Senate Hearings on Bill C-18 – A Look At Hearing 8 (Segment 1)

Our special coverage of the Bill C-18 senate hearings is continuing. This covers the 1st segment of hearing 8.

(Note: This hearing took place before Meta’s test of blocking news links and before it passed the senate)

Our special coverage of the Transportation and Communications (TRCM) Bill C-18 senate hearings is continuing. After quite the string of lobbyists, we are finally getting some other voices in the debate again. It’s definitely nice finally hearing some other voices for a change.

Before we get into this hearing, we wanted to showcase the previous hearings we covered to date.

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
Hearing 4 – Alphabet / Google / Meta / Facebook
Hearing 5 – Lobbyists (3) / Lobbyists (4) / Western Standard
Hearing 6 – Lobbyists (5) / Lobbyists (6) / Dwayne Winseck
Hearing 7 – Lobbyists (7) / Digital News Organizations

As always, the video we are following can be found here. You can watch it yourself or read generally what was said. Our thoughts will be added in brackets and final thoughts of the hearing will be put at the very end. Otherwise, enjoy!

Opening Statements

Emma McDonald of the Minderoo Foundation opened with her statement. She said that she knows from personal experience that curbing the power of big tech is challenging. during her time in government (Australian government), Facebook consistently argued that there was no economic value in news being on their platform and they claimed that the law fundamentally misunderstands the relationship between their platform and publishers. Google told them that their code was unworkable. As senators are probably aware, Australia lived through the blocking of news content on Facebook when they were on the cusp of introducing laws like Canada’s Bill C-18, Online News Act. When Facebook “defriended” them in Australia on February of 2021, it was just as the legislation was about to go to their senate. It frustrated many Australians and angered politicians of all persuasions.

But ultimately, McDonald continued, it didn’t stop the Australian government staring down powerful adversaries in passing the Australian News Media Bargaining Code in early March of 2021. Facebook and Google have been freeriding for years (not in this context) profiting from the inclusion of online news content on their platforms. Government intervention is the only mechanism that will force them to the negotiating table to pay for the news and information that delivers value to their businesses (obviously, this is complete BS reasoning.) The Australian code was developed in response to concerns from large and small media outlets about the impact behemoth digital platforms were having on Australian media and the local ad markets.

McDonald argued that this is not a uniquely Australian or, indeed, Canadian problem. Globally, the market power of Facebook and Google with its sophisticated ad tech and vast scale has been disrupting and decimating local media for at least a decade (Yeah, the poor media was mercilessly sent free traffic to their websites and boosting subscriptions by the big bad mean platforms. It’s just torture that they are getting all of this free business I tell you!). They have all witnessed the shedding of audiences and news room jobs and the loss of advertising revenue at an alarming rate (due to COVID, the digital transition, increased competition from online competitors, lack of interest in old newspapers, shifting audience expectations, etc.)

Despite the tech outrage in the leadup to the code, McDonald carried on, it has proven to be a success to Australian news media large and small (if the goal was to hack and slash journalists jobs at a massive scale, then yeah, the Code was a massive success). It’s workable and effective. It did not break the internet (it further solidified the dominant positions of the platforms), it is not a link tax (it is the very freaking definition of a link tax), and it showed that it is possible to curtail the market dominance of the platforms (it did no such thing).

Not long after the Code became law, McDonald said, most Australian media secured lucrative deals with Google and Facebook (Rupert Murdoch is “most Australian media companies”). By October of 2021, just over 6 months after the code was introduced, it became apparent that smaller independent publishers would not get Google or Facebook to talk to them. So in November of 2021, Minderoo Foundation agreed to support 21 independent publishers by offering to collectively bargain on their behalf and help them negotiate deals with Google and Facebook. They did this on the belief that these small publishers should be given the same opportunity as large publishers to negotiate with Google and Facebook for the use of their content for the public benefit.

McDonald talked about the negotiations. She said that the Australian Bargaining Code was designed to address the power imbalances between Australian news businesses and digital platforms and help support the sustainability of public interest journalism. Media that serves a public interest function and employs people of all shapes and sizes. The Code and the collective bargaining efforts have delivered positive outcomes (to the ultra wealthy) for small news media businesses, two of whom Senators will hear from today.

Senators, McDonald said, the ball is now in their court. Other countries are watching what they do with great interest ad momentum is definitely building. We need to support local news now more than ever, build trust and combat disinformation and bolster our democracy. She urges senators to stare down the threats of big tech and pass the law to save senators local news services (well, murder news businesses with a stupid law if we are being really honest here).

(I have to admit, it is such a bizarre sight to see Australian lobbyists appearing to push for a bill that is so obviously against Canada’s interests. This is straight up foreign interference, really. It shows just how corrupt things have gotten.)

Lawrence Gibbons of the of the Star Observer then opened with his statement. He said he is the publisher of the Star Observer, Australia’s largest and oldest media outlet (Cool! More of the foreign interference campaign!) He also spoke about his affiliation with an Australian organization representing Australian news publishers. Over the last few months, while the legislation has winded its way through the senate, disinformation about Bill C-18 has been spread like a disease. Some Canadian outlets have falsely reported that only large media conglomerates benefited from tech deals. This is fake news. (This is a bald faced lie. Critics have rightfully pointed out that a lions share of the benefits went to the largest news players. This is 100% accurate.) They should know. Their group of 24 small and independent publishers secured a deal from Google (this is by someone who runs one of the largest outlets in their country.) and they are not the only ones. He spoke about one other organization that secured a deal too. (Heh, other Australian organizations also had a lot to say about the Code. Spoiler: it wasn’t pretty.)

Gibbons continued by saying that no secretive algorithm could ever replace a fourth estate in a functioning democracy. Yet, despite the significant role journalism plays in our liberal societies, the digital duopoly poses an existential threat to the very existence of journalism around the globe (Next, you’ll be telling me that the platforms cause global climate change, war, disease, locusts, plagues, cats and dogs living together, and potentially causing the sun to swallow up the earth.) Together, Google and Facebook/Meta suck up one third of all global advertising revenues combined, making it increasingly difficult for content creating publishers to survive. If democracy such as Canada and Australia wish to preserve local news coverage, there is little choice but to require Google and Meta to do deals with publishers big and small (actually, a funding formula would have easily been a much better approach.)

Gibbons continued by saying that in response to Bill C-18, the tech giants have funded a massive propaganda campaign (I know! I saw that massive propaganda campaign- wait, that was from the big publishing lobby, oh, uh, never mind) threatening to pull news content from platforms across Australia. Australians have heard it all before. In 2021 when their parliament tabled similar legislation, Facebook pulled the plug on news published on their platform (that was the right call for platforms). Then, after a few weeks, the news returned (probably one of the biggest mistakes the platforms made as is clearly demonstrated here in Canada and the US. They are paying for that sin now).

Despite claims to the contrary, Gibbons droned on, a range of small independent companies sat down at the negotiating table. Australian legislation facilitated this outcome (note that he never talks about the financial side of things, just that they “negotiated”). Importantly, the law allowed independent publishers to join forces to collectively bargain with the mega transnational tech firms. In Canada, Bill C-18, as amended by the House of Commons, would allow independent mom and pop publishers to join with larger publishers in collective negotiations (this won’t happen in practice. The smaller publications will be on their own as many of the larger publishers already secured deals).

Gibbons continued by saying that concerns that the digital duopoly will only do deals with large media companies are not ill-founded. Left to their own devices, Google and Meta would only ever bargain with a few mega media companies (this is misleading because even supporters admit that this only happened as a result of the threat of this bill). In a cynical attempt to buy off the biggest players and nullify the government (that more or less is what actually happened in Australia). This is precisely what is happening in Canada without the passage of Bill C-18.

To thwart legislation, Gibbons droned on, Google and Meta started doing exclusive licensing arrangements with larger publishers alone (Gibbons has officially contradicted himself) to the exclusion of many French language, multicultural, LGBT, and first nations publications (Now Gibbons suggesting that the platforms are racist and homophobic. Standard demonization, really.) If there is one message that they can send to their commonwealth kin, it is this: only the passage of a law compelling the digital duopoly to bargain with a range of public interest publishers will ensure that Canadians will continue to have the rich and diverse media landscape Canadians so richly deserve (the bill will do the opposite).

In the absence of such legislation, Gibbons scaremongered, an ever shrinking Canadian media landscape is all but inevitable.

Senator Leo Housakos noted that the other witness disappeared, so suggested continuing with questions and answers. If the other witness returns, then they will give him the opportunity to intervene.

Questioning the Witnesses

Senator Paula Simons said that she has heard from many people about the wonders of the Australian deal, but she has questions. In March of this year, News Corp Australia announced that it was laying off 1,250 people from its news rooms, cutting 1 in 20 of their staff (this was news I covered at the time and was brought up in hearing 7, segment 1 with no answer). When she asked Sims in the past if he could tell her how much money the other independents have received from the platforms, she was told that all of these deals are confidential and there’s no way of tracking how much money is actually going into news rooms and no way of tracking whether that’s actually- if there is actually a way of tracking if there is a net increase in hires of journalists or news production. So, how is she to have confidence that this is actually working in light of the fact that over 1,000 journalists lost their jobs once Rupert Murdoch had this deal.

(This is one of the million dollar questions. It’s incredible seeing this brought up a second time trying to get answers to this. This is a HUGE hole in accountability and if we are going to be compelling payments from platforms to publishers, I want to know that the money actually went to fund journalists and journalism production, not golden parachutes for CEO’s.)

McDonald responded by saying that she is aware of the recent report that has been released by the Australian institute that has evidence that the job advertising numbers has increased 45% since the bargaining code has been introduced in Australia(This is a standard corporate play. Lay everyone off so that they don’t have to pay the wages of higher seniority, then hire them back at lower wage levels. This is not actually a good barometer of how successful things are). So, there is evidence, and she can make the evidence available and make sure it is tabled as evidence, that actually demonstrates that there has actually been an increase in jobs (the layoffs do suggest otherwise). Rupert Murdoch is one of many publishers that secured deals (he’s the biggest one! Also, why is he laying people off when he’s getting more funding?) So, perhaps she should let the other witnesses speak to this about smaller publishers (dodging the question I see. This stinks to high heaven of corruption.)

Chris Gogos of the Star Observer said that he could give his opinion on this. As a small publisher, the Australian News Bargaining Code has actually allowed them, given them capacity to not only to keep people, but to add journalists to their staff. Also to accelerate their transformation to the digital era (you’re REALLY late to that game, dude) which is critical for a sustainable for a publication of their size to be viable. It’s as simple as that. It’s actually been- they have seen the positive from the deal. (Wow, that was quite the non-answer there.)

Gibbons said that if he could endorse what Gogos has said, as a small independent publisher, the resources that were received have allowed them to add on journalistic staff, but equally as importantly, it has given them the resources to develop their website (LOL! A WordPress theme can go for a measly $50. Hardly bank breaking for a publisher that has a turnover rate of 6 or 7 figures), to put resources into their digital transformation (fun buzzwords in light of your previous item) and, frankly, it’s naive to think that as an independent publishing company, resources that go into expanding their digital reach (by posting links to the platforms), resources that go into expanding their advertising capability and capacity (which should be netting a return greater than the investment of setting up that infrastructure) all contribute to the overall livelihood and sustainability of the publication (why is it naive to think that?). All of these things are integrated and without the investment from Google over the last year their business would be in a substantially different position post COVID. (You need an entire law to afford $50? Just how inefficient are things over there anyway?)

Senator Simons said that senators have been told that if Bill C-18 comes into force in Canada, it will provide 35% of the operating costs of the Canadian news rooms. Is Gibbons getting anywhere close to 35% of their operating budgets in these deals? (That is a really really good question. Senator Simons is really on fire with these questions!)

Gibbons responded by saying that he can tell her that he is under a none-disclosure agreement that prevents them from providing that information (LMAO! She’s not asking for an exact dollar figure.) He must say that he finds it completely unsatisfactory as someone who is committed to transparent journalism and free flow of information, but unfortunately, the law is the law and he’s not prepared to breach his funding agreement by providing her with that information. (Gibbons just provided the absolute perfect reason why Bill C-18 desperately needs strong transparency provisions. I don’t think he intended that as that is basically friendly fire to his Canadian news counterparts.)

Senator Simons said that this- cards on the table, she was working as a journalist for 30 years, she is concerned that once you are beholden to the two biggest behemoths, the two companies that control what we see that sets the news agenda for the world that provide the paradigm by which we understand what is happening around us, that Gibbons is beholden to them so much so that they all sign non-disclosure agreements, he won’t tell her how much money the platforms are giving to him, they won’t tell her how many more journalists that they have been allowed to employ, and he really can’t answer her when she says that Rupert Murdoch, who is the biggest press baron in Australia, took his money and then laid off 5% of his staff, she needs to be convinced that this is real and that it’s worth the cost of selling your soul to Google and Facebook. (Yeah! Go Simons go! Go Simons go! Go Simons go!)

Gogo’s sounded flustered and said that he obviously cannot speak for a news corporation and the way they do business. Uh, he would not say- he himself being a small publisher and not having the access to this which- two behemoths such as Google and Facebook- that’s an important point to make here. That accessibility to those companies is actually very difficult for small companies like his (I think senator Simons broke the witness. He’s not making a lick of sense right now) and what their collective bargaining arrangement has allowed them to do was actually to, uh, have accessibility and to be at the table to have a discussion. Without such legislation, this would not have been possible and this is a very very very important point to make from a small publishers perspective (you want more money, don’t we all?)

When it comes- Gogo’s stammered, he’s also under a non-disclosure agreement, so he cannot answer her question directly. Um, but what he can say is that the- he was- the agreements in place are workable. Um, they do not feel at any point that they are at the behest of anybody, whether that is Google or Meta. (I think that was the closest we’ve gotten yet to an absolute gibberish answer. Seriously, though, that exchange was spectacular.)

Senator Leo Housakos notes that Rod Sims, former ACCC chair, is back and offered to let him give his opening statement.

Additional Opening Statement

Rod Sims gave his opening statement. He said that he just wanted to make three points, one is that, and it’s been said, the logic of the News Media Bargaining Code was that there was a massive imbalance in bargaining power in the sense that Google and Facebook would simply not even talk to, or certainly not in any way engage with media business about payment for their content (again, this is directed at links, not republication of whole work). So, that was a complete impasse. The News Media Bargaining Code solved that problem (only because the platforms mistakenly capitulated, not because it was a law that “solved” anything.) So, they then have got commercial deals between the media companies and the digital platforms in ways they could not get before.

Secondly, Sims continued, there were three key provisions of the Bargaining Code. One, there is a requirement to negotiate, and if that doesn’t work, then arbitration will kick in which is final offer arbitration. Secondly, if you do a deal with one media company, you got to do a deal with a lot. So, the platforms could have said that they don’t want any news on their platforms, but if they have any on, they have to do a deal with all companies. Thirdly, they have allowed collective bargaining as he knows has just been explained. The outcomes were excellent (for Rupert Murdoch) pretty much, he has to say, what he has expected. The amount of money paid by the platforms to media in Australia was over $200 million per annum (this is an estimate, not a hard number). Google did a deal with everybody (they didn’t). Facebook, with companies that employed 85% to 95% journalists, Many small companies got a direct deal, but two groups did collective bargaining. One was Country Press Australia which represents the smaller players and already has an industry body to work on its behalf, and the other one was brought together by Minderoo as senators heard.

Sims said that he should say that the smaller players got more money per journalist employed by the larger companies (not really a strong point. If one company employs 10 journalists and gets $20,000 per year in total, that’s $2,000 each. Meanwhile, a large company gets $1 million per year and employs 1,000 journalists, that’s $1,000 each. The point would stand but that is still not even enough to pay for one month worth of salary for each journalist especially when you have benefits, taxes, and insurance to contend with.) So, the myth that small journalist- that they missed out is just that, a myth (again, not what the criticism said. The criticism was that the larger players got a lions share of the revenue, not that they got all of it. To this day, the criticism still stands.) They did well. Country Press is extremely pleased with its deals, and he knows that senators have heard from Minderoo.

They only recently got some data, Sims continued, that showed there was a 50% increase in the hiring of journalists post the deals being done (compared to what time frame? If it was in the middle of COVID, that’s probably not saying much because things were really bad at the height of the pandemic for news organizations.) That didn’t surprise them because all the feedback from the journalists was, to quote them, there’s never been a better time to be a journalist in Australia (that sounds like an exaggeration to me). Then, once the Media Bargaining Code was completed, they saw companies hiring journalists and journalists immediately noticed that.

So, Sims continued, the News Media Bargaining Code, and he would say the Canadian equivalent is absolutely necessary (you keep thinking that). Otherwise, you won’t get commercial- should he say, fair dealings between the platforms and the media companies. There’s just no way that the media companies would do deals if there was not either the existence of the Media Bargaining Code or the threat of a Media Bargaining Code. They know that as a fact in Australia. It’s been very successful and he urges the Canadian parliament to pass their equivalent.

Continuation of Questions and Answers

Senator Rene Cormier turned to Sims and said that he is happy to hear that there are good news, but he has to tell them this: the Canadian Community Radio Fund has great reservations when it comes to the success of the Australian Bargaining Code because all Australian community publishers will not have benefited from it. For 50 news broadcasters, all of them, less than a dozen of them have reached agreements (that’s why I called BS to the notion that everyone has reached agreements.) Could Sims comment on this and tell senators how we should make sure that community radio could benefit from this under Bill C-18?

Sims had technical issues with translation – not uniquely a problem he experienced in such hearings.

Senator Cormier turned to McDonald and said that he understands that Australian media outlets that were accepted by the authority to arrive at deals did not do so because of administrative bottlenecks. Could Mcdonald tell senators how her organization technologies initiative supported old media houses in terms of resources? Could she tell senators what FTR offered and how services were paid?

Senator Cormier added that his second question for McDonald is that he has a fear with Bill C-18 that small Canadian media outlets will also have difficulty with arriving at voluntary deals. Does McDonald have any recommendations for senators in the context of Bill C-18?

McDonald responded by saying that in terms of how they assisted the small publishers, first of all, she has to acknowledge the support of the ACCC who made the collective bargaining process extremely easy (From what I’ve heard, the bargaining process in Australia is extremely convoluted and difficult, actually). They had the publishers- so the publishers were frustrated. They went to the ACCC. She spoke with the ACCC about supporting them. She connected originally with Lawrence and Lawrence did what- Lawrence “hearded the cats” so to speak. So, he collected all of the publishers together who were interested in participating in Minderoo’s collective bargaining for them.

One of the things about the ACCC’s process, Mcdonald continues, that made it so easy was that it was simply a form filling exercise that had a list of all the publishers. There was a condition attached which was that they had to have an annual turnover of $10 million or under to be participants of this form of collective bargaining. Once they lodged the forms for the ACCC that they were bargaining, they notified Google and Facebook and then it was a back and forth negotiation with, well, with Google, not with Facebook as she mentioned in her opening statement. She met with Google regularly, she conveyed meetings with the group of publishers and gave them updates on how the discussions were going with Google.

Lawrence, McDonald said, also conveyed meetings with a group to help them understand what was happening through the bargaining process. After, as she mentioned, about 6 months, they landed in a place where the publishers were all happy with what was on offer from Google. So, she hopes that answers Senator Cormiers first question.

Senator Cormier said that, yes, the second question is about recommendations because he is worried that all medias will have problems to negotiate.

McDonald responded by saying that they will and she thinks that voluntary deals are particularly difficult for independent publishers if they do it alone. So, if Canada’s government or Canada’s regulators look at a similar model to what was introduced in Australia that made it pretty seamless for them to work collectively, she thinks it would be a great addition to Canada’s legislation (middlemen. More middlemen to skim money from everything. Joy.) so the facilitation of the coming together of parties like Minderoo, Country Press, or industry associations that have come together in Canada that can work with publishers and bring them together and do that collective bargaining- she’ll let others speak to that, but she thinks that was hugely beneficial for them and the Country Press and Australia group.

Senator Julie Miville-Dechene turned to Sims and noted that Sims talked of an increase to 50% in the number of journalists all across the industry. What is the retention rate? She especially want to hear Sims about the firing or the let go one journalist in 20 by News Corp – the Murdoch Empire. They got a lot of money from the platforms and it seems to have not gone to journalism. So, what does that say on the Australian model. (So far, we haven’t gotten a good answer on this huge question. Thrilling to see this question get pressed.)

Sims replied by saying that it was a 50% in hiring. The number of new journalists rose by 50%, not an increase of journalists by 50% (interesting.) They could see that across many media companies. There was, if he remembers correctly, some reduction at News Corp. His memory is that they both had some reduction at some times and extra hiring at other times. So, he doesn’t know the net result of that. On News Corp, he supposes, got slightly less than 20% of the money (that’s a big chunk of cash, there and I’m not even sure if that’s actually a low ball estimate or not.) They are about 20% of the media business in Australia. So, they are one company, but certainly, he knows that the other big companies, that’s the ABC, the Nine, and Seven, and The Guardian all increased. They’re hiring. All he can say about News Limited is that they had some redundancies and other times, they definitely had some hirings. Sorry, he doesn’t know the net effect of those two things, but what he does know is that the net effect of journalists right across Australia was a lot of extra journalists hired. (another swing and a miss to that question.)

Senator Miville-Dechene asked if Sims had any information on the retention rate. Are they there? The journalists that were hired? It’s not possible to give her some more exact figures?

Sims responded by saying that he knows for a fact that the journalists hired by the ABC, which is the public owned broadcaster and extremely large, they are still retained. He knows at the Guardian Australia, they are still retained because he knows the number of journalists they had before the Bargaining Code and afterwards. The extra journalists they hired, which is about a 50% increase in journalism, is still there. He doesn’t know what it is for Nine, Seven, and News. They just don’t have those numbers. (Normally, I wouldn’t mind the lack of information from a random observer, but this is the guy that’s supposed to know these kinds of things. It’s surprisingly vague information to say the least.)

Senator Miville-Dechene said that she wanted to move on to another topic. Sims said that small media has bargained on their side as groups and bigger media have bargained individually. Here, at this point, we have the big coalition who is assembling small and big print media. It’s called News Media. They have about 560 media newspapers in general – big and small – and they want to collectively bargain. So, she is wondering if senators are looking at the Australian model, Sims is saying that the smaller media has gotten more out of their negotiations than the big guys. So, does it make sense that small and big media in such a big number, we are talking about more than 500 newspapers, get together, who is going to be the losers and the winners there from Sims point of view?

(If you ask me, the way things are going to go, in Canada, everyone is going to lose and no one is going to be a winner.)

Sims responded by saying that certainly they’ve noticed a benefit from individual deals. He should say that individual deals were done by the larger players. They were done by the medium sized players and they were done by some of the smaller players. Some of the quite small media players in Australia did their own deals. There were two groups that collectively bargained, as he mentioned, Country Press Australia. You go to very small towns and you got very small newspapers with two or three people. They got an excellent deal and Minderoo did a great job with some others.

Sims continued by saying that some of the small players did their own deals and some of them did collective deals. The smaller players got more per journalist than the larger players. he thinks it’s really up to the media companies themselves as to how they want to do this. If they want to join together and collectively bargain as a big group, he doesn’t have a concern with that. It means deals get done, it means they will get some benefit. As McDonald has said, you need some mechanism to help some of the very small players. Country Press Australia actually had an industry organization that could work on its behalf. If in Canada, you got an industry organization that covers a larger number of players big and small, well, he doesn’t have any problem at all of them negotiating on behalf of their members.

Sims said that there is not a lot in it in terms of amount of money (That’s a big admission on his part. The smaller players are not getting a lot of money out of this. It undercuts a vast majority of the whole premise of this legislation in the first place). He’s making the point that the smaller players in Australia were in no way disadvantaged, but he doesn’t have a problem with all the players, big and small, to negotiate collectively.

(If there is not a lot of money for the smaller players, then this is hardly a revolutionary concept. The lobbyists, including the ones in the room in this hearing, were making a big point, saying that this is about saving the small journalism outlets – that this was about bringing in huge amounts of money for the small players. From a perspective of a small business who is struggling, if you are maxing out your credit cards and hundreds of thousands of dollars, you have to really ask yourself what you are supporting if you are supporting this bill at all – and you shouldn’t be, really. If after all the blood sweat and tears that went into getting a deal only yields a couple hundred dollars, I would be all “WTF???” in all of this. I mean, that admission alone should be a huge red flag.)

Senator Andrew Cardozo turned to Sims and said that, as Sims is looking at the whole field, is this the clash of the titans with democratically elected governments looking at a policy and the private sector saying “don’t you dare.”? (Not at all. This is a case of the government proposing a completely insane bill and trying to bully platforms into submitting to their demands… when the governments in question don’t really have any bargaining chips to work with.) How seriously should senators take this threat (really seriously) and he was wondering if Sims had any idea of how much money is involved. Is it $200 million? $300 million? Does Sims know the ballpark figure overall? ( think this answer is very well known already at this point. $200 million roughly.)

Senator Cardozo then turned to the other witnesses and asked about thoughts on the threats to their independence. There has been some references that if you have these deals with these major corporations, his colleague talked about selling your soul, is it any different than the deals they do with major advertisers? (I can say one thing that’s for sure, it’s unlikely that any one single advertiser would account for 35% of covering the cost of all expenditures. That simply doesn’t happen. Given that promise by supporters, there really is no comparison to my knowledge.)

Sims responded by saying that certainly when Google threatend to move search out of Australia, Facebook threatened to take all news and emergency advice from the platform, there was a large pushback from the Australian population (Australian digital rights organizations were not happy with the government at the time, actually). This was Google and Facebook being disrespectful to Australia and disrespectful for Australian politicians (as opposed to the saintly and good will gesture of blatant foreign interference that we are seeing on display here because that’s just pure wholesomeness.) So, he thinks there is an underlying democratic issue there.

He should just add that, Sims continued, it’s very hard for Google to take search out of Australia and he thinks that it’s extremely hard to take search out of Canada (not what is being contemplated by Google). As soon as Google threatened to take search out of Australia, the CEO of Microsoft spoke to the Australian prime minister the next day offering to have Bing come in (Actually, Microsoft was pushing for this bill from the beginning of the debate as a way to drive up costs of its competitor. It’s a move that ultimately ended up backfiring on them later on because publishers later claimed that Microsoft was ripping them off when they low balled the publishers afterwards, banking on good will for a job well done. Also, Bing was already in Australia to begin with.)

Now, sims said, he’s not suggesting that Bing is the prefect substitute. He is suggesting that Google has to think awfully hard. It’s got 90% of search all around the world. If it left one major country such as Canada and a new competitor was allowed in, he’d think that’s a big threat to Google (Actually, it wouldn’t be sustainable for the competitor in the long to pay for the privilege of linking to content in the first place. If Google has no way of recouping the unlimited liability we are talking about, a smaller competitor wouldn’t have a hope in the long term. Of course, as I said, Google isn’t withdrawing from the country completely, just contemplating dropping support for news links). So, it’s not clear that Google was ever going to carry out their threat in Australia.

Sims said that he suspects not in Canada and, look, the overall funding was over $200 million Australian dollars per annum. He thinks it could be close to $250 million. He just doesn’t know. He just knows that it is just over $200 million Australian dollars per annum for deals that run 4 to 5 years each.

Senator Cardozo asked about editorial independence.

Gibbons responded by saying that he is happy to speak to the editorial independence. They have had no discussions about content on their sites with Google. Frankly, they are a big behemoth and he doesn’t think they really care about what they publish. In fact, he’s got to say, he’s had absolutely no discussions in relation to him appearing before committee which he is fascinated by. He was told by executives at Google that doing a deal with them did not mean they were silencing him. He’s got to say, having Google as a financial beneficiary to his small business, it’s actually a great great tool to have not only to have financially their resources, but their expertise and advice in terms of growing and sustaining his business (standard suite of services offered if I’m not mistaken). So, he’s been very grateful.

Just one other thing, Gibbons continued, the challenge with the Australian legislation is that Facebook and Google were never actually designated under the Act because, well, the treasurer chose not to do so. That meant that it was up to those companies to decide whether or not they were going to talk to them. They did not talk to them individually at Google until they collectively bargained and until they got one of Australia’s richest philanthropic groups behind them. Facebook chose never to deal with them and chose not to deal, in fact, with a lot of people and that’s more of one of the flaws of the Australian legislation as it came down the pipe. It simply was never enforced.

McDonald responded by saying that she is not a publisher, so she can’t speak to that point. The only thing that she would say, she guesses, is that- this- as she’s said at the beginning, she’s worked with media companies for most of her career before she took this job. She knows that this isn’t the panacea. It is one of the tolls in the toolkit that they need to support publishers in the future. It’s done a great job in Australia, but it’s only the beginning of the story, not the end of the story. She thinks that you will find the same thing if you bring in this legislation. It’s an important piece, but- and she understands the concerns about the dependence of Google and Facebook, but if you got a huge advertiser, like a big car manufacturer or a supermarket chain, it’s no different. It’s helping to fund your business. Commercial media is based on the receipt of funding from other commercial businesses. (In my experience in the media, if a business advertises on your network or newspaper, the organization will bend over backwards to not badmouth them no matter what. The money puts the fear of God in the journalists in the news room. That’s why I’m skeptical about this never affecting coverage at all.)

Senator Donna Dasko said that she wanted to get a sense of what the basis for negotiation was between the two platforms and the media organizations. In particular, the differences in the way the organizations negotiated and dealt with the two companies differently. Can the witnesses tell her how that differed- what the expectations were for Google versus what the expectations were for Facebook? She’s trying to understand what the basis was for the money and especially the differences between the two.

Sims replied by saying that during the discussion in the lead up to the legislation, Google always engages with the ACCC which he chaired at the time and the government. Facebook did not. So they always took a very different position. Google was most concerned with anything that interfered with the integrity of their algorithm. Once they were convinced that wasn’t an issue, while they didn’t like the Code, they went ahead and negotiated. Facebook just wanted the whole thing to go away. They did negotiate because they were very worried about getting a designation. So, they always thought that the threat of arbitration would give them the outcome that they wanted. In the end, it became the threat of designation. So, he can only say that Google had a much more proactive approach.

(There’s a very important point to make in the midst of all of this. That is the fact that Australia threatened to designate the platforms. In Canada, Bill C-18 automatically designates the platform. That is a critical difference between the two bills.)

Senator Dasko said that maybe she could ask it this way: Did the companies get more money out of Google than Facebook (my understanding is that the answer is “yes”.

Sims responded by saying that yes they did. They judged that to be appropriate because Google is much bigger than Facebook in terms of the amount of advertising money it gets. So, they thought- the problem is that Google only did deals with companies that only employ 85% of journalists, but they felt- when the companies were doing deals, they felt that the money that was being paid was appropriate to their share of gain. Google was paying more, but they always expected that they would. So, they thought that ratio was about right (I think that ratio is 66% Google, 33% Facebook).

Gibbons said that a couple of points. Firstly, Australia has always been the most monopolistic media market in the free world and when Sims says that 85% of the media and journalism jobs are in the hands of the few companies in Australia, and that they got the lions share of the money, that’s just the commercial reality of the market (What a difference between the beginning of the hearing and now. At the beginning, he urged senators not to believe anyone saying that most or all the money went to the big players. Now, he is saying that this is just the commercial reality of the market. A significant walk back, really.)

Number two, Gibbons continued, in terms of how the deals were actually structured, their group of 24 publishers who were cat hearded as McDonald described, it was not a coincidence that they came together. Under the media bargaining code, in Australia, there was actually a media register that publishers were invited to sign up to and it was a pretty arduous task. They had to fill in forms and demonstrate that they were public interest publishers and meet an entire government threshold (so much for the “easy” and “seamless” process McDonald tried to say it was.) The majority of the people in the Public Interest Publishers Alliance were actually on the government registry and they assumed that once they got on that registry, that would give them a front row seat in terms of bargaining with Google and Meta. So, they individually sent off letters to each of the companies and said ‘hi, we’re on the register, we are ready to talk; and they sent e-mails and they sent e-mails and they sent e-mails and nothing happened and no one responded.

Gibbons continued by saying that it was under that frustration that they contacted the ACCC who advised them of the collective bargaining system who then introduced them to their facilitator, Mcdonald. Now, the bottom line is that Google actually eventually returned their calls when they came to the group. Once they had McDonald and the Minderoo foundation behind them, Meta never talked to them, never returned their calls, and referred them to Facebooks grant process that they have for small publishers and disclosure, both him and Christopher did get grants from the Meta funding, however, he can disclose that it is a fraction of the money that they receive from Google.

Senator Pamela Wallin turned to Gibbons. She said that they keep referencing, in their discussions, the Australian legislation, but point of fact, it never really did come into existence. It was the threat of the legislation that actually led to whatever negotiations, how badly they may have been handled. Is that- would Gibbons confirm that?

Gibbons responded by saying that he 100% confirms that. He knows that other people may have other opinions, but he can tell Senator Wallin that there were a number of independent publishers who didn’t get deals and he can also tell Senator Wallin that those publishers who chose not to be part of the collective bargaining process were- many never got deals in the end (that’s a fun progression throughout the hearing. Initially, everyone got deals, then most got deals, now some did not. This is not a good trend here). So, while that threat of designation brought Google to the table, and didn’t matter one diddly squat to Facebook, right? At the end of the day, what he takes from the Canadian legislation as he sees it is that:

A) It is not up to a politician to decide whether or not they are going to fall to the power of the digital duopoly (it’s the whole government making that determination, technically) and,
2) (yes, he really said “A”, then “2”) The designation is more likely to happen and
3) Small independent media publishers are not left to their own. They are part of the legislation as it is crafted from the very beginning.

So, Gibbons said, hats off to Canada and he hopes that everyone gets deals (he’s hilarious… and is very very very unlikely to be right).

Senator Wallin said that one of the concerns here is that they are giving the power to a broadcast regulator who is going to have to develop expertise in this particular area. They’re giving that body, the CRTC, the power to designate at their whim. Does Gibbons have any thoughts on that? It may not be a politician doing that, but it is a regulatory body that is directed by politicians.

After a long pause, McDonald responded by saying that in terms of CRTC which is Canada’s communications authority she believes which is similar to their Australian Communications and Media Authority, she thinks that- she doesn’t think she knows enough about Canada’s authority to speak of greatly… authority. Um, she would certainly have faith in the Australian Communications and Media Authority who understands how the media sector works and certainly understands digital disruption and they have followed the path of studying how media has been impacted by digital platforms for a very long time. They worked side by side with Competition and Consumer Commission over the years to come up with- sort of policy directions. They are part of the legislation that exists now which is the- even though it is a competition law, the registration of the media organizations that Gibbons was referring to happens via a certain Communications and Media Authority on the understanding that they know the media industry best. (I think she’s working on a LOT of assumptions here.) So, she thinks it makes sense for them to designate- in a way, it’s probably better than putting it in the hands of a treasurer whose attention can be difficult to get and they are dealing with so many things as a treasurer in the country, but that’s just her personal-

Senator Wallin said that, no, it was more about the process of unilateral designation one way.

McDonald responded by saying that, so they designate Facebook and then they-

Senator Wallin said that, sorry, they have the power- well, we’ll see, but it is intended in this legislation that the regulatory body would be able to say, ‘OK, you are a designated publisher and, therefore, you are required to pay’ or ‘you are a designated body and you are required to pay the so-called link tax’ – but that’s not how Australia’s system is working because the legislation didn’t ever actually come into force.

Sims asked if he could just say that the legislation did actually come into force?

McDonald said that, exactly, she was going to say that, but the legislation actually does exist and it absolutely is in force. (My understanding was that the two biggest platforms were never actually designated.)

Sims said that so all that did happen is that in the final discussions with the treasurer and Facebook on the one hand and Google on the other, the treasurer discerned that they did not want to get designated. Both Google and Facebook did not want to get designated because of the effect that might have as a precedent for around the world. So the treasurer has said, ‘look, the legislation is the law of the land. It’s absolutely on the statute books, the next step is whether or not the treasurer designates Google and Facebook’ and he said that ‘if you do a lot of deals, then I won’t see a need to designate you.’ They went out and did a lot of deals, they did them in record time. Within about 6 months, they had virtually all of them done. So, that’s how that worked. (time ran out)

Senator Bernadette Clement turned to McDonald and said that we do heard cats here in Canada quite a bit, so she got her reference. Her first question is that the fact that she went from a competition policy to an economic model. In Canada, we’re quite interested in competition- well, the lack of it (thanks to terrible anti-trust regulations and virtually no enforcement from the regulating bodies. Yes, that’s me taking a dig at the CRTC among others.) Why did that happen? Why did it go from that to that – the economic model? In light of what Gibbons was saying about Facebook and Google and the difficulties there, would it not be preferable to have an economic model such as- instead of doing secret deals, you’re actually using- you actually have a set percentage of a news outlet’s editorial expense budget and everybody gets the same thing across the board?

McDonald said that she’ll defer to Sims as the economic expert and the competition policy expert. She worked for the minister for communications and her background is all legal and in the media regulatory space, so it would be inappropriate for her to speak to this with any kind of authority.

Sims said that he’ll be very quick. They decided not to make this a copyright issue. Instead, to make it a market power issue. Market power is very much the ACCC deals with. The ACCC doesn’t just work with competition law, but also deals with market power issues as well. So that’s why it came to the ACCC, but Senator Clement is right, it is an economic issue. They are dealing with how do you overcome with excessive market power that Google and Facebook have (The Code and the deals that came out of it did nothing to fix that). So, Senator Clement is right, it is an economic outcome rather than a competition one.

Senator Clement asked why did that happen. Why did Sims make that choice if it is a monopolistic issue?

Sims responded by saying that the way they solved the monopolistic issue is the way they do it in Australia all the time (do nothing about it?) It is an established model where you have negotiate/arbitrate positions (so, nothing. Got it.) So, all they are trying to do is rebalance the bargaining power and once you have negotiate/arbitrate, the company with all the power (keeps it) can no longer say ‘go away’ to the small player. It has to deal with them. Otherwise, it’ll find itself in front of arbitration. So, given the threat of arbitration, rebalances the bargaining power, that then allows commercial deals to then be done and that’s what they were seeking to achieve. They actually wanted deals to be done between individual media or collective media and the platforms. They never wanted them to be public. They never wanted them to decide what the percentage is. They wanted commercial deals and they got them.

(OK, what Sims just said here was complete and total nonsense. If you have a single company taking a monopolistic amount of space in the market, and you want to solve that problem, then the obvious solution is to bring in competition. In this case, Google, in their mind, has monopolistic power in search. So, if you want more competition in search, then you find ways of encouraging competitors to search. What he just said was that the government essentially took money from Google and gave it to a bunch of media companies that have nothing to do with the search engine industry. That literally solves nothing from a competition perspective. You still have Google as having monopolistic power and just shifted money from one industry to another. That statement alone given by Sims proves that he is no economist because this is really basic stuff in the world of economics.)

Senator Peter Harder noted that they had to postpone the witnesses due to senate business (I was really wondering about what happened there.) He said that he wanted to explore a bit where Canada’s legislation differs or has learned from the witnesses experience. They talked about designation. Could Sims comment a bit on the data collection and transparency in this legislation vs theirs as to any comments Sims might make on that. That gives him the opportunity to talk about lessons learned that might be the next step for Australia in this field based on what Sims sees happening here.

Sims responded by saying that he thinks that the data or transparency provisions lawmakers have in the Canadian bill are excellent. That is a deficiency. The ACCC is the only organization in Australia that has that information – that can tell you the deals of $250 million and it should be more transparent then that. So, he thinks that the Canadian law has picked up the key defect in the Australian law. The only other issue is, of course, is the automatic designation. He thinks that will be revisited. They have a new government. It’s got many things on its mind. He thinks Facebook would eventually get designated (no wonder Facebook said that the Australian deals are tenuous), but he agrees, that lack of automatic designation is also a problem. So, he thinks the Canadian law fixes up the two issues he would have.

Senator Harder said that if he could pick up on the same themes, Sims, if we’re talking 5 years from now, what is the state of not only Australia and Canada, but where else do regimes like this exist and can Google fight off having the United States join some kind of framework not unlike Australia and Canada’s. (The US constitution guarding against compelled speech will definitely help Google if that fight ever fully comes to fruition.)

Sims responded by saying that they know that deals like this have been discussed in Indonesia, parts of Africa, in India, and also the next country that will probably do this is the United Kingdom (sadly, that may be accurate). So, he thinks that once that happens, you’ve got such a precedence around the world- he means he can’t speak for the United States parliament (it’s called Congress), they seem to have great difficulty agreeing on things between the two parties, but his sense is that there is bi-partisan support for a media bargaining code in America (Republicans are trying to turn it into an anti-moderation law which is why it got stalled and shelved), it’s just too hard for the parties to agree on things. but he thinks that the momentum- he thinks in five years time, you’re going to see a lot more bargaining codes like this (we’ll see about that).

With that, Senator Leo Housakos adjourned that part of the hearing.

Concluding Thoughts

OK, first of all, I cannot emphasize enough the surreal nature of Australia openly lobbying the Canadian government to pass such a law. Some in the media loves to talk about foreign interference, well, this is foreign interference in broad daylight and everyone acting like this is no big deal. It would be one thing to pick their minds on how things went in Australia, but this hearing was more them trying to persuade lawmakers here to pass the law.

Of course, that was only the beginning of the problems I witnessed with these hearings. On top of it all, it was very clear that the witnesses were misleading or not being forthcoming with what they knew. For instance, the witnesses were pounding the message that the Australian Bargaining Code was all about the small players. Yet, later on, Gibbons pretty much admitted that the current media marketplace in Australia is not actually that competitive and only 15% is taken up by the smaller players. So, that argument got defeated by the very people pushing it.

Obviously, there was the moment at the very beginning where Senator Simons was pushing for answers on what assurances that money actually generated by the deals actually goes to journalism production and the people who actually produce the work. This came attached with the headline that News Corp Australia laying off 1,250 employees. Hilariously, witnesses were actually given two opportunities to explain that away and assure senators that the money does go to journalists. Instead, in both instances, they largely dodged the question entirely. That is most assuredly not a good look for them from where I’m sitting.

I burst out laughing when one of them hid behind their non-disclosure agreement after being asked if 35% of expenditures are paid for with these deals. The thing is, there are ways of answering that question that wouldn’t violate an NDA. So, for instance, one of them could have said that based on what they know about these deals, it would be realistic to assume that the revenue generated could rise to that 35% or not. You’re not disclosing what you made off of these deals, you’re not giving general dollar figures, but you are answering the question in that instance. They chose not to, but I think senator Simons inadvertently got her answer when Sims later admitted that the deals aren’t exactly getting a lot of money. So, I strongly suspect that the answer she indirectly got was “no”.

What’s more, there’s loads of misleading statements throughout. The big one for me was that critics were accused of being “fake news” by saying that smaller players got no deals. I know from experience that this is not what critics were saying in both Canada and Australia. What they were all saying was that the largest players got a lions share of the revenue. Amusingly, Gibbons admitted that this criticism was basically true when he talked about the nature of the media market in Australia, so of course the larger players got a lions share of the revenue.

It is absolutely mind blowing just how bad those witnesses were at selling the legislation. They came out swinging at the beginning against the critics only to later admit that pretty much everything that was said by critics was actually true. As a result, that whole panel was a threat to themselves when it came to pushing this bill. There’s not a lot of ways I can see this hearing going even worse for them than what I saw.

Drew Wilson on Twitter: @icecube85 and Facebook.

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