Despite repeated warnings to the contrary, many legacy media outlets and the Liberals thought they could use government power to take extract money from successful tech companies. It hasn’t turned out that way.
The Globe & Mail has turned against Bill C-18. Their editorial board has warned that C-18 gives too much power to the CRTC, as the legislation would allow the CRTC to “cut a media company off from millions in funding if it finds itself displeased with the way the company operates.”
“As the government caves on Bill C-18 regs, @globeandmail effectively calls for the bill to be scrapped altogether. Says it “distorts the marketplace” and concludes “there are clearly better ways of supporting Canadian media than the mess of Bill C-18.””
As the government caves on Bill C-18 regs, @globeandmail effectively calls for the bill to be scrapped altogether. Says it “distorts the marketplace” and concludes “there are clearly better ways of supporting Canadian media than the mess of Bill C-18.”https://t.co/Nd9B439Bh3
— Michael Geist (@mgeist) July 11, 2023
That of course assumes that companies like Facebook & Google were willing to pay for links, an absurd idea both companies have rejected.
The Globe & Mail is instead arguing for an extension of already-existing tax credits that incentivize people who subscribe to online news services, perhaps by increasing the credit from 15% to 100%, or making it equal to the credit people get for donating to political parties.
It’s quite notable that the Globe & Mail is criticizing C-18 in such clear terms. They are right that it is dangerous for the government to decide what media is and isn’t ‘legitimate,’ and they are right to realize how C-18 distorts the market by protecting companies from the results of competition.
Just take a look at how the government itself explains the expanded powers that would be given to the CRTC under the legislation:
“The Bill would grant new roles and powers to the Commission. The Commission’s new responsibilities would include drafting a Code of Conduct to guide negotiations; determining which news businesses are eligible to participate; maintaining a list of digital news intermediaries to which the Act applies; determining when a digital news intermediary may be exempt from the regime because voluntary negotiated agreements satisfy statutory criteria; supporting the arbitration process; receiving complaints about various matters related to the framework; and applying administrative monetary penalties for non-compliance. The Commission would also have the power to draft regulations to govern various aspects of the operation of the Act.”
C-18 also gives the government – through the CRTC – more power to order online news outlets to hand over their records:
“The Bill authorizes the Commission to gather the information it requires to fulfil its responsibilities. Persons designated by the Commission may also order the production of records from a digital news intermediary operator or eligible news business where there are reasonable grounds to believe the records will be relevant to verifying compliance with the Act or preventing non-compliance.”
Ask yourself if that seems like something a country that claims to value freedom of the press should be doing?
Of course, the warnings about the fact that C-18 is a dangerous power grab is something people like myself have been saying for quite some time.
These are things the Liberals and the legacy media were warned about.
The Globe & Mail may be a bit late to come to this realization, but better late than never.
Buyers remorse
As the damage caused by the Liberals’ unwillingness to be reasonable about C-18 continues to grow, some who pushed for it clearly have buyers remorse.
Notable to see Bob Cox, former chair of News Media Canada and Winnipeg Free Press publisher sounding the alarm over the potential harm out of Bill C-18. Government’s tough talk won’t compensate for losses stemming from this miscalculation.https://t.co/6dFe0yJOAt pic.twitter.com/0wUFZD8O6B
— Michael Geist (@mgeist) July 7, 2023
Funny enough, News Media Canada celebrated when Bill C-18 passed:
“News Media Canada welcomes the passage of Bill C-18, the Online News Act, which allows for news businesses – large and small – to come together to negotiate fair market arrangements for news content with dominant search and social media companies.
“This is an important first step to level the playing field and address the significant market power imbalance between publishers and platforms and to restore fairness and ensure the sustainability of the Canadian news media ecosystem,” said Jamie Irving, chair of News Media Canada, “We thank Prime Minister Justin Trudeau for honouring his commitment to pass legislation, based on the Australian News Media Bargaining Code.”
“Real journalism, created by real journalists, continues to be demanded by Canadians and is vital to our democracy, but it costs real money,” said Paul Deegan, president and chief executive officer of News Media Canada.
“Original fact-based, fact-checked journalism from authoritative news brands matters, and publishers look forward to participating in the bargaining process in good faith.”
We extend our thanks to Pablo Rodriguez, Minister of Canadian Heritage, for setting the table for commercial negotiation, backed up by the teeth of final offer arbitration,” added Mr. Deegan.”
Clearly, that celebration was a bit premature.
A failed extortion attempt
Let’s cut through the spin and take a look at what Bill C-18 really represents.
Fundamentally, it’s a failed extortion attempt.
Companies like Meta and Google have a lot of money, because they provide a service that a large number of people freely and voluntarily chose to use. Nobody forced people to use those services. Instead, those services rose to the top through market competition by providing value to those who use them – otherwise people wouldn’t use them.
By contrast, many legacy Canadian media outlets have struggled to provide value to their customers, and are thus losing money. Instead of accepting this and taking responsibility for their own failures, those legacy outlets – along with a federal government eager to make the media more dependent on the state – are desperately looking around for places they can extract money from.
Since they post their content on platforms like Facebook, and since Google links to their content, the legacy outlets have sought to blame Facebook and Google for their own failures, and use that blame to create a justification for taking some of the money earned by those tech platforms.
Again, instead of embracing real competition, those companies ran to an obliging government demanding the use of state power to compel tech platforms to give failing media outlets more money. The government threatened the tech companies, insulted them – Trudeau compared them to Canada’s enemies in World War Two, and made it seem as if those platforms had no choice but to redistribute some of their wealth.
Basically, it was a thinly-veiled extortion attempt.
And it has failed spectacularly.
Now, it appears the Liberals may be preparing to cave, despite all their public ‘tough-talk’ to the contrary.
Here’s what Professor Michael Geist wrote about the change in emphasis from the government:
“Earlier today, Canadian Heritage released a “next steps” document that outlines the planned forthcoming regulations. Those new regulations will effectively rework the legislation by shifting from mandated payments for links with uncapped liability to a threshold contribution customized for each company established by government regulation. Moreover, the contributions will incorporate existing deals and other contributions such as marketing dollars.”
Bluff called
In essence, the tech companies called the Liberals bluff. The Liberals thought they could brazen their way through the contradiction of demanding tech companies comply with legislation by paying people to use a heretofore free service when those companies could also comply be simply not providing the service at all.
This meant that the legacy outlets not only wouldn’t get any new money, but would lose tons of money they already get from the traffic that links on Facebook and Google provide.
Government greed
We often hear about the supposed greed of the private sector, but it’s really the government that is much more greedy. In a relatively free market, a company only makes money by providing value to others. Governments meanwhile take what someone else has already earned.
The worst combo of course are corporations who run to the government to try and stifle competition or – as discussed above – ‘extort’ others into redistributing their money.
Why should companies that lose in economic competition be allowed to demand anything of the winners? Why do Canadian legacy outlets feel that they are exempt from failing or going bankrupt?
There is an attitude of entitlement among many companies in Canada, an entitlement that isn’t based on having succeed in real competition, but instead on their proximity to power and their belief that they can survive by using that proximity to power to manipulate and distort the market.
This is a big problem, because it is a disincentive to innovation and a disincentive to provide real value.
Thus, if the Liberal cave-in on Bill C-18 actually plays out, and if legacy outlets fail in their attempt to skew the market in their favour, Canadians will be the big winners. We need a free, open, and competitive marketplace for news and ideas, and the weaker Bill C-18 becomes the better it is for our country.
Spencer Fernando
