Senate Hearings on Bill C-18 – A Look At Hearing 4 (Segment 2)

We are continuing our special coverage of the Bill C-18 Senate hearings. This is the second segment of hearing 4.

The TRCM (Transport and Communications) senate hearing on Bill C-18 is continuing. With so many big names already being heard, it’s difficult to imagine if there are many more heavy hitters to be heard in these hearings. Still, we are continuing and this one had a lot of promise to be interesting because there is yet another big name that is now at the centre 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

In addition to the above, we also covered the first segment of hearing 4. That is, of course, the hearing that featured Google. So, if you haven’t checked out that hearing yet, I would highly recommend doing so.

Now, we are continuing on with this hearing. That is, of course, the second segment of this hearing. As always, you can check out the video we are basing this analysis on here. The time stamps are a bit curious with this one, so in this case, you’ll want to skip ahead to around 19:48:56. This hearing focuses on the appearance of Facebook/Meta. So, enjoy the summary and analysis.

Opening Remarks

Rachel Curran opened opened with her remarks. She says that the way we consume news is always changing. Radio, television, and now the internet changed people’s habits. The reduced cost of gathering and distributing information has lowered barriers to entry. The proliferation of content has increased competition for audiences. Technological changes in the advertising industry have, and will continue to challenge traditional business models. The news sector is just one sector profoundly affected by these changes. This disruption has allowed small businesses to reach larger audiences including a wave of new digital startups across Canada.

(I’ve seen lots of sectors disrupted by technological change. The most famous example I’m aware of is the music industry, but there’s also the art sector, the television sector, the movie sector, and, well, I really could go on and on. Either way, we are far from uncharted territory when we talk about news being part of the online ecosystem as this has been going on for decades now. Heck, I was a part of the online news writing environment since 2005, so I say that with considerable experience behind me.)

But, Curran continued, it has also driven claims of traditional publishers that companies like Meta have benefited unfairly from news links that publishers willingly share on their platforms to reach audiences online. This has led policy makers in Canada to propose legislation that would require internet based companies to pay news publishers for content and links that they choose to post.

Unfortunately, she added, frameworks such as the Online News Act before you are based on a false premise and fundamentally misunderstands the true relationship between platforms and publishers. It is publishers that benefit from being on their platforms, not the reverse. Meta estimates that Facebook feeds Canadian publishers more than 1.9 billion clicks in the last 12 months, free marketing worth more than $230 million in estimated value. This number is proof that their tools and apps are good for the news industry. Their platforms help publishers sell more subscriptions, grow their reach, and display their ads to a larger audience then they might have otherwise. As with other businesses, non profit organizations, and even political parties, publishers choose to use their apps because they benefit from doing so.

News content, Curran explained, is also not a significant source of revenue for Meta. Posts linking to news articles make up less than 3% of what people see in their Facebook feeds and 1 in 5 Canadians say that they would actually prefer to see even less news content on their apps. Globally, more than 90% of organic views on article links from news publishers are on links posted by publishers themselves, not Facebook users.

(This tracks with my own personal experience with getting users to share links. Years ago when Digg was a big thing, it was much more common for users to share news links on various social media news websites. You really didn’t have to put in much effort to reach these audiences which allowed for more time to craft more and better articles. Unfortunately, as time has gone on over the years, it has grown increasingly difficult to convince people to share something organically, leaving the publishers themselves to basically do more of the heavy lifting and post those links themselves. Most of the time, it’s staff sharing the links or people that are paid to share such links these days.)

That’s why, Curran said, for months, they’ve been sharing publicly their concerns with Bill C-18, the Online News Act, a framework that requires them to pay publishers for links or news content they voluntarily put on their platforms is, quite frankly, unworkable for them. As the Minster for Canadian Heritage has said, how they choose to comply with the Online News Act is a business decision that Meta must make – and, they’ve made their choice. Because the legislation ignores the realities of how their platforms work, the preferences of people who use them, and the value they provide news publishers, they have no choice but to comply with it by ending the availability of news content in Canada if Bill C-18 is passed as drafted.

(An interesting thought on this. If Facebook pulls the plug on news links in Canada, then that puts pressure on Google to follow suit. Google, of course, has been continuing to say that this is all under consideration while Facebook is saying flatly that they won’t be allowing the sharing of news links on their platform. It could also help create a domino effect where the government starts hitting up other platforms to compensate for the lack of funding they were expecting and other platforms are going to face that same pressure to just not bother with this. It’s hard to say that this is, for sure, going to happen, but it’s definitely within the realms of possibility here.)

This decision, Curran continued, is consistent with their response to similar legislation tabled in the United States last year (Sounds like a reference to the JCPA or Journalism Competition and Preservation Act which is been an on again, off again bill for some time). The public policy debate around Bill C-18 is, of course, intertwined with concerns about the role of journalism in civic society and they agree, let there be no doubt about this, they agree that news holds tremendous social value, but this bill misrepresents the economic value of news to their company and it risks further subsidizing large legacy organizations and profitable broadcasters at the expense of independent and innovative news businesses.

Curren said that they urge the Canadian government to consider a policy response that reflects the true division of value between platforms and publishers and addresses the concerns that the have raised today. She thanked the senators and welcomed their questions.

Questioning the Witnesses

Senator Julie Miville-Dechene said that many people thought Meta was bluffing that they threatened that they would no longer broadcast news in Australia and Meta stepped back on that issue in a (great?) way. What is happening now in Canada? What is Meta seeing so clearly that Meta is not going to participate- Meta is not going to comply with the legislation? That is what she understands – that Meta is going to make a business choice that is clearly different. Is Meta bluffing once again in Canada here in this committee? Why should senators believe Meta now when Meta is threatening not to share Canadian news content?

(I don’t know if this is somehow a translation error or not, but by not allowing the sharing of news links, Meta would be in full compliance with the bill. If there is no news links being shared, then there is no compensation/payments that is required. Even Thomas Owen Ripley confirmed that if there are no news links, then the platform won’t be charged as the Act would no longer apply. There’s no requirement in the bill that platforms absolutely must carry news links on their platforms. Also, a lot of experts have concluded, like us, that this isn’t likely a bluff. Heck, even the publishers have started to admit that this might not be a bluff which is, in and of itself, a big admission.)

Curran responded by saying that, as Google has said, they are not actually designated under the Australian legislation. No company has yet been designated under that legislation. What they have managed to reach is what they would call an untidy and short term compromise.

Curran added that she would also say this: they do have commercial agreements in place with publishers in Australia including commercial deals and grant funds, but they don’t pay for content publishers are already posting. They only pay for net new content for products they might want to introduce in the future. In a sense, those deals are similar to what they have already done in Canada wit their news innovation program which her colleague can speak a little bit more about where they enter into commercial partnership agreements with publishers with new behaviour, not for existing voluntary posting to Facebook.

What’s notable about Canada, Curran explained, is that all of that actually happened without legislation and despite their best efforts to find a way to work with the news industry, and to enter into these commercial deals in a way that helps create sustainable business models, they’re still faced with an unworkable piece of legislation that forces them to end the availability of news on their platforms entirely.

Senator Miville-Dechene asked about how many deals have been concluded with what kind of media. Is Meta just going with bigger media or smaller community media? Also, she wanted Meta to explain to her why they are not paying for the value of news, but Meta is trying something else.

Marc Dinsdale responded by saying that when you look at the entire package of their commitments to the news industry, the news innovation test is certainly one of them. That includes 18 publishers across the country – large, small, representing both official languages. In addition, they have run a number of other news programs to the tune of $18 million over three years that include a lot of other publishers whose needs might be different.

In those programs, Dinsdale continued, they’ve run accelerated programs that try to connect publishers with people from The New York Times, for example, that coaches and helps them to navigate to the digital world. That has broadened in scope. That includes larger publishers, small publishers, BIPOC publishers, indigenous publishers. They have also funded programs like the Meta and Canadian Press fellowship program and indigenous fellowship programs which helped to fund directly their roles in news rooms. One thing that he would also add, when we talk about Australia, this is also a different moment in time. When they look at the direction that the users want them to go in, they look at the fact that more than 50% of time spent on their platform is on video. They look at Reels as the fastest growing format on their platform. They look at the fact that people want to see video from people – from creators. They look at the fact that 20% of people on their platform say they want less news.

(Australia was definitely a different moment in time. One factor that Meta might be reluctant to say, but goes along with what they are pointing out, is the fact that digital advertising has taken an absolute beatdown between when the Australian model was formally passed and now. Meta made what many consider a bad bet on the Metaverse and that caused the company to lay off large swaths of their own employees. So, when you look at the drop in revenue aspect, that does put a disincentive to just throw money at news organizations with no strings attached and no liability cap to speak of. All this over top of the fact that Facebook has been moving away from news altogether and towards video. All this together is quite the stack of factors for why Meta is reacting they way they are with Bill C-18 in Canada and the JCPA in the United States.)

When they think of value, Dinsdale explained, and equitable exchange within the industry, those are all factors in this. People on their platforms- they are in a competitive environment where people engaging on other platforms are saying the same thing. That is the dissonance of discussions of value.

Senator Rene Cormier said that he would like to better understand the situation about deals. Meta talked about various types of deals. Meta is a business. He would like to understand, if they could give senators a figure, how much money does Facebook make through those agreements? How much money is Meta making and the media outlets that enter deals with them? How much money do they make? He would like to have some figured to understand the balance or imbalance between Facebook and the media outlets.

Dinsdale responded by saying that when they look at the values, he can certainly talk about what they put into the programs. The commitments they have made, like he said, there is the $18 million that they have committed over three years. That does not include the news innovation test programs with the 18 publishers. Those are protected by commercial confidentiality, so he is not able to share numbers on those. Beyond that, there is the core foundational value of the free marketing of more than $230 million per year that publishers gain by voluntarily placing links on their platform that they share to people. This is information senators can hear from them, but also from someone like Jeff Elgie who spoke publicly in the past about the value he receives from Facebook for free. If he had to go and pay for that – he made the calculation himself – he said that it would be astronomical for him to pay for what he receives for free. So, when we think about the totality of the value he would say that-

Senator Cormier said that Meta is talking about investments. That’s good. He is talking about trust here. So, does Meta have figures that they can give them to understand the impact that these deals have on Meta. Second, if, tomorrow morning, this new agreement, how much money would Meta lose? (something may have been missed in translation here) They are talking about the trade agreements here.

Dinsdale responded by saying that this goes at the heart of what they consider the commercial value of news, if you will. The challenge of that is, again, that people told them that they want to see less of this on their platform. The platform is moving in a direction that is away from what the news industry fundamentally provides to them. That is links to news content. In that sense, they have talked about that there is little to no revenue that they make off of news proper. Also, the reality, as they said in other places like Australia, is that there is a high substitutability to news content on their platform because people don’t come to their platforms for news. People come to their platform to connect with communities they care about. People share stories with friends and to engage with public figures. They don’t come to their platforms for news.

Senator Cormier asked if Meta has any data. Does Meta have data that comes to that conclusion that people are not coming to their platforms for news?

Dinsdale responded by saying that he would have to go back and see if there is specific research on that. Senators can look to the public sphere. This is from the Reuters Institute that says that there isn’t too much news on the platform.

Senator Cormier said that if Meta has any data to send it to the clerk so that they better understand the issue.

Dinsdale responded that they will give them that.

Senator Cormier said that he would like to know, please explain to them, in a few words since time is limited, what’s the three main issues of this bill before senators. The negotiations process before getting into arbitration. There are lots of steps involved. Tell them. What are the three main issues so they can understand it. Very briefly.

Curran responded by saying that the main issue is this: they are being asked to compensate publishers for material they voluntarily place on their platforms because they gain a certain benefit from doing so. So, it doesn’t, as Dinsdale said, news content on their platforms is highly substitutable. They don’t lose any revenue or very little revenue if news content is substituted by something else. So, this is not a real source of revenue for their company and yet they are being asked to compensate news publishers for this material when they place it on their platforms because they get free marketing and distribution value from doing so. So, it really is the fundamental underlying premise and structure framework that they are objecting to.

Secondarily, Curran added, they object to the assigning of value to news links. Senators have heard previous witnesses like professor Michael Geist talk about the problems of trying to associate a certain monetary value to links, including news links. really, for them, the problem is trying to assign or forcing them to compensate publishers for material they place on their platforms. Whether that’s audiovisual content or links or snippets. Really, it doesn’t have any commercial value to them. So, it’s very difficult for them to accept that they got to pay for this.

Senator Paula Simons said that she wanted to talk about the very specific amendments that they have provided them before they spoke. Dinsdale just got through saying that people want to see video. Certainly, for years now, Facebook has worked with newspapers and encouraged them to post more video to Facebook. There’s lots of video and audio being shared on Facebook. Yet, among their first series of amendments, they would like to scope out all audiovisual content from the bill. Meta says that this is regulated under the Broadcasting Act and that’s certainly true, she doesn’t think that has anything to do with compensation or, since she doesn’t like the compensation link tax model, with the idea of benefits. So, can Meta explain to her what on Earth is the rationale to exclude all audio and all audio visual content from consideration under the Act?

Curran said that as the Chair of this committee has said previously, the Parliamentary Budget Officer (PBO) has written a report that says that the primary beneficiaries of this bill are going to be the highly profitable and already subsidized broadcasters in Canada including the CBC. Their argument is this: audiovisual content posted by broadcasters should be scoped out of the bill. There’s still the problem of news content posted by broadcasters that isn’t audiovisual content, but they are saying that this content specifically should be scoped out of the bill.

Senator Simons asked what about small town radio stations? What about people sharing their podcasts? Meta is suggesting that no one who operates in the audiovisual space- don’t misunderstand her, they know that she doesn’t actually support the premise of the bill, and she has great sympathy for their general argument – but she doesn’t understand how on Earth they can differentiate by saying audio and audiovisual content, much of which is posted by things we used to call newspapers, could be not included. Because every news site these days posts video and audio including the Toronto Star, the Globe and Mail, the National Post, the (doubt I’d ever spell that French name correctly), La Presse.

Dinsdale responded by saying that he would respectfully refute that. If you were going to the Toronto Star, the Globe and Mail, La Presse Facebook pages, you’ll see that almost exclusively, all of their posts are link posts. It’s link post, link post, link post, pink post.

Senator Simons said that their linking to video. They’re linking to audio.

Dinsdale responded by saying that he would argue that they are linking to text content the vast majority of the time. This is, again, they see the value and them, taking people from their platform, and sending that to them.

Senator Simons said that she understands that. That’s not the question she is asking. She’s asking Meta that they are putting forward an amendment that says that we should take all consideration of all audio visual content out at a time when traditional print products are becoming more and more multi-media. She can tell them that if she hears ‘pivot to video’ one more time, she’s pivoted to video so many times, she felt like she was in those swirling tea cup rides. She just doesn’t understand, is Meta saying that private radio is out? Are they saying that podcasts are out? Something like Canadaland? What would be in and out in this model? She doesn’t understand.

Dinsdale responded by saying that he would argue that what is in and what is out is irrespective of the type of content that it ‘is it a news outlet that’s owned by news businesses?’ That’s an entire different set of considerations. To Senator Simons question of commercial radio, they need to seek guidance from the final text of the bill to understand is a music radio station considered compared to news talk radio stations?

(I’ll admit that Meta isn’t exactly doing a great job at explaining their position here on this particular point.)

Senator Simons said that she would like it if they answered her question.

Curran responded by saying that she would say this: the premise of this news regulation is that the declining revenues of the written news publishing industry in the digital age is something that the government needs to support. So, what they are saying is that if that is truly the objective of the bill, then it doesn’t make sense to also include audiovisual content and radio in that objective. (That’s… actually a good reason. It probably should be addressed in a separate bill.)

Senator Simons said that as we are making this premise, local radio revenues are in decline because of competition from digital advertising, that local television stations are in calamitous decline and that other innovative startups are operating in a multimedia world. Let’s move on to another one of their amendments. (time expired, but Simons asked someone else to ask why they should leave in Google and scope out Facebook.)

Curran responded by saying that they would be happy to answer that as they have a very different relationship with news than Google.

Senator Pamela Wallin then said that why don’t they explain that then? (The room laughed.)

Curran responded by saying that Facebook doesn’t scrape the internet for news content. They don’t aggregate news content in search results. They have a very different relationship with news content and with news publishers then Google does. So they think- parliamentarians ought to take that into account when deciding who should be scoped in under this bill. News content is really not critical or important or a fundamental part of the services they provide and the product they provide to Canadians. So, their reaction to this bill is necessarily going to be very different.

Senator Wallin said that with Meta’s argument that the free exposure and the value of the exposure that people voluntarily seek by posting their material to them is very very valuable. She doesn’t understand particularly why then, they are so supportive if this. Is it just free money? (Yes.)

Dinsdale responded by saying that he thinks that she would find that there are obviously is a set of publishers that is very much in support of this and there is very much a set of publishers that is very much against this. It is the characteristics of those publishers that there has obviously been fears that have been expressed that any innovative new publisher is placed at a disadvantage – especially considering if the PBO is correct that 75% of the revenues would go to the largest traditional media organizations in the country. He thinks that if it’s a new entrant to the market, they have to dig themselves out of a $239 million hole.

Senator Wallin said that, and then the new ones are unfairly treated compared to the CBC or the Toronto Star or whoever it may be because we don’t have a proper definition. That’s part of the problem that they got here which is what is news? What is journalism? Who decides? What’s a new entity? Who decides that? (My guess, actually, is that it’s the CRTC and the CRTC would play fast and loose with the very vague definitions which is a problem in and of itself. People in the cool kids club benefit while people outside of the cool kids club get left out.) If we don’t have any definition on that, then it’s pretty hard to even impose this on Meta. She guesses that the clearest one is on the amendment of copyrighted content that they are quite happy to pay for that. If something is copyrighted, but if people are voluntarily providing it, well that’s that. Meta is just a conduit.

Curran responded by saying that the EU copyright directive respects the principles of copyright law. So, if snippets are posted, if a link is posted, that is exempted from the EU framework. If Canada were to follow a similar approach here, she thinks that this would make that a much better piece of legislation.

Senator Wallin said that this is meaning that Meta would not reproduce a Margaret Atwood novel for free, but if somebody references Margaret Atwood, that should not cost Meta or penalize Meta financially.

Curran responded by saying that, absolutely, if Meta were reproducing the text in full and they’re placing ads against that content, let’s talk about what Meta would need to pay to compensate for that. However, if Meta were posting a link or a snippet or if a publisher is posting a snippet or a link, which is currently allowed under copyright law, let’s allow for that. That is certainly the approach the EU is taking and they think that’s the better approach.

Senator Wallin said that even if news is not a big part of Meta’s product in the end, Meta is still willing to support it and, therefore, why?

Dinsdale responded by saying that he thinks that this is part of the crux of the challenges. They want to be a platform where there is an expression of ideas and the sharing of content. If you look at the exchange of value that exists now, they think it is equitable. They would like to continue to do so, but if this exchange in value goes from being equitable to one that introduces new and unknowable costs to them that, again, people want to see less of on their platform, and the choice that they are provided is either to comply and enter into negotiations where you don’t know the value of the outcome, or remove news content from the platform and the viability of news content from the platform, they would have to choose ending the viability of news content on the platform.

Curran added that, to be clear, they don’t want to do that. They have supported the news industry, as her colleague said, through $230 million in free marketing and distribution value. They’ve supported the news industry through the news innovation program and other programs that they have launched, but really, this bill is going to force them to end the availability of news on their platforms in Canada and they don’t want to be there. Google said the same thing. They don’t want to end up in this position. They want to support the news industry in this transition into the new digital reality and they are trying to do that to the best of their ability and this bill is just going to force them into a position where they cannot do that.

Senator Fabian Manning said that he just wanted to go back to something that Meta said earlier. Is meta telling them that Global News or Toronto Star that will post their content to their own Facebook page in order to drive traffic to their websites. This bill will make Facebook pay them for that? (Yes!) So, Meta is like a community billboard, but Meta will be forced to pay someone who uses their billboard to promote their own business. (Absolutely correct. That’s the entire aim of the bill and why so many, including myself, consider it to be a complete and totally insane idea in the first place.)

Curran responded by saying that that is absolutely correct. So, they will be forced to compensate news publishers for material that they post to drive traffic and to drive clicks back to their page, back to their website where they can then monetize those views, those eyeballs, either through a paywall or they can place ads against the views that show up on their webpage. So, they are being asked to compensate them for an activity which actually benefits them from a monetary perspective.

Senator Manning paused for a moment, then asked if Meta could articulate what the financial liability for their company as a result of this.

Curren responded by saying that this is also an excellent question. Part of the problem with this legislation is that it exposes them to a totally unknown liability and a liability that they don’t control. (Basically, the sky is the limit for that liability) So, it incentivizes publishers to post material to their platforms in a volume that Meta does not control in a manner or a pattern that they don’t control, and so they can’t control how much they post, they can’t control how much they pay for that material. So, that’s part of the problem, is the uncertainty around this framework which exposes them to a totally unknown liability.

Senator Manning said that if Bill C-18 passes as is it is today and some of the regulations are coming afterwards, so, wouldn’t it be to everybody’s best interest if we had regulations beforehand so at least we know what the rules of the game are.

Curran responded by saying that, absolutely, if they knew what liability they were exposed to, and this is part of a short term solution in Australia is that they were able to know the cap of their liability at a certain amount, if they knew that ahead of time, they could make an informed commercial decision about whether that was something they could live with. When it comes to Bill C-18, they are really exposed to a completely uncertain and unknowable liability. No business would agree to do business under those conditions. No business could agree to that.

Senator Manning said that when Meta announced that their company would end the availability of news content on Facebook and Instagram in Canada, the Minister responded “this tactic didn’t work in Australia and it won’t work here. Canadian’s won’t be intimidated. All we’re asking Facebook to do is negotiate fair deals with news outlets when they profit from their work.” In principle, does Meta agree that smaller players, as that seems to be where we’re leaning towards, or the bill is telling us where we are leaning towards, does Meta agree that smaller players and smaller news outlets needs the support of government as a referee in order to conclude fair deals with tech folks like themselves?

Curren responded by saying that, in principle, they do agree that the objective of the bill is to support smaller, local, and regional players. In practice, what the Parliamentary Budget Officer (PBO) has said is that the bill is actually doing to direct the large majority of funds, 75%, towards established, highly profitable, highly subsidized broadcasters and it’s going to benefit the large broadcasters and publishers who are already benefiting from programs that are already in place. So, it’s not actually going to do anything for the smaller, local, and regional players that the bill purports to benefit.

Senator Manning said that it didn’t end the availability in Australia. Meta said that it’s going to end the availability here. Give him one part of the Australian set up vs Canadian set up that would facilitate Meta to move to make available news content.

Curran responded by saying that she thinks that, importantly, through the Australian legislation, they have not been designated. No company has been designated and Senators have heard that from Google as well. So they were able to reach a short term compromise that allowed them to continue to carry news content in Australia. The bill in Canada is quite different. It asks Meta to designate themselves as a news intermediary automatically upon passage of the bill. So there’s no room provided for a process to play out that would allow the government to decide whether they should be designated or not. That’s the key difference between the Canadian and the Australian legislation – that there’s no room to reach compromise with the government before they are designated under the legislation.

Senator Leo Housakos said that, at the end of the day, there is no doubt that the digital world has changed the way all industry operates. We see it in the retail sector, they see it in the taxi industry where Uber has come in and changed the way things operate, they see it in the travel industry where people go direct to travel websites to book their flights and they don’t go through travel agents. Yet, the government didn’t rush to save the taxi industry. They’re not rushing to save travel agents in this country. We’re not rushing to save the retail market that is struggling. There seems to be this love affair with the government, the current one, to decide exactly where the flow of money goes to media agencies in order to prop them up. He believes that’s a slippery slope. That’s just his personal comment.

Senator Housakos continued by asking would Facebook prevent news outlets from posting links if this legislation passes and forced to pay for those links?

Curran responded by saying that yes, they’ve made that decision. They very much do not want to be in that position, but if Bill C-18 passes substantively as drafted, they will prevent the sharing of news links on Facebook and Instagram. What they have called ending the availability of news content on their platforms.

Senator Housakos commented that that would have a tremendous impact particularly for those journalists and those newspapers that are linking in right now. He think it would completely- it would reduce their capacity to use that megaphone to reach, what he would think would be millions of Canadians.

Dinsdale responded by saying that yes it would. When they look at the number of times that this happens, and the 1.9 billion clicks that they provide to those publishers to send them from their platform to their website to consume their content and to buy subscriptions, etc. It’s hard for them to understand the economic value of that because all of that value happens within these websites that they don’t have access to, obviously. It would be a challenge. one of the things that he would note, in some sense is that when you look at the industry as a whole, also part of the reality is that they represent a small part of how people get to these sites. When you look at the traffic that is attributable to them, it’s maybe 13%, that’s from the National Economic Research Association report that just came out. So, he thinks that’s difficult because they are providing a lot of value to the industry. They are not the reason that these publishers exist or don’t exist. So, there’s kind of a piece of both ends in that statement (that last sentence was a little mumbled, so I’m not sure that last sentence is perfect.)

Senator Housakos said that he gets a sense that there is not unanimity amongst the journalism world and journalism sector in regards to this bill and an end result will come out of this experiment. Is that a fair assessment on his part?

Dinsdale responded by saying that he would characterize that as fair. Especially once a study by the Parliamentary Budget Officer’s study that came out that he thinks that the smaller publishers, he thinks, where they understand the implications of the type of model that is being suggested. It would be fair to say that there are concerns from smaller publishers. there was a piece that was published, he forget who wrote it, that talked about the challenge to the blockage of innovation. The news industry is not necessarily going to be formed not necessarily by the publishers that exist now, but by the thousand publishers that are to come. A bill like this makes it challenging for that thousand publishers to be born and to grow.

Senator Donna Dasko said that she wanted to just pursue the Australian situation a little bit more. So, Meta has operated- made deals in Australia. Yet, Meta is very critical of the legacy media. Did Meta make deals with Murdoch and his massive companies there or did Meta not because they don’t like the legacy media?

Curran responded by saying that the Australian model legislation contained a number of really important differences from the Canadian legislation which they outlined for Senator Manning that allowed them to reach a short term compromise. They did enter into commercial deals with certain outlets in Australia, but again, that was for net new content, it was not for content that publishers were voluntarily posting to their platforms. Truthfully, they are not sure how long those arrangements are going to last. They are at a different moment in time as Dinsdale has referenced. If they were to be designation under that legislation, she thinks that the outcome might be very different.

(that actually is very interesting. The idea that they don’t know how long those deals might last. I actually figured that they would just continue with their deals for a number of years. To hear that there might be an expiration date for those deals already forged in Australia certainly puts an interesting light on the situation.)

Senator Dasko said that the situation can go on there as it has been given the question she asked Google about the status quo. So, Meta could just continue as with their law not being formally enacted or whatever and Meta is making deals with companies in this situation. Meta could do that, right?

Curran responded by saying that they do have short term deals in place with certain outlets in Australia? Yes. Their investments there have over-indexed towards the larger status-quo established publishers and not the new digital startups or the innovative outlets that they would like to support. Whether those agreements will continue beyond the three years is very much in question.

Senator Dasko said that so Meta may just opt out of Australia is what Meta is saying.

Curran responded by saying that it’s hard to speculate at this point, but she thinks that if they were to be designated under that legislation, which they have not been yet, she thinks that the outcome would not be very much different from what it is in Canada or in the US.

Senator Dasko commented that Meta said that they knew what the liabilities were ahead of time. Here, they have an unknown liability, but Meta also said that they have low traffic and so on, so would Meta be able to say that so they’re a low volume operation on the news. they don’t have that much money to allocate to the news for this particular legislative programs. Can Meta not operate that way?

Curran responded by saying that if the Senator is saying that Meta does not get much revenue from news content, no they don’t. That’s part of the issue. As Dinsdale said, they use content as what they call “highly substitutable” on their platforms, and so if they substitute news content with other content, there is no impact on their user engagement or on their revenue numbers. Certainly no negative impact. Sometimes a positive impact. So news has no real commercial or economic value to the company. That’s the problem with the framework that is outlined in Bill C-18. It’s not that they believe that news has no social value because they believe that very much and they would love to continue supporting the news industry through their free marketing and distribution tools. For instance, the programs that Dinsdale has outlined, but it has no commercial value to them and so if they are asked to pay for it, their business decision is that they would no longer continue to carry that content.

Dinsdale chimed in to say that he believes that is part of the challenge as well is, and he thinks Google talked about this as well, is the outsized expectations. There’s a number to this now, apparently. That number is $329 million. So, he agrees that in an ideal world, they would look at the economic realities of what news means to them – the commercial value. It doesn’t feel that the framework that is proposed allows that. The framework is a conclusion that is looking for a methodology. That is the overarching challenge relative to what Senator Dasko is suggesting.

Senator Dasko said that the framework would permit Meta to make deals that don’t cost very much, wouldn’t it? You could argue that in terms of low online audience, low online content for news. Meta could argue on this basis and say that, well, they have this low volume operation, therefore they don’t have a lot of- it doesn’t provide value, therefore in the fairness equation that is part of the bill, Meta could say, what is fair? There’s not much volume or there’s not much revenue.

Curran responded that it would be great if that were the case, but she doesn’t think that’s true. The government has said that they expect to get a certain amount of money out of this bill and there’s been some competing numbers there. It’s $330 million from some sources. It’s $215 million from Heritage officials, but they are clearly working backwards from a number they hope to get to. So, they are clearly expected to contribute a significant portion of that number as the bill is targeted to two American tech companies. So, if you are saying that we could make the argument that there is no commercial value to them, unfortunately, that’s not the case because they are trying to get to that number, whether it’s $215 million or $330 million and going backwards, as Dinsdale said, the methodology is working backwards from there.

Senator Andrew Cardozo said that, just to understand, Meta said that if Meta stops carrying links to Canadian media, Meta has nothing to lose financially (pretty much!) for their company.

Curran responded by saying that that is correct.

Senator Cardozo said that his question is on how decisions are made and the power of governments and the power of corporations. Their in this situation that they kind of saw play out in Australia and he would look to Curran for advice as she’s worked in senior levels of government. She’s worked closely in the House of Commons and the Senate and here they are as senators and looking at a bill and a company saying that if you dare do that, we are looking at “x”. What should the political system do? Should they go, “OK, you are the boss of me, we’ll step back.” This is a major issue that they are dealing with in the geopolitics of the world.

Curran responded by saying that, no, they think it’s actually a good thing that parliamentarians are considering this issue of how to support the news industry and how to support independent journalism which is a critical part of our system. A critical part of our democracy. Meta thins that there are better ways to do that than the framework which has been outlined in Bill C-18. Their colleagues at Google recommended a central fund, for instance. there is always the option for the government to direct tax revenues to supporting industries that it feels need the support because of the position they are in. So, she thinks Meta can say that there are other models that at least conceptually or theoretically would be easier for them to support. They believe in sustaining the news industry and supporting the news industry is an important objective – and they want to be part of that.

Senator Cardozo asked who would set that framework for how that would happen and the fund that Meta currently supports here and there. Would it be the corporations who decide what that support system would be for newspapers? Would it be the democratic system?

Curran responded by saying that yes, she believes there is an important role for policy makers. There is an important role for government to play in supporting industries that aren’t necessarily really succeeding in a market based system. So, they have no concerns at all, at least in theory, with decision makers and policy makers stepping into this space and saying that the news industry is something that they need to support. It’s the fourth pillar of our democracy. It’s something that’s going to be very important to Canadians. So, they think it deserves government support as well. They would be very happy to participate in that. So, this is not an instance where Meta is saying, ‘look, leave it up to us and if we think this is worth supporting, we’ll support it and if not, we won’t and let the market decide’, that’s not their position at all. They think there is an important role here in government and for policy makers.

Senator Cardozo said that, yes, it’s a tough one as to who would (play?). In terms of government, do you want the government as opposed to the free media, but we certainly have a crisis where news media is in crisis. He agrees with Curran that it is a key part of our democracy. What do we do?

Curran responded by saying that she agrees with that. So, look, their colleagues at Google suggested a different model which, at least in theory, would be easier for Meta to support. Their primary concern with this framework is that it’s asking them to compensate news publishers for material that they place on their platform at a price that is totally unknown to them at a level that is totally unknown to them. They can’t operate under a framework that asks them to pay a totally unknown and totally uncertain sum-

Senator Cardozo asked if Meta could work that out through the regulatory process. They had the CRTC there yesterday (reference to hearing 3, segment 2) that said that what they would likely do is have a two phase process. They first ask everybody for their ideas, then they put together a draft set of regulations, then they go for a second round of input. Would that give Meta some comfort and be able to have some input some of those details?

Curran responded by saying that the Australian model which they have referenced during this hearing – because there was a delay with the bill passing, the legislation passing, and the designation of Meta under the legislation or under the News Media Code which has yet to happen, it has allowed a space and time to work that out and to figure out a more certain liability that Meta would be exposed to. Again, as she has told Senator Manning, because Meta had that space and time to figure out what they would need to pay and whether they could live with that, that allowed them ultimately to reach a compromise – even a short term compromise – under that legislation.

The problem with the Canadian bill, Curran added, is that it asks Meta to self-designate as a news intermediary almost immediately upon passage of the bill, and so there is no space, there is no time for a process to unfold which would allow Meta to set parameters around that liability.

Senator Bernadette Clement said that she wanted to come back to Meta’s repeated assertion that the news has no economic value for Meta. Meta does keep data on who’s clicking on news. That indicates a preference, doesn’t it? That data gives Meta an advantage in terms of how they are going to target their ads. So she doesn’t understand how news doesn’t have an economic value because Meta is keeping data and data is extraordinarily valuable to them. So, she doesn’t accept those assertions. (The senator is comparing apples and rocket launchers here. This question shows she has no clue what she’s talking about.)

Linsdale responded by saying that when Meta talks about the economic value, they talk about it in the sense that it’s such a small part of the experience that it’s highly substitutable and they believe that if it was no longer on their platform, it would not affect their business. So, that means to them, how can they invest in something that, at the end of the day, is not going to have a material impact whether it is or is not on their platform. Meta looks at it from an economic perspective in that sense of the exchange of value between them and publishers and they believe that, frankly, publishers get more from this relationship than Meta does because they are providing them this $230 million in value and they believe that they don’t receive that back.

Again, Linsdale explained, the preferences of their users are moving away from news. People want to see less news on their platform. They want to see entertaining content from from creators or individuals-

Senator Clement said that it’s just that the data Meta gets from people clicking on news shows preference that Meta was able to use (Listening is clearly not the senators strongest skill here, obviously.)

Senator Simons said that news is not fungible if Meta is saying that they are going to replace news with other content. Content may be misinformation of mischievous disinformation designed to set people asunder. She wonders if Facebook bears any responsibility for sharing timely, pertinent, accurate information, especially in times of crisis.

Senator Miville-Dechene said that she wants Meta to come back on the assertion that news has no commercial value to Meta. Can senators get figures on that? Because, why would senators believe Meta? It would be normal that Meta would come to the committee and say that news has no commercial value, so they don’t want Bill C-18 because they don’t profit from it. But obviously, why should senators believe Meta? (Well senator, pass Bill C-18 to get the f*** around part out of the way so Meta can get to the business of dropping news links and begin the finding out process for you. Please proceed, senator.)

Senator Cormier said that he understands that to react to the bill, the intent is to withdraw any content related to news. He also understands that radio and audiovisual content will be excluded in this (didn’t catch that word) bill. So, if they adapted to Meta’s amendment, does that mean that Meta would be blocking written content, but Meta would be broadcasting audiovisual content because it is not targeted by the bill?

Curran responded by saying that she would like to address the issues of misinformation first. Meta is going to challenge the preface of that question a little bit. 24 million Canadians use their platforms monthly to obtain information from government, from Non-Governmental Organizations (NGOs), from community organizations, from emergency services, to receive updates from their friends and families on the kind of things they are doing in their lives. So, she thinks that senators would agree that that’s not bad information.

Senator Simons said that Facebook has faced criticism for the sharing very bad information. (Senator Housakos said that Senator Simons also ran out of time).

Curran responded by saying that she has also said that the senator also has a Facebook community where she shares information about what’s going on in Ottawa and the legislative initiatives that she is engaged in and that she has a really good and engaged Facebook community who wants to hear from her on those issues. So, she thinks that if they are forced to end the availability of news on Facebook, it’s not something they want to do, but if what’s left is updates from friends and family, and from parliamentarians, and from government organizations, and community organizations, they don’t think that’s bad information or misinformation, so she thinks that they would challenge the premise of the question that removing news is only going to leave bad information on their platforms. She doesn’t think that’s the case at all.

Linsdale said that to the question of the value of news, again, it’s challenging to put a number to that except to say that it’s not what people want to do on their platforms. It is replaceable in terms of other content. Therefore, from a commercial perspective-

Senator Miville-Dechene said that this wasn’t what her question was. She wanted to have a figure.

Curran responded that she thinks that they can follow that up on the work that they have done to assess the value of news on their platforms, absolutely. In terms of ending audiovisual content, if they are forced to end the availability of news on their platforms, it would be audiovisual content and text content (whoa!). So, it would be all news content as defined in Bill C-18 and they are still waiting to see the final shape of what that bill looks like because that will be the definition of what they would use to define news content on their platforms too, but anything that is defined as news content in Bill C-18 is ultimately what they would be forced to remove on their platforms.

With that, Senator Housakos thanked the two witnesses for appearing and adjourned the hearing.

Concluding Thoughts

So, talk about a bombshell saved for the end of the hearing. If audiovisual content is captured in the bill that is defined as news, then they would drop that content too from their platform. I totally didn’t see that coming and thought that the audiovisual content stuff was a weird side thing that wasn’t going to go somewhere. It sounds like Meta is going to basically treat Bill C-18 as a shopping list of what to drop and if that includes audiovisual content, out it goes from the platform.

Over top of that, what a situation where Meta is extremely believable here. They aren’t screwing around by being wishy washy and saying that they are considering dropping news links. They are just straight up saying that, yes, if the bill passes as-is, they are dropping news links. They laid out the case nicely that users are not only moving away from news links, but actively telling Facebook that they want to see less news on their platform. It’s a perspective that stings me personally as a journalist, but I’m not one to ego trip and just say, “Well, obviously Meta is lying. I think my content is the best content around and everyone wants to view it, so therefore, I’m right and Facebook is wrong.”

I’m not stupid. I look around and see how much harder it is to sell free news. Sure, there may be pockets of web space out there that still soaks up news content, but that has been on the decline for years. There was a time when Reddit was all about news content and they moved steadily towards memes and non-news content altogether. Even in my own data, news is increasingly less a thing that pulls in the traffic. Almost everything else tends to be compensating for the news on this site itself. I had this plan of maybe getting to the point of having enough traffic that brings in sustainable revenue so that I eventually go back to maybe writing news more than once a day on a regular basis, but with everything I have heard, I am even second guessing if that would be a wise decision. I really am not entirely sure at this stage.

Another thought in all of this is this: if the debate has gotten to the point where Meta is one of the more honest and straight shooting individuals in the room, then the people debating against the platform has a serious and fundamental problem on their hands.

Additionally, you have Meta regularly go back and talk about what the users want. Where are users going and where are they moving from. Senator Clement insisting that she thinks that news is important and valuable to any company, therefore it is, highlights exactly why I have little faith that this debate is going to end any better than where Bill C-11 ended at the senate level. It’s the attitude that government knows best. If the government insists that news is highly valuable and important to a platform, then that is the end of the debate for them. It doesn’t matter what the data shows or what feedback says. The government knows best.

The problem with that is that reality doesn’t care about your deeply held beliefs. If news is not valuable to Meta, and that is truly the reality, then that belief is simply going to blow up in the senators face. I can only imagine how senators like Senator Clement or Senator Miville-Dechene is going to react when Meta follows through with their threat and blocks news links altogether. They can stamp their feet and angrily shake their fist at Meta screaming, “How dare you?” all they like. They will have substantially less power in that situation, in part, because Meta is an American company and there is no law that says that Meta is legally obliged to carry news links. Companies like Alphabet and Meta are the ones in the drivers seat in all of this, whether senators realize it or not. They may not believe it now, but when that hammer falls, I think we’ll see a very big change in attitude in the situation.

On a side note, I’m willing to bet that if Meta does share that data that shows that news content is not that valuable, the senators that doubt Meta on the value of news won’t change their mind either. I think they’ll honestly believe that it’s all an elaborate hoax and shove that data straight into the shredding machine. What’s more, even if the rest of the senate comes up with a compromise that would, in fact, satisfy the platforms and get them to go along with this insane scheme of link taxes, the House of Commons level is going to veto those changes just like what they did with Bill C-11 in regard to Section 4.2. I’m willing to believe that history might very easily repeat itself in that scenario.

After hearing everything here, I can only see an absolute abundance of pain in the future for the news sector. Things are going to get extremely ugly and although the supporters of this bill will no doubt deny any responsibility, that pain is only going to be traced back to those pushing this bill in the first place. It’ll all be entirely self-inflicted pain that could have very easily been avoided.

Drew Wilson on Twitter: @icecube85 and Facebook.

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