Senate Hearings on Bill C-18 – A Look At Hearing 4 (Segment 1)

The special coverage of the Bill C-18 hearing is continuing. We now go inside the first segment of hearing 4.

Our special coverage of the TRCM (Transport and Communications) committee hearing on Bill C-18 is continuing. A lot has already taken place with these hearings, but there are more hearings – some of which are hotly anticipated.

Before we get into that hearing, though, we wanted to showcase the previous pieces of coverage of these hearings:

Past Hearings Covered

Hearing 1 – Heritage Ministry officials / Lobbyists (1) / Konrad von Finckenstein
Hearing 2 – Missing/Not Available
Hearing 3 – Michael Geist / Peter Menzies / Lobbyists (2) / The CRTC

So, with that, we are moving on to the 4th hearing of this series. As usual, the video we are watching for this analysis can be found here. With that, let’s get right into this hearing.

Opening Statements

Richard Gingras opened with his statement. He said that they have heard their position on this legislation mischaracterized as ‘not wanting to be regulated’ or not wanting to support Canada’s news ecosystem (I’ve heard both of those characterizations as well). This is untrue. Through both of their services and their direct funding of news organizations, Google is one of the biggest financial supporters of journalism. Last year, Google linked to Canadian news organizations more than 3.6 billion times at no charge – helping them make money with ads and new subscriptions. They also pay news publishers to license curated and paywalled content through Google News Showcase which currently supports more than 150 publications across Canada.

Through the Google News Initiative, Gingras continued, they provide tools, training, and funding to support the shared goal of enabling the independent and diverse news ecosystem. They are willing to do more. They support a thoughtful approach to regulation that protects the foundations of the open web and recognizes the value they already provide publishers.

Unfortunately, Gingras explains, Bill C-18 will not encourage the continuation or expansion of publisher licensing agreements as it is intended to do and it may jeopardize current products, services, and investments that benefit the news ecosystem and all Canadians. For over a year now, they have shared their concerns, proposed thoughtful solutions, and alternate models they feel would be more effective at achieving the underlying goals. However, rather than considering a fund model or addressing concerns raised by them and others, recent amendments glossed over serious issues, exacerbated others, and produced a new range of inconsistencies.

The debate on this legislation, Gingras added, has also created dramatically unrealistic expectations among news publishers and politicians – treating Bill C-18 as an unlimited subsidy for Canadian media. The publisher class has grown so broad under this bill, that it won’t have an impact on where it matters most. Core among the issues of Bill C-18 are the provisions that override well established copyright allowances and put a price on links. By making Canada the first country in the world to put a free price on links to web pages, this bill ignores the existing $250 million value of free traffic to publishers and sets a dangerous precedent that is contrary to the interests of the Canadian news ecosystem.

Leaving existing copyright balances intact, Gingras continued, as was done with the European copyright directive, would establish a reasonable baseline that recognizes the value of free traffic and enables negotiation of value added content and services. Regrettably, Bill C-18 could see existing support to news publishers slow down or stop while Google, and others, seek the clarity of a reasonable outcome. Creating clear exemption criteria would have the immediate benefit or encouraging Google, and publishers, to sit down, reach agreements, and flow money to journalism quickly. Replacing final offer arbitration with standard commercial arbitration, which is relied on for the most complex business disputes, would be the fair and just way to settle any resulting disputes.

Furthermore, Gingras said, clarifying eligibility criteria would ensure the bill effectively and equitably support quality journalism for local communities including ensuring that eligible news businesses actually produce journalism and directly fund the creation of journalism. The reality of Bill C-18 is that the extreme level of business uncertainty, and uncapped financial liability that Google is being asked to accept, merely for the providing of free links to news sources Canadians are searching for, and which news publishers benefit from, is unreasonable and threatens to create a situation where everyone loses.

If they must pay publishers, Gingras continues, for simply linking to their sites, making them lose money with every click, it would be reasonable for them, or any business, to reconsider why they would consider to do so. They remain laser focused on working constructively with senators, with the government, with the news industry, to fix this legislation and make it work as it was intended. At minimum, Bill C-18 should include a clear attainable path to exemption that incentivizes businesses like Google to continue to support the Canadian news ecosystem. He then said that they look forward to the Senators questions.

(This position has definitely remained consistent over the last year or so. Nothing really surprises me here in the opening statement. While the House of Commons level was a complete wash, it definitely looks like Google is, at least, trying to extend the olive branch with senators. Doesn’t hurt to try, right?)

Questioning the Witnesses

Senator Julie Miville-Dechene said that one of the problems with the bill is the fact that what surrounds the value that has to be negotiated is vague. Press editors see 30% for publishing houses whereas platforms like Google are referring to the commercial value of information content for platforms compared to the commercial value of traffic generated on information sites. Could Google explain how the issue was revolved in Australia and what amendments are proposed to resolve the issue because she thinks its at the core of the disagreement between the media and Google.

Gingras responded by saying that, first of all, he thinks it’s important to note that Australia, the bargaining code that was proposed was indeed a piece of legislation that they considered quite unworkable. They expressed those concerns. There were changes in the bill before it was ultimately passed. More importantly, the government gave them clear understanding of how they could be exempt from that bill and, indeed, they proceeded and worked with the industry to address what they were asked to do – and they were never designated under that bill. That bill does not apply to them in Australia.

To the senators point, Gingras continued, as he noted in his opening remarks, he thinks that one of the unfortunate problems with the bill is that it creates a disincentive for them to do all they can to connect users to new and diverse voices expressing current events in Canada. Also to the senators point, the suggestion that somehow that the bill should result in compensation by Google and others equal to a third or 30% of news room costs is both inaccurate and problematic. He knows that was expressed by someone out of Australia who admitted that it was mere speculation on his part. He has looked into that closely and frankly, they find no mechanism to even understand what news room costs are across Canada or in Australia for that matter.

Gingras said that he would also add that, as important as it is, he thinks they would all agree, they, and others, provide support. He would question whether the future of an independent media would be wisely founded on an economic model that is reliant on a third of its funding from third part private companies such as Google. So, again, they think it is an unrealistic expectation. They think it’s an unwise expectation. They are certainly glad to do all they can, but they don’t think that’s the right constructive path to get there.

Senator Miville-Dechene said that if Google does not accept the calculation of 30%, how does Google calculate the value of journalistic content on platforms like Google? It’s the measure. What’s the value of this content? They are going full circle because if Google is not transparent about the value, how can they make progress? (Maybe stop pretending that free linking requires compensation might be an excellent start.)

Gingras responded by saying that he believes they have been transparent. First of all, he would point out that, as he has indicated, that news queries to Google on Google search are less than 2% of all queries. It’s a very very small percentage of queries, as he’s noted. (Interesting because I didn’t know if there was a statistic of how much news is searched on Google up until now. Make sense considering news is such a small percentage of Facebook traffic as well, though.) As others have indicated, the Reuters Institute for instance, in any society around the world, the percentage of citizens who are interested in serious news is in the single digits. However, unfortunate that might be, he thinks that we would all like for that to be higher.

As he said, Gingras continued, the amount of queries is less than 2%. The amount of revenue that they earn directly from news on their products is even less then that. That’s not difficult for anyone to assess if you do a query on Google search on a news topic, such as this bill, you will not see ads. Advertisers are not particularly interested in news queries as a method of reaching their potential customers. (This really compounds the line, ‘publishers need platforms more than platforms need publishers’ by quite a lot.) So, it is a small percentage. Again, they are willing to do more and it provides to them, but he thinks that it’s important that that be recognized and that it be recognized the value they do provide both in terms of traffic and the many other means used to provide support to the news industry in Canada.

Senator Paula Simons commented that Gingras came in with a rather conciliatory statement. Google’s public facing comments before this has been that were they to pass Bill C-18, that they would pull out of the market and block Canadian’s not only seeing Canadian news, but international news on Google searches. She’s wondering if that is still Google’s position and she is wondering that given the rise of AI, which was not really considered seriously at the time when this bill was drafted, would that not prejudice the use of development of AI technology if Google blocked all Canadian’s from seeing Canadian and international news links by their search site? (Personally, I think the action Google would take is just not carrying Canadian news links. The test showed that non-Canadian news links were still accessible to Canadians, but that’s about it.)

Gingras responded by saying that, first of all, he doesn’t recall that Google has ever made the statement that they would pull out of Canada (yeah, I think this was the result of confusion where some people thought that Google would outright pull out of Canada entirely which was never their position.) What they have stated is given the legal framework of Bill C-18, that they would reconsider how they would use links.

Senator Simons said that this was not the language. The language was that Google would block Canadian’s from accessing both Canadian news and international news on their platform.

Gingras responded that as stated by the recent tests, that they would have to evaluate their use of links. Through those tests, they did indeed during that 5 work week period, did not block, but they did not have those news sources in their index. Of course, Canadian’s could visit those sites in many other ways, but yes, for that period, for that very small percentage of Canadian’s, that was the case.

Senator Simons said that they were blocked and for that time period, they could have gone to Bing or Yahoo! or another search engine, but they would have to know first that they were filtering out all news. How could that possibly work for Google in an AI model that requires as much data as possible? Would Google not be shooting themselves in the foot? (If the traffic for news is so low in the first place, not really.)

Gingras responded by saying that we are in the very early stages of the development of these technologies. They certainly recognize the huge potential benefit and will continue to develop them with that in mind. Again, as they speak there today, they are eagerly, if not, desperately seeking a constructive path forward. They don’t want to end up in a position where news is not in their products. They would rather not that at all. However, as they’ve indicated, even indicated with the tests, the primary usage of their products by Canadians is to find all matters of things other than news.

Senator Simons cut him off for time reasons and said that in their additional materials, Google suggested that one of the concerns with Bill C-18 is that it doesn’t do enough to impose journalistic standards on news or to make sure that Google is allowed to elevate certain news sources over others. Can Google tell her, because she’s a former journalist herself that is concerned about the idea of either the state or these corporations deciding what is or isn’t acceptable news. Is Google calling on the government to create more policing of what is published before Google would accept this form of legislation?

Gingras responded by saying that that wasn’t their intent at all. He would share her concerns. He doesn’t think it is up to the government or anyone to decide exactly what journalism is. The point Google was trying to make, and will continue to make, is that the underlying precept of the bill was to drive support for the quality of journalism for local communities across Canada, but the breadth of the definition of eligible news businesses appears to go far beyond that – such that it won’t proportionally help with what they just said: providing journalism to local communities. so, that was their concern there.

Senator Simons noted that in terms of Google’s undue preferences concerns, her understanding of this clause is that it’s meant to make sure that neither Google, nor Facebook, could penalize companies that are not in active negotiations, are not playing well with others, but does Google interpret that as not being able to index quality sites over others?

Gingras responded by saying, “precisely”. He said that what they were pointing out was that they didn’t feel that the language with regard to undue preference is not clear. It could be interpreted or misinterpreted to suggest that Google could not rank as they do to provide users with the most relevant and more authoritative sources. It might subject Google to many challenges – legal challenges to Google’s ranking efforts. That was their concern. If Googles understanding or interpretation is incorrect, they’d be pleased with that.

Jason J. Kee said that their concern with that that the undue preference could render Google potentially liable for elevating any sort of information if someone feels they’ve been disadvantaged. That could easily apply to purveyors of authoritative content who are unhappy about not being high up in the rankings. Then, this improved on at the other place, but it renders Google potentially liable. They are quite concerned about that.

Senator Rene Cormier asked that, first of all, could Google give Senators some examples of agreements that Google has arrived at with Canadian media houses?

Gingras responded by saying that in their efforts and programs in Canada, there are many. They range from training programs to innovation challenges to our relationship with Google News Showcase. In all of those efforts, they seek to address and make their programs available to as diverse of an array of publishers as they possibly can without fear nor favour individually of one over another. As he mentioned with Google News Showcase, under those arrangements, that’s supporting news organizations in some 120 communities across Canada. Again, it is their objective to be as broad and diverse as possible. As he mentioned in a prior hearing, he feels he’s spent a tremendous amount of time working with publishers in Canada both legacy publishers as well as emerging publishers.

There’s an extraordinary array of emerging news publishers in Canada, Gingras continued, and they’ve worked closely with them to help in their development and they’d love to continue to do so. He thinks their voices should be heard in these debates as well. (This is something I’ve been keeping an eye on. Are smaller emerging news voices being heard in this particular hearing? So far, I haven’t seen that happen. I’ve asked to be part of the hearings, but to date, haven’t heard back.)

Senator Cormier said that he would like to understand what is Google’s problem with Article 11 when it comes to exceptions because, apparently, Google has agreements with different types of media outlets. In the document he’s received in his office a few days ago, why is it that Google sees it, in its current form, that the bill that causes people to re-enter voluntary agreements until the regulatory authority clarifies the situation? What prevents Google from entering into voluntary agreements with the most media outlets possible, as diverse as possible so that Google can benefit from the exceptions?

Gingras responded by saying that they feel that the exemption criteria, at this time, are quite vague – such that they are not sure that is a potentially good path. Furthermore, given that, it’s unclear in Google’s minds, that this creates the right incentives by the publishing industry itself to come to the table, reasonably negotiate, such that they might actually pursue an exemption.

Kee chimed in by saying that the purpose of the criteria exemption, as they understand it is to incentive voluntary agreements and to provide, essentially, an out. It is the proverbial carrot to the stick of the mandatory bargaining regime that’s in the bill. The challenge that they find that’s with the current wording of the bill is that: a) It is so expansive as to require an agreement with every single publisher. That wouldn’t necessarily be feasible given that there’s a wide range of publishers. They all have different needs. It is also worth noting that the exemption criteria requires all these deals to kind of look alike. It requires paying and receive compensation for the making available of their content. They find that a lot of smaller publishers that actually are in in kind programs like training and other kinds of programs are actually more effective. The exemption criteria doesn’t actually reflect that.

Lastly, Kee continued, they just want clarity about what exactly is- how much is enough? How much is Google actually expected to be contributing? Google doesn’t have that kind of clarity.

Senator Cormier said that Google is saying that the CRTC has no news expertise. We can expect regulations to take time. Seems Google is (afraid?) that the process will take a long time. Why hasn’t Google taken more initiatives to have voluntary agreements? Today, Google is able to have agreements with different media outlets before the bill is adopted. Why doesn’t Google do that? (This is a very confusing question since it is well documented that Google already has voluntary agreements in place.)

Kee responded by saying that Google has done exactly that. The Google News Showcase is their premier program where they actually engage in a news publisher partner where they will provide them, essentially, curated news information that they then show on certain products – particularly on Google Discover products. This isn’t a program that is necessarily suitable for all publishers. It requires them to participate and requires a certain amount of volume to participate with them that some smaller publishers aren’t necessarily capable of doing which is why they offer alternative programs to small or medium size publishers by and large. So, to be clear, they have been engaging with publishers in Canada voluntarily for some time – long before Bill C-18 was introduced. Again, they would wish to continue to do so. The challenge they face is that without a clear path to exemption, they don’t know what else they should be doing, how much they should be spending, or what the expectations are. Until they have that kind of clarity, it’s difficult for Google to move forward.

Senator Jim Quinn noted previous meetings he’s had with Google. He said that he was interested in the impact of providing the links to news outlets in terms of revenue – effects on Google’s revenue. From 2013 up to 2023, for example, revenues went from $55 billion to, last year, $280 billion. He understands that revenues are largely driven by advertising at around 80%. So that means that, last year, there would have been revenue of about $224 billion driven by advertising. What is interesting to him is that their traditional publications, their advertising has gone down as Google’s has gone up because of the information that they provide. He noted Gingras’ comments of 1% would be tied to links. So, he’s trying to get a bit of a quantification of how much revenues does Google accrue because of the 1% of news links provided. If it’s 1%, it could be somewhere around $22 billion tied to advertising, taking the 1% advertising revenue. Let’s assume that is half of that, $10 billion. So, there’s got to be a relationship between advertising disappearing from traditional publications, Google providing links, and benefiting from providing links, to have that news transmitted by the platform. He believes people should be compensated for the work that they do. So, he was wondering about the comments in terms of values.

Gingras responded by saying that one of the unfortunate parts of this situation is a misunderstanding of what has happened in the advertising environment with the introduction of the internet. The suggestion has often been made – it was somewhat embedded in Senator Quinns question – that somehow, the advertising revenue of a news organization has been moved to Google. That really wasn’t the case. You can actually see that in Google’s own individual behaviour. Newspapers, in their day, were the internet of their communities. We went to them for all kinds of information, but the internet changed that. It’s the internet that has disrupted the advertising environment.

Gingras explained that there are four key categories that drove revenue for newspapers, probably 75% – 80% classified ads, which moved to the internet. When you look for, say, an apartment for your son or daughter, you would go to a classified ads service on the internet. Department stores, which are now a shadow of their former selves, in a world of e-commerce. Food discount services found in the paper which his mom always used, supermarkets don’t work that way anymore. They have loyalty programs. None of that revenue came to Google. Automotive dealers, none of that went to Google. The internet disrupted the advertising environment, without question.

One huge benefit, Gingras continued, is that small businesses in communities could not afford to advertise in newspapers. Small businesses are a majority of Google’s advertisers because of the cost effectiveness and the efficiency of advertising. So, he thinks it’s very very important to keep that in mind as we look at this debate. Again, as Google has noted, they are willing to do their part to support the news industry, but we should do it on a sound basis and understanding of what happened in the world of advertising, of what values Google currently provides in terms of, for instance, search traffic. As he noted, small percentage for Google, it’s often a large percentage for news publishers.

(This is a reality today that we face. This isn’t just some random person just blindly agreeing with Google. We are like a large majority of operations out there where search makes up a massive amount of traffic for our website. We obviously could do more to take advantage of other services as we move forward, but the human resources aren’t there to say, for certainty, that we can stay on such services for the long haul. With that, if we did, we would actually be far more reliant on platforms like Google than before if we did so. At the end of the day, it’s the platforms that are in the drivers seat in such a debate, not the publishers. Google could drop news links in Canada altogether and it would be like brushing away a few flies off of their shoulder for them, but it would squash a huge number of publishers in the process. This is at the heart of why trying to charge for news links is such a terrible idea in the first place. Demanding compensation from platforms like Google would make services even more beholden to these platforms – the best case scenario for news publishers. If Google drops news links, then those news services just see their traffic start dropping out of existence – and with that, the ability to survive along with it.)

It has replaced the 30% of their operating expense that used to pay for distribution and news stands, Gingras added. Now, that comes through services like Google Search at no cost to them at all.

Senator Quinn asked if Gingras would agree that it’s fair to say that there is some revenue accrual to Google’s favour with the shifting of advertising, and not just the classified ads. There is- if it’s $20 billion, cut that in half, it’s still $10 billion. Cut that in half and it’s still $5 billion. There’s some accrual that comes back from the shift from some advertising that would be in traditional newspapers. Some of those newspapers are very regional newspapers that we lost so many. So, wouldn’t it be reasonable to assume that the company benefiting from that should have some dialogue to come to an agreement? That was part “A”. Part “B”, he understands that Google has some deals with some of the larger publications in Canada. Has there been any other discussions with other publications in Canada to work out deals? In Australia, that was exactly what was happening so Google is exempt. The deals were made and Google was no longer applicable to the law. So, what progress is Google making in the negotiations to avoid being subject to this bill should it pass?

Gingras responded by saying that one thing he should point out with regard to Australia is that the class of eligible news businesses is exponentially smaller than what they see in Bill C-18. It was a much more targeted approach. What Google would very much like to engage in that dialogue, Google has been engaging in dialogue. Of course, expectations have to be reasonable and appropriate to both parties. He thinks that is what at question here is that is this reasonable and appropriate? They will certainly continue that dialogue. What he would urge government to do also is to make sure that we are thinking of the future, not the past. We shouldn’t look at this legislation for how to recreate a past which is now gone. How do we put the focus on driving the necessary innovation by emerging players, by legacy players, to not only have an effective and sustainable (time ran out).

Senator Andrew Cardozo said that he gathered that Google would have preferred a different model – the fund model – but he sees that Google has a number of deals with outlets at this point. Google has agreed that Google is prepared to help Canadian news media, so what would Gingras rather see instead of this bill?

Gingras responded by saying that one ongoing concern that Google has, they feel that the role of the search engine is extraordinarily important in an open society. They do their absolute best to do that in a highly principled way. Google knows that citizens around the world trust them because they feel that Google does it well. He thinks it would damage that trust to the extent that Google is perceived that they have a direct hand in funding news organizations in societies. They’ve done that. They feel that they have been guided to do that in places around the world, but he doesn’t see that as an ideal approach. To them, they would rather see an approach such as a fund where the structure and the criteria were carefully crafted or it was governed by others, not them – in where the source of the revenue would, indeed, be largely from them, but wasn’t necessarily tied to individual companies, but tied to a broader class of activity.

Again, Gingras continued, it’s how we come up with a model that achieves the right result, doesn’t create undue influences by anyone’s part, and actually achieves a longer term objective in the interest of the news industry. Among the emerging players are people who are being successful and profitable in the world of digital news. The situation is not nearly as dire as some have suggested. People are making this work, but they tend to be new organizations who have figured out how to be effective in our modern digital world.

(I think this goes back to being innovative. The world has changed, how does an organization or a business adapt to those changes? It’s been my experience that innovation is something that the news business, at least among the more traditional players, tends to do reluctantly. Yes, there are notable evolutionary examples within the sector, but there is this disdain to the idea of change. What’s more, even just in watching some of the coverage, the very idea of the internet itself is offensive to a number of these media organizations. Some really don’t want anything to do with the internet and think it’s just a bad place where only evil things happen there. With eyeballs moving in that direction, the larger media outlets should have just tried to figure out how they could be prepared for the digital age. Many did not and, instead, just asked for free money to stick with business as usual – that business as usual being that people go back to the newspaper stands or go back to watching their newscasts exclusively. That’s not happening as much any more. The organizations that have held out and resisted these changes are the ones I’m highly skeptical that we should be “saving” because they have rejected the future in favour of the past and just expect the world to simply reshape itself to their whims. I’d say to those organizations that they made their bed, now they lie in it. They made their choices, others have made theirs. We need to let some of the consequences of bad decision making run their course.)

Senator Cardozo said that in terms of funds, Gingras said that it would be governed by someone other than Google or the industry. Who would it be governed by? Who would set up that governance structure?

Gingras responded by saying that he could give the senator an example. He suspects that senators are far more expert then them, but he referred to in the past about Canada’s Journalism Tax Credit. It had very clear criteria. In fact, they echoed that in their work on Google News Showcase. They created a board of experts to adjudicate appeals on folks who, in their application, might have been rejected. He’s not sure how those were appointed. He suspects those were done as you do with other commissions and bodies to try to represent expertise across the landscape. He thinks there are many ways to do that both in your protection of undue influence either by private interests like Google, or as some might suggest, concerns of government influences as well. (I’m admittedly a little confused by this answer.)

Senator Cardozo responded by saying that that is not all that different from this. That you would have, perhaps, a government appointed body – CRTC like, but perhaps not the CRTC – who would oversee this. Would Google not be still having deals with businesses?

Gingras responded by saying that in understanding the bill, yes, it does guide them towards private negotiations – be it collectives or private individuals. If that’s the only way that is going to happen, they would do that. Again, his concern with that- they’ve had this experience. They tried to be very equitable and criteria driven by Google News Showcase, but that tends to drive suspicion on the part of others. He thinks that what’s important also is coming up with structures that actually reinforce trust, not only in the news media, but also the mechanisms of actually supporting that trust in the news media.

Senator Cardozo asked how many deals does Google have in place and do they cover ethnic and indigenous media

Gingras responded by saying that he doesn’t have the exact number of deals in his head. They can certainly get that. He does know that it covers 120 companies down to as small as Yellowknife. He does not know the specific populations they serve. He would imagine they are diverse. He would like to think that it includes indigenous populations from those publications, but he doesn’t have any specific data on that to provide.

Senator Leo Housakos asked if he would have that data for the committee.

Gingras responded by saying that they strike relationships even under this bill. They would be striking relationships with news publishers who serve those communities. It would not be up to Google to determine their specific audiences. As far as the ownership of those entities, he, too, doesn’t have a clear indication of every ownership structure of every publication.

Senator Pamela Wallin said she had a couple of questions on the eligibility criteria. Does Gingras have any idea who is eligible in their discussions with government. She’s assuming Google has had some. Has Gingras had those discussions. Does Gingras have a sense that they know who they think provides actual news in this country or what a definition of journalism might be?

Gingras responded by saying that they certainly, in their various engagements with the government, with the Heritage Ministry, with members of parliament, have asked those questions. He doesn’t think that anyone right now has very clear answers to those questions. AS he had noted, they had always thought that the criteria laid out, for instance, for the Journalism Tax Credit, were quite good in that regard. It is tricky. He does recognize that, in a sense, defining what journalism is, what a journalist is, is almost contrary to the notion of free expression. So, he understands the sensitivity. That’s why he thought, actually, the model suggested by the tax credit is quite a reasonable one.

Senator Wallin said that she comes to this debate with this point of view. She’s a believer in free speech and free expression, so she wants the most available content out there and what she fears with this particular bill, there will be less and less access for her and other Canadian’s to a wide variety of sources. You are either going to, as Senator Simons said, just shut down operations with the sharing of news links. But it’s certainly going to restrict that because it is now dependent on what the definitions are, liability, who’s a journalist, who decides. It is really going to restrict that free exchange of ideas which is the very core of the internet.

Gingras responded by saying that, yes, and again, that’s why he thinks these questions are so particularly sensitive and important to address properly. He does want to correct just one point. Google has not suggested that they would shut down operations in Canada. They simply said that they would have to adjust their products.

Senator Wallin then asked does Gingras have a sense that the government understands Google’s business model, what Google’s concerns are, about unlimited liability with no definition of what’s an eligible news organization or a news producer? Does Gingras think that they understand the concerns he has about this, kind of forcing Google to be hands on in picking and choosing what kind of information goes forward. She doesn’t like it. She doesn’t want government involved and she doesn’t really want Google involved either on that. She wants open access.

Gingras responded by saying that he can’t really speak to that level of understanding. Google has made considerable efforts to explain their concerns in great detail. He has met with the Heritage Ministry going into the very specifics they we are going into here today. He will try to continue to do that. Frankly, in his job, he looks at the situations like this and say ‘Richard, did you do the best job that you could have to explain?’ Because, clearly, people aren’t understanding it as clearly as they feel is necessary given the importance of the legislation that they have before them.

(There is a problem with this. Explaining something to someone requires both someone who is able to speak and someone who is capable of listening. As I’ve seen with the Bill C-11 debate, the problem isn’t necessarily that people can’t explain these issues well enough. These issues do get nicely broken down and nicely explained. The problem is having a party that is willing to listen to the concerns. The government that is pushing these bills have proven time and time again that they don’t want to listen and anyone who disagrees with them on anything is simply spreading false information or somehow debating in bad faith. There is no shortage of people willing to explain how things work on the internet and why Bill C-11 is going to be harmful. There is no shortage of people willing to explain how the internet works and explain why Bill C-18 is harmful to the news ecosystem. The government, however, is simply jamming their fingers in their ears and accusing those explaining these things as liars or partisan hacks or some sort of paid Google or Facebook actor. In that environment, you simply aren’t going to get a productive exchange of thoughts and ideas. You are only going to get people banging their heads against a brick wall, going nowhere on the side of those explaining these things.)

Senator Wallin asked if Gingras thinks that they understand that Google is willing to fund journalism, not just willing to fund failing legacy models. To Gingras’ point, we are not trying to save the past, we;re trying to build something that’s in the future.

Gingras responded that he would hope so. Just one observation, because he has worked all around the world, Canada has an extraordinarily innovative news ecosystem. Companies like Discourse, Narwhal), Indiegraf, Village Media. Village media is profitable in operating in over 100 communities in Canada. He doesn’t think Jeff Elgie has been heard in these discussions. He knows that, from what he hears, that they feel that they aren’t being heard with this legislation. He thinks it would be important to consider that as well because, again, the full breadth of diversity here is important. Most important is that we be thinking about the future, not attempt to recreate the past.

Senator Wallin said that the pay for links- She guesses that her concern is that if she sends a message to somebody and says, ‘gee, I read a really interesting piece on such and such on such a publication.’ That then becomes Google’s bill? (I don’t believe so. The legislation is largely focused on a service like Google News because it indexes news. I don’t think a GMail service would be affected by this. News links would still be on non-indexing services – unless the media goes even crazier and demands news links payments for messaging and e-mail services too which would likely come in the form of a separate bill.)

Gingras responded by saying that no, he thinks the law in that regard restrict individuals from sharing links. It is very specific to the Designated News Intermediaries (DNIs).

Senator Wallin said that if she did that one something like Twitter or somewhere…? (Not really a question that Google can answer as they have nothing to do with Twitter. That really depends on how Elon Musk responds when the publishers come knocking for payments. In all likelihood, he’ll probably send a poop emoji, scream about how the media is terrible, and block news links to organizations who ask for payments and just make the situation a huge mess like he does everything else. Who really knows what would actually happen, though because there’s always the possibility of doing something worse then that with someone like Musk.)

Gingras responded with a brief pause, probably just briefly visualizing how Musk would handle the situation, then said that well, depending on whether they are a DNI, he thinks that it’s clear that if you shared on that platform, but he’s speaking about Google search which is not about sharing. However, in a social media environment, that would be the case.

Senator Donna Dasko said that she just wanted to ask, if the bill passes, as it is, what will Google do? What is Google going to do as a company?

Gingras responded by saying that they don’t, as yet, know because he thinks there are considerably degrees of uncertainty. The bill hasn’t passed. He thinks that there is still opportunities for change-

Senator Dasko interrupted and says that, let’s just say it passes as-is, what is Gingras thinking of? What does Google think they are going to do?

Gingras responded by saying that he doesn’t think it is appropriate for them to speculate. He thinks that they have been clear on the considerations that they have which is, ‘do we need to assess how we use links?’ Do they need to assess whether it is logical to continue to provide a service like Google News which earns Google no revenue, yet drives significant traffic to publishers? Do they need to consider the nature and construct of the relationships they have with publishers given the structure of the bill and the demands of the bill and the broad class involved in the bill? So, that is very obviously a complex set of circumstances. So, he can only cite their concerns about the uncertainty and the fact that he has no certainty now as to what they might do.

(This tracks nicely with my speculation that I’ve had for a long time that platforms are basically putting one foot out the door thanks to the progress of this bill with respect to news links. A lot of supporters are trying very hard to believe that this is just strong arm negotiation tactics and that Google and Facebook would never drop news links, so they will just go along with whatever is demanded of the government because carrying news links is somehow just too profitable for these platforms. In this case, the evidence keeps siding with platforms where the news isn’t that valuable to them and they are more likely to just drop news links altogether rather than pay hundreds of millions just to maintain, in some cases, a free service just because. I know if any supporter is probably giving a ‘just you wait’ response, but the odds are not in the bills supporters favour.)

Kee said that if he might quickly add, the bill is creating a fairly complex framework that has the challenges and issues that they have identified, but also, it still requires a number of regulations both from governor in council and for the CRTC over the course of process that will give greater clarity and certainty regarding the issues of the exemption criteria. For example, what is a Designated News Intermediary (DNI) or not? What is the process for eligible news businesses to register? How can they negotiate collectively? The CRTC is going to have to set up a code of conduct that will actually govern negotiations that will set certain minimum terms. These are all matters that, quite frankly, anyone could tell you exactly where this is going to land. So, they’re in a process where they are just trying to: a) try to understand the potential implications of this bill on their existing products and services and what the effect might be, recognizing that there will be greater information that will come down after passage.

Senator Dasko said that, but Google will stick around through those processes.

Kee responded that he gets it. As Gingras said, they simply don’t know.

Senator Dasko said that she wanted to ask about the Australian situation right now. Is Google fairly satisfied with the status quo and the way that’s worked out with Australia? Just their sense of the situation – not the past, but right now. What’s Google’s feeling about the situation right now in Australia?

Gingras responded that they are satisfied right now. They feel they have addressed the interests and desires of the government as well as the news industry – and obviously managed to do so in a fashion that a piece of legislation that they have had concerns about is not enforced against Google. He wouldn’t think it would be intellectually honest for him not to note that that structure is not indeed the kind of fund structure they would suggest. Those were individually negotiated arrangements with collections or individual publishers. His guess is that senators would find some degrees of suspicion in the environment in Australia. Did Google benefit certain players vs others? Certain small players more than certain small players. Thus, obviously, the desire to approach this in a different way.

Senator Dasko said that she guesses that she takes from that since no situation is ever perfect and there will always people who will complain about- companies will always complain that- she just takes it that he said that it’s going fairly well all things considered with this model. That is the Australian model which is what they are trying to develop here.

Gingras responded that yes, but there are some key differences as he noted earlier, it is not identical to the bargaining code in Australia, and among those elements are the lack of clear exemption criteria. It did not involve a regulatory agency and the mechanics along the way. It was, he thinks, designed for speed and he thinks Bill C-18 is not going to attain the speed that senators might like.

Kee said that it is worth noting that the Australian code has had the unfortunate effect of being a bit of a precedent and a model that everyone is looking towards. As Gingras has actually suggested, a code style model has a series of perverse incentives. The issue of putting a price on links which they are deeply concerned about as well as actually rewarding certain legacy players over small and innovative players and they feel that a fund based structure would actually take care of many of those challenges, but also accomplish the same policy objectives.

(It’s sort of what I was worried about here. If Google were to go along with this whole scheme, it would actually offer an incentive to, say, pull financial dollars from general Adsense revenues of smaller publishers like mine and just hand those dollars over to the largest players. The dollar value of ad revenue is already down by quite a bit on my end and if this comes into force, I worry that this money would decrease even further. This would not only have the unfortunate effect of my site getting those marketplace pressures to just fold, but also makes it much harder for other start ups to use, say, advertising as a method of paying for server costs as they strike out on their own and try to do things in their own way.)

Senator Dasko said that Kee mentioned earlier about the- (She was told that she only has 15 seconds left) what would be Google’s expectations if they don’t make deals with some of these eligible organizations and what does Google think will happen?

Kee responded by saying that he thinks that Bill C-18 is quite clear that, essentially, eligible news businesses can essentially compel mandatory bargaining which goes to dispute resolution and final offer arbitration with criteria they are quite concerned are quite weighted against platforms and will not actually allow the panel to properly consider the evidence.

Senator Housakos noted that Google recommended replacing final offer arbitration with standard commercial arbitration. What are the benefits of standard commercial arbitration and what is Google’s concerns with final offer arbitration?

Kee responded by saying that final offer arbitration is a form of baseball arbitration where in certain circumstances, two parties will put their final offer on the table and the arbitrator has to pick between the two of those. It is intended for use and is predominantly used in markets where it is pretty clear what evaluations are and well established and the intention is to try and bring the parties close together because you don’t want to put an offer on the table that isn’t going to be accepted. In this case, we are dealing with a brand new market where there isn’t any consistent market evaluation at all. The concept of paying for links is very brand new and so there isn’t actually that valuation model.

Final offer arbitration, Kee continued, would not allow to actually consider evidence and to actually consider compromise solutions between the two of those. Standard commercial arbitration does. In that case, you have two parties, they put forward their position, the arbitration panel would listen to both arguments by way of the evidence, and can come up with either selecting one or two positions, or it could come up with a compromise. In their view, that is actually more appropriate for the circumstance where the valuation isn’t exactly clear, and the last thing is that it has the benefit of basically being very flexible. If you are concerned about, again, either party dragging their heels, you can put in very firm timelines to ensure that no one can actually do that so you can come up with fast decisions.

Senator Housakos said that he would like to cite their Parliamentary Budget Officer here who, in his findings, said that 75% of the funding, in his opinion with this bill, would be going to, of course, the giants: CBC, Bell Media, and Rogers – which, his concern with this bill is quite evident where, as usual, it’s quite weighted for legacy media and legacy broadcasters. Of course, the government, in the same breath, are saying that the objective of this bill is to help journalism and help diverse journalism. Diversifying use in this country. So, at the end of the day, isn’t it quite contradictory that the lack of diversity in our news sources right now would be hurt even further when the vast majority of the pie, intentionally with this bill, is going to the giants – CBC, Bell Media, Rogers.

Gingras responded that he thinks he can only, in essence, agree with Senator Housakos’ assessment and with all due regard to the CBC and those other entities. If the objective is to address local news, quality journalism for local communities, then it’s hard to see that being attainable given the disproportionate allocation that those analysis suggest. Frankly, he suspects that those analysis are quite correct.

Senator Housakos asked if Google thinks that freedom of expression is further eroded by the supports going to the largest players rather than local news entities that government claims is trying to protect? Will small publishers be worse off and is money being siphoned off towards these large broadcasters with an objective that he can’t understand? What would be a better approach to help achieve more diversified news and helping startups and local news outlets across the country which, for years, have been struggling far far more than the legacy media giants?

Gingras responded that a couple of comments on that. One is that he thinks that an approach where the criteria were more precise in terms of the objectives of the bill and the methods to attain that. He wants to make a relevant point here. As he noted, they see an unfortunate loss of trust in news media. They see awkward statistics about the number of people who are actually interested in news. The concern he has, and he comes form this with a journalist background and a technology background is how do we do the innovation and drive the innovation in the media space, in the news space, to rebuild that sense of relevance? This so that journalism can perform its critical role in open societies. That’s why he keeps going back to how we drive innovation that is forward looking and not look backward to try and recreate a past that can’t be recreated.

Kee said that he keeps coming back to a the benefit of a fund style model that can actually be constructed that actually supports the class of news outlets, the class of journalism outlets if you want to ensure they aren’t getting a disproportionate benefit. In this case, he thinks the real core of the concern is diversity of voices. The concern is that you don’t want a handful of legacy large players to be essentially dominant. You want to encourage the emergence and diversity of voices – small players basically serving diverse communities that may not always be heard historically, where they actually have a real opportunity to build a sustainable business model. To continually subsidize isn’t necessarily going to encourage that kind of behaviour. So, making sure that we are actually building a funding mechanism that is actually going to support innovation and sustainability – helping them build that sustainable business model is actually going to help them do that. A model that they actually just launched with the government of Taiwan is an innovation fund that was actually intended to fund small publishers in Taiwan. This would be one model.

Senator Bernadette Clement said that, so Section 51, she’s looking at their submission here, and Google actually has a concern around Section 51, that it creates liability for elevating authoritative information and empowering bad actors. However, last year, in the EU, Google was fined for abusing its powerful dominance in those spaces. She knows that it’s anti trust legislation, but there was a considerable fine around that. This, Section 51, sets up a safety mechanism. So, is Google disputing the need for a safety mechanism? (That really smacks of a red herring argument, there. The relevance of an anti-trust fine is pretty dubious from my point of view). Number 2, transparency around rankings. Google talks about wanting to favour smaller innovative- but how do Canadian’s know how Google is ranking? Is google committing to more transparency around that because she would argue that a lot of Canadian’s don’t understand how Google is doing that and can’t find that information. Number 3, last year, Google decided to block, as a test run, access to some searching. What did that test run achieve? Can Google comment on that in relation to agreements that Google is supposed to be looking at?

Gingras responded that as he’s indicated, the trust of their users is incredibly important to them. They actually do provide a tremendous amount of information about how they rank. There is a document online, publicly available that’s about 170 pages long that addresses the principles behind their search algorithm – how they approach it. He thinks it’s very thorough and very useful and would encourage people to read it. Secondly, they tried to be as clear as possible in terms of their methods within the bounds of security because, as you might know, people are always trying to game the algorithm and they have to protect against that.

Gingras continued by saying that he thinks the third point is the most important one with regard to algorithmic accountability is enabling third party research which they do. Academic research, for instance. If we look at assessments by those academic methodologies, they largely reinforce what he’s saying that they adhere to their principles. If there are areas that they suggest that they are not doing the best job, that’s important feedback to them. Again, what drives them is the trust of their users. Their business is based on the trust of their users who could move to a different search engine with the click of a mouse.

Gingras then said that, with the results of the tests, what the tests told them is nothing particularly new. It reaffirms the fact that news queries are a tiny percentage of their overall queries. It did also indicate that it also had no impact on their users which are the 98.x% of all the other queries. So, all of their efforts to learn about what the best new heating system might be or how to plan a travel vacation to Vancouver and, so on and so forth. That remained as before. So, those are the kinds of things that we learned from the test.

(This sounds like something in the spirit of the article I wrote on supporters of the bill placing far too much value on the news that winds up getting linked to on platforms. When I speak to people in general, one of the biggest obstacles I faced is that people are not interested in the news at all. They think it’s all too boring or not interesting/relevant or too depressing or not all that reliable in the first place. I see it every day that the biggest problem with news is that not enough are paying that much attention to it. There are journalists out there do the best they can to provide interesting and informative news reports, but too few people are really paying attention for a whole variety of reasons including the ones I just noted. Convincing people that they actually do want to pay attention to the news is a huge problem in this industry and I think it would be more beneficial to try and build up that interest in a meaningful and healthy way. I’m not sure the sector is really doing that great of a job of that – at least not the ones at the top anyway.)

Kee said that, with respect to Section 51, the undue preference. His understanding is that the intention is to principally prevent any platform, Google or otherwise, to engage in retaliatory action. Essentially, you can’t necessarily punish a publisher that comes forward and says that they would like to bargain now that there is an obligation under this code in order to engage and pay for links to their site and that a platform couldn’t necessarily downrank them on that basis. Google concurs with that. The challenge in that is that the wording is actually adopted from broadcasting. It is so broad that it essentially prohibits any undue preference or any undue hindrance or any unjust discrimination that a publisher basically alleges. What happens is that if a publisher complains that they are not receiving the level of rank as they would like to see, which can happen because ranking is inherently giving preference and advantages and disadvantages to someone, you have to find a way to order it, then they could then complain and litigate that. The bill is structured that once the publisher complains, the onus then shifts to the platforms to prove that the given preference – advantage or disadvantage – was not undue. Their deep concern is that that is going to have profound effects on their engagement in ranking simply because they already have systems in place to elevate authoritative information and downrank low quality information in order to provide a valuable service to their users.

Senator Clement said that she understands that they want their users to trust them, but when senators are talking about dominance, and their looking at those fines in the EU, how does Google respond to that?

Kee responded that he thinks that there are circumstances where there are obviously some concerns that have come up. He would say that we live in an environment where Canadians get information from a wide variety of sources. It’s not just search as Gingras has indicated, the vast majority of search queries are not news related. Then the fact that a vast majority of people get their information from a wide variety of sources that the market is actually quite competitive – both in the space of search as well as the advertising space. Essentially, what they are saying is that there are a variety of competitive alternatives that actually acts as discipline to Google because they have to ensure that they are constantly innovating in the best interests of their users in order to actually remain competitive.

Senator Housakos then thanked the witnesses for coming and adjourned that part of the hearing.

Concluding Thoughts

Probably the most interesting tidbit to come out of this hearing is just how little news matters to Google. You could always get a sense that the level of interest from users who use Google was always going to be low, but even I was taken aback by just how low that percentage is. That percentage being less than 2% of queries. It admittedly puts a small question mark in the back of my mind about basing my whole operation around news in the first place, making me wonder if pursuing news was ever going to be a worthwhile endeavour. At the same time, though, I remember that I put a whole pile of other cool stuff on this site that is not really news related. So, at the same time, it does also feel like confirmation that my own strategy of going much more heavy into non-news related content then any of the sites I worked for before was actually a really good one.

From the broader perspective of the less than 2% statistic, this really further cements the idea that publishers need platforms more than platforms need publishers. This whole notion that platforms are beholden to news because their entire success rides on the existence of news content was always a completely nonsense and arrogant theory put forward by the bills supporters. There was always little to no evidence to substantiate the theory and the statistics put forward by Google not only kills the theory, but also buries it 6 feet under ground in the process.

It’s also why it was always a major threat that Google would just pull out altogether. The financial incentive to go along with this idea simply isn’t there. Why shovel hundreds of millions with no cap to the liability over something that counts as little more than a drop in the bucket for a giant like Google? Nothing about that adds up. It’s why I’m betting that we are marching towards a repeat of what happened in Spain in the mid 2010’s where Google just pulled its Google News service from Spain and everyone watched the entire sector tank as a result of the biggest players own greed backfiring in the entire sectors face.

There was some coverage from the major media outlets that focused on senator Simons question, but I suspect that this has more to do with her more stern tone towards Google. I think the media is wanting all lawmakers to be shaking their fists at Google, giving them a massive grilling over the idea that they might not go along with this idea, and just give them the what for. Ultimately, what was said during such an exchange probably wouldn’t have mattered to the media. Senator Simons could have angrily raged about liking chocolate ice cream and a larger media outlet would be shouting, “Yeah! You go get ’em senator!” (Sadly, that is only a minor exaggeration.)

Ultimately, this really solidifies the image that platforms are basically in the process of putting one foot out the door with regard to news links in Canada. People tend to confuse this with Google leaving Canada altogether and that is simply not happening. Google can very easily offer a whole suite of services and go so far as to axe Google News access in Canada without very many people even noticing a difference. I suspect that part of the test was to see if Google News could still be offered in Canada, but the news links would point to non-Canadian services. This would turn a small scrape for Google into a tiny scratch.

The only people who would even notice the disappearance for Google News would be news types like myself who do use such a service on a regular basis. Even then, it’s easy for people like me to just readjust and use other services or even use TOR to just use the service in another country. A basic level of knowledge on how the internet work means that losing a service like that altogether is ultimately going to be a small problem that can be easily overcome. Unless something unexpected happens in this debate, the odds that Google ditches news links to Canadian sources is still way out in front as the most likely outcome in all of this.

Drew Wilson on Twitter: @icecube85 and Facebook.

1 Comment

  • DB says:

    So a senator thinks 1% of $224 B is $22 B. No wonder he doesn’t understand the stupidity of this Bill.

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