for it right now because the power imbalance is so shifted in the favour of the platforms, right?
What we're asking for is to create a structure so that an arbitrator could make a call as to what the fair market value is, and then we could go on about our way. Once that payment is made, there's no link tax, respectfully; Ms. Gardner talked about a link tax. You don't pay extra for each time someone clicks or for each link that gets posted. You pay a one-time lump sum fee for access. After that, you're free to do with the content whatever you want, subject to the applicable copyright law.
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I will also have the 18 seconds of speaking time that Mr. Housefather didn't use.
Thank you, Madam Chair.
Mr. Palmer, let's go back to the brief that you submitted to the committee last week.
In the brief, you talk about the definition of news content being too broad and unclear. In your view, the act could apply to podcasting services like Apple and Spotify, voice assistants like Alexa and Siri and potentially even app stores. However, you don't explain how that might be the case in your brief.
If you read section 27(1) of the , which specifies what businesses are eligible, how do you match these businesses with those criteria?
Can you clarify that for me?
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Mr. Palmer, perhaps you could respond in writing later on. I have about 30 seconds left. I really have very little time.
Ms. Gardner, let's put aside our differing opinions on how appropriate Bill is.
I know that you want to protect quality journalism. However, I must tell you that I don't entirely disagree with challenging the two journalists per media outlet rule. I don't think that's true for the new journalism models that define what quality media is. Nor do I feel that's what's going to protect regional media.
Do you feel we should place more emphasis on journalistic quality criteria and base it on journalistic standards rather than the number of journalists? Would that criterion be acceptable to you?
Please take only a few seconds to respond, because I have very little time left.
Mr. Singer, I would like to come back to what we were talking about a few minutes ago, hate and disinformation.
We have seen Elon Musk's takeover of Twitter and the deliberate promotion by him of appalling disinformation around the attack on Speaker Pelosi's husband. We have had criticisms levied against big tech for their refusal to act promptly to counter disinformation. I wanted to see if you had any comments about that growing disinformation coming from big tech.
Also, there's the other side, which is having responsible journalism. We have the crazed extremism of Fox News and we counter that with the kind of journalistic integrity, for example, that comes from the Canadian Broadcasting Corporation, which is often opposed by extremists.
To what extent does the JCPA cover public broadcasting like PBS in the United States? To what extent do you feel it's important that public broadcasting be covered by an approach, for example, like Bill that helps to counterbalance this crazed extremism we see from Fox News and the deliberate disinformation that we're seeing from Elon Musk's Twitter and from other big tech companies that seem to profit from the engagement that comes from this disinformation?
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I do agree that a lot has been brought into the room today that is not germane to Bill and is not about news organizations and their relationship with news disseminating platforms.
I think we all agree, presumably, that there are many reasons to be critical of big tech. Those do include the algorithmic amplification of inflammatory material. I think that is something that the House is intending to grapple with through online harms legislation. That's a really important issue.
I'm on the board of the Canadian Anti-Hate Network. That is what we track: anti-Semitism and hate of various kinds, and racism in Canada, including what's disseminated by the platforms. It's an important issue. I don't want to diminish or make fun of the importance of the issue.
I think your instinct is correct. There's an anti-big tech sentiment increasingly over the past, let's say, five years and it makes big tech a convenient target. I think that is some of what is happening here.
Big tech has a lot of money. I think it's perfectly reasonable to impose taxes upon big tech and, as I said, use that to fund journalism, but personally, I could live without the moral judgment because I don't think it's appropriate.
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The people who are doing the creativity and innovation right now don't think so, and I think that their perspectives are probably correct, because they are the folks doing that work.
From my perspective, this bill will reward organizations that have deal-making capacity and employ lawyers and business development people, and it will reward organizations that have lobbying power and presence in Ottawa, and the little organizations definitely don't have that. They spend all of their time trying to innovate their product and sort of tweak it so that people like it more and so that they are more likely to pay a subscription for it or sign up on Patreon or whatever model the organization is using.
One thing I can tell you as someone who has run news organizations is that the more business models you have, the more complicated your life is; the more masters you have to serve and the more expertise you have to develop. When I was running the Wikimedia Foundation, we experimented with multiple business models for two years and then we doubled down on the one that was working, which was ordinary people giving us donations because they wanted to.
It's not, I don't think, a great idea to try to get start-ups to be in the business of not just pleasing their audiences and aiming, presumably, for user pay in many circumstances but getting good at negotiating with Google and Facebook and coordinating with other entities to do that and also to get good at government through local journalism funds and whatever other mechanisms the government has. That's another stakeholder and another revenue generation area.
That is a lot of complexity for something that is really small when the person doing business development is also writing the news and maintaining the website.
I think it will be bad for innovation, and I think innovation is badly needed. What we want ideally is a sustainable journalism industry, and to get there, you have to innovate.
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Thank you, Ms. Gardner.
Mr. Palmer, comments were made by Mr. Singer around.... There seemed to be this claim that there were these two pots of money, which again points to his misunderstanding of this legislation. He pointed to the fact that newspapers are going to be able to apply for money but then other news outlets will be able to apply for money. That's not the case. Within this bill, there are not two pots of money. There's only one pot of money and, indeed, you will have smaller newspapers competing against larger organizations like Bell.
We've heard from two different individuals who came before this committee, one representing Alberta newspapers and one representing Saskatchewan weekly newspapers. Alberta newspapers said that, within that province, 50% of newspapers would not be eligible because they don't have two or more full-time journalists. Then, with regard to Saskatchewan, he said that 80% would not be eligible because they do not have two or more journalists.
If the point of this bill is truly to protect local newspapers, will it accomplish that?
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Thank you very much, Madam Chair.
I want to make a quick observation.
We've had witnesses come in to tell us that there have been almost 500 media corporations that have collapsed over the last decade because of the changing structure of the business in Canada. We've also been told, and I think the Conservatives probably agree, that there is no value to the media that's being distributed on the big tech giants.
I think it's astonishing to just assume that, if you open up Facebook or you click on a Twitter link or you're on Google, the Canadian content does not have value. If we agree that it has value, then we agree that we should assess that value, as Mr. Singer has suggested. It's a very fair process. You actually determine the value of that content on that platform, how much it is being monetized by, and you pay the publisher accordingly. It's a very simple concept.
Mr. Singer, do you have any final statements or reflections on that specific point? Is there anything you'd like to comment on as we close this session?
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Yes, I want to take on one thing that Ms. Gardner said just a second ago, which is this notion that the small organizations aren't going to have the resources to hire a lobbyist to negotiate.
I just want to submit respectfully that the whole purpose of forming a coalition is that everyone goes in there together, represented by one lawyer, one expert. It's going to be funded as a collective. It's not going to turn on the funding capabilities of any one particular small publisher. There is no lobbying that needs to take place, or negotiation. You just join the collective, and then the collective is going to hire a lawyer and an economist. They're going to go into the room and negotiate and try to put forward the best valuation possible.
I want to dispel the notion that somehow this is being set up in such a way as to make life difficult for the small organizations. Actually, if it's done right, it should make life easy for them. All they have to do is join the coalition, and then, conditional on winning at the hearing, they're going to get their pro rata share based on traffic generation and based on employment. That's how we're doing it, at least in the United States.