Canadian news is seriously fudged. Here’s why.

Legacy news media’s Hail Mary Competition Bureau C-18 play, explained - the good, bad and ugly, all conveniently compiled in one place, for your edification.

Yesterday, the escalating battle between legacy Canadian media outlets, the Canadian federal Liberals, and tech giant Meta was kicked another notch up the crazy tree.

The Canadian Association of Broadcasters, News Media Canada, and the Canadian Broadcasting Corporation made a joint submission to the Canadian Competition Bureau alleging that Meta (Facebook, Instagram) is engaging in anticompetitive behaviour for refusing to post links to these outlet's content because of the conditions imposed upon them by controversial Canadian bill C-18. 

This technical-sounding problem has a long backstory. And while a lot of digital ink has been spilled on it this week, it doesn't appear as though anyone, most notably Canadian legacy news outlets, has put the good, the bad, and the ugly of the situation into plain language all in one place. 

So allow me to translate this……situation……for you. It's a long read, but it's an important one. (I've even summarized each section for you!)

What is the backstory to the Competition Bureau complaint, and why does Canada now have a "news ban" on certain digital platforms?

TL; DR: This fight isn't really about journalism. If it were, countless Canadian journalists wouldn't be laid off. Unable to adapt to the digital era, financially failing legacy media outlets wanted a new source of cash beyond existing subsidies, were aided and abetted by the federal Liberals in betting the farm on C-18, and lost when Meta and Google called their bluff. 

I'll emphasize that quality journalism is vital to a healthy democracy. 

But the whole issue with C-18 and now the Competition Bureau complaint is less about that and more about sustaining the corporate profits of certain companies that failed to financially transition when the digital revolution disrupted their virtual monopoly on advertising revenue. 

Canadian news media, particularly traditional print media, has been dying slowly over the last two decades as they lost their stranglehold on advertising to online digital platforms. These legacy outlets have hemorrhaged revenue ever since, and for the most part, many have been unable to transition their revenue generation models to this digital reality.

At first, some of these outlets tried to stop the bleeding via mergers that left Canadians with virtually no local media coverage from these traditional sources. Many legacy newsrooms across the country have been shuttered. But this wasn't enough to keep the business afloat, so some of these outlets went to the federal government with cap in hand. In 2019, Canadian Prime Minister Justin Trudeau's Liberal government gave print media outlets nearly $600 million in bailout funds. Journalists and opposition politicians heavily criticized these funds and the process for how the funds were distributed. Millions more were distributed to them as part of pandemic subsidies.

But all this funding didn't stop countless Canadian journalists - those investigating and writing the news - from being laid off. Nor did it stop the financial death spiral these corporations were in. Meanwhile, new digital outlets, platforms, and formats - like the one you're reading this article on - began popping up, thriving and challenging legacy outlets for subscribers. So legacy media outlets went back to the government for more.

Enter controversial bill C-18, which required online platforms like Meta and Google to pay Canadian news outlets for hosting links to their content (it's now being referred to as the "link tax bill"). Meta and Google, while acknowledging the importance of contributing to actual journalism, pointed out that when news outlets post links to their platforms, legacy news outlets get both free advertising (Meta estimates the Canadian value as over $200 million) and access to their vast user bases. They also pointed out that Canadian bill C-18, unlike a similar bill in Australia, left no room for customized deals to be made with news outlets (which they had already made in some cases in Canada) and exposed them to an uncapped "link-tax" financial liability (that is, these platforms have no control over how much this new law might cost them). They sought amendments to C-18 to address these issues.

When it became clear that the legacy outlets were pressuring the Liberal government not to amend the legislation, Meta and Google both countered and said that if the bill was not amended to a compromise position that would allow for contributions to news production and the removal of uncapped liability, then they would block links to news content in Canada.

But the Liberals, despite cross-partisan condemnation, did not amend the bill, and it passed. So now, if you are in Canada and try to access Canadian news on Meta's platforms, you cannot. 

What exactly is the Competition Bureau complaint, and why was it filed?

TL;DR: The complaint should be viewed as a Hail Mary play to force Meta and Google to comply with an unamended bill C-18 and a way for the Liberals to buy time to change the narrative on the news ban instead of doing what they should be doing, which is going back to the drawing board with all parties at the table. 

In passing C-18 without amendments, legacy media and the federal Liberals, thought Meta would blink on their threat to block links, accept an uncapped financial liability, and pay the C-18 link tax. They were wrong. There are 3 billion Facebook users worldwide, with only 24 million Canadians using Facebook or Instagram. The Liberal cabinet and the board members of legacy media outlets failed to see that it didn't cost Meta as much to block links to Canadian news as it would accept an uncapped, internationally precedent-setting liability. 

So, to comply with the legislation, Meta followed through with blocking links to Canadian news. Now some of those legacy outlets, who are in severe financial dire straits and desperately need the money that C-18 would have provided to them to stay afloat, are in a situation where not only do they not have the C-18 money, but they also find themselves without the free traffic and advertising that Meta provided to them. In short, they were severely fudged and needed to do something.

The logical something at this point would have been for the government to change the legislation to allow a win for everyone. But the legacy outlets have filed their Competition Bureau complaint, which conveniently also buys the Liberals time from having to bend and bring all parties back to the negotiating table to devise a solution that could actually work. 

Meta should be paying for the news. Why shouldn't they follow C-18 and pay?

TL;DR: News is worth paying for, but unamended bill C-18 isn't the way to get people and platforms to pay for the news.

Journalism is essential, and Canadians need access to news. However, nothing in C-18 will ensure more journalists will be employed.

During the debate on C-18, Meta and Google acknowledged the importance of contributing to actual journalism but pointed out that Canadian bill C-18, unlike a similar bill in Australia, left no room for customized deals to be made with news outlets (which they had already made in some cases in Canada), and exposed them to an uncapped "link-tax" financial liability. In that, link ban or not, unless C-18 is amended, platforms like Meta and Google could resort to algorithmic metering of news to limit the number of link clicks they have to pay for, which could mean Canadians see less news too.

Platforms like Meta and Google wanted a solution that allowed them to contribute to actual journalism but also capped their liability and acknowledged the value they already do provide. Namely, when news outlets post links to their platforms, they get free advertising (Meta estimates the Canadian value as over $200 million) and access to their vast user bases. 

What will happen with the Canadian legacy media's Competition Bureau complaint?

TL;DR: It’s hard to tell. But Industry Minister François-Philippe Champagne's political intervention in what should be a non-political review may be enough to get the complaint to a tribunal phase, where experts are saying it should probably die. If it doesn't, Champagne's intervention means there will be allegations of some serious banana republic $hit going on.

Canadian academic Michael Geist recently posted an excellent summary of the technical and legal reasons experts say the legacy media's Competition Bureau complaint against Meta should fail. You can and should read it here. Among many others, Geist makes this particularly great point about why the application is flawed:

"The claim continues by stating that "Meta cannot claim any legitimate business justification for blocking news content from its digital platforms." Yet then-Canadian Heritage Minister Pablo Rodriguez repeatedly said the opposite when asked about the potential for blocking news links at committee. Rodriguez noted that it was a business choice for the platforms to determine how to comply with Bill C-18. The failure to take that business choice seriously is a key reason why the government now finds itself in a legislative mess."

But a Globe and Mail article laid out a more significant reason beyond those outlined by Geist about why the complaint should fail. In a tweet (X-eet?), Minister of Industry François-Philippe Champagne arguably inappropriately weighed in on the complaint. That's because Champagne is primarily responsible for determining if the current person overseeing the review of the complaint, Competition Commissioner Matthew Boswell gets to keep his job or not when he's up for renewal in a few months. Canada's former federal ethics commissioner (Trudeau has left his position vacant for six months) even weighed in on this point, calling it an ethical "blind spot" for the government. 

So now there has been speculation that Champagne's interference could cause the complaint to advance but eventually be rejected based on its technical merits. Former chair of the Canadian Radio and Telecommunications Commission, Peter Menzies, said in a Tweet, "I haven't yet found a person well-informed on this file who thinks this is anything other than a publicity-seeking Hail Mary. Champagne may successfully bully Boswell - at least if he wants to get reappointed - into advancing the case to the tribunal but it'll die there."

That said, it should be noted that in 2022 the federal Liberals made sweeping changes to the Competition Act, the piece of legislation under which the legacy media's complaint was made - namely, the concept of "abuse of dominance." It's not impossible that this very high-profile case could be used to test-drive these changes legally. 

Regardless, people tasked with undertaking this review must consider a fact outlined in a recent study that shows that people get news from many platforms, making this "distribution" based anticompetitive argument harder for legacy media to argue. And frankly, this has always been the case. Legacy media aren't just losing the advertising and content distribution war to Facebook. They lost it decades ago to countless forums like Craiglist, Kijiji, Autotrader, eBay, Pinterest, and most notably, Amazon. 

But what happens in the technical review may matter less than the time and airspace this debate buys the federal Liberals and legacy media time to try to distract from the legislative clusterfudge that is C-18 to swing public opinion in their favour. They're already at it, with newly minted heritage Minister Pascale St. Onge tweeting new, but essentially fact-free, talking points on the matter. The problem for the Liberals and legacy media, as a friend pointed out to me this week, is that they no longer have total control over what Canadians see - platforms like Meta do too. The real question in the coming months is who wins that battle for hearts and minds.

Ok, but the United States is looking into Meta for anticompetition stuff. Why shouldn't Canada?

TL;DR: There are questions to be raised about competition issues with Meta. But those things aren't necessarily what the Canadian legacy media's Competition Bureau complaint is about.

There is no doubt there are questions to be asked about big-tech companies like Meta and Google when it comes to competition. However, complaints raised in the United States and other jurisdictions are not necessarily parallel to the complaint by the CBC and media groups to the Competition Bureau in Canada. The scopes of these reviews, and the processes and laws by which they are undertaken, shouldn't be purposely confused with each other. 

Are Canadian legacy media being upfront with Canadians about all sides of this debate?

TL;DR: Helllllllls no. LOLZ. 

Responsible journalism in Canada is taking a hit throughout the sordid C-18 affair. Here are some fun facts that could be material to understanding the legacy media's Competition Bureau's complaint but have conveniently been left (mostly) unreported by those outlet's (self) coverage of the issue:

• Most Canadian legacy media outlets had a financial stake in C-18 proceeding unamended, yet fail to disclose the existence or amount of this stake in their reporting on the issue. That is, they consistently fail to declare their bias.

• Legacy media fails to report that several small, local news media startups vehemently oppose C-18 because they felt they didn't need the funding to grow and thrive. They were more worried about losing site traffic if Meta and Google followed through on their threat to stop posting links. Those startups are now caught up in this issue thanks to the Liberal and legacy media's recalcitrance.

• When it comes to talking about competition in the Canadian media landscape:

  • Many Canadian broadcast media outlets are owned by parent companies that control the government-enforced bandwidth oligopoly that artificially keep Canadian cell phone bills exorbitantly high.

  • Some legacy print outlets were previously investigated for anticompetitive behaviour (but later exonerated) and made arguments in defense of their position that sound hypocritical in light of the language they used in their Competition Bureau complaint against Meta.

  • Some legacy print outlets recently faced further speculation about if they would be engaging in anticompetitive behaviour when they tried to agglomerate further by announcing a merger (that did not proceed).

• Some legacy media outlets accept hundreds of millions of dollars of direct taxpayer subsidies sometimes at the exclusion of other outlets from government programs overseen by a questionable panel appointed by the Liberal government, whose membership included someone who subsequently ran for the Liberal Party of Canada and is now the Liberal Minister of Heritage formally in charge of said policy.

• The Canadian Broadcasting Corporation accepts over a billion dollars worth of taxpayer funding per year to produce content they put out for free while still selling advertising like a private sector entity. And further, even if C-18 were to advance, most of the revenue would go to it and other broadcasters, not print media.

• Contrary to their messaging in the Competition Bureau complaint, no Canadian news media is being taken down or blocked. That information is still available on their sites. Meta and Google are blocking links to those sites on their platforms, and now C-18 has caused the loss of traffic from Meta and Google to sites owned by all Canadian media outlets, including those who didn’t want C-18 to pass.

What other problems could arise if the government doesn't change course?

TL;DR: You get less actual news, the Liberals get scrutiny, and Canada looks more like a place where no one would want to do business.

Before C-18 came into force, Canadian media outlets had access to a system of news sharing that allowed posting links to sites that drove traffic from platforms like Google and Meta to Canadian news sites. Those outlets could then charge for access to their content. Bill C-18 screwed that system up. This change means Canadians see less news on popular sites, and it's harder for innovative news businesses or voices that don't traditionally get platformed to start a news business.

Then, when the global business community sees things like Canada's Industry Minister openly weighing in on a process that should be free of political interference, will Canada's business processes be continued to be viewed as fair and democratic?

Furthermore, less news consumed by the Canadian public isn't necessarily bad for the political fortunes of a scandal-prone federal Liberal government. But it is a bad thing for democracy.

What should the government be doing?

TL;DR: Upend C-18. Go back to the drawing board. Do things that support journalists having the resources they need to do their job instead.

For a government whose Labour Minister has repeatedly said, "the best deals are made at the bargaining table," it is worth asking why this has not been the Liberal's approach on something as important as the production and dissemination of Canadian news. 

The Liberals need to indicate that they are willing to rethink C-18, pour over the hours of Parliamentary testimony provided by experts from all political stripes given over the bill, and offer a new approach. That approach should ensure that startup news operations are unrestricted, that actual journalists are given the resources they need, and that the corporate interests of the boards of directors of a few failing media companies aren't put ahead of those things.

Oh, and the Canadian Broadcasting Corporation's mandate should be rethought while they're at it.

Why isn't the government doing this?

TL;DR: Politics.

I don't pretend to understand why the federal Liberal government does what it does. But on the issue of C-18 and the legacy news media's Competition Bureau complaint, if I had to hazard a guess, the reason why the Liberals are leaning into their approach is that they feel it satisfies political stakeholders that have a bearing on their political fortunes, as opposed to doing anything material to enable more journalism in Canada.

And, with their political fortunes sagging, the federal Liberals are looking for shadowboxing matches that distract from big-ticket political issues like the housing crisis or the nationwide increase in violent crime. They're betting that they can make the fight over C-18 look like picking a fight with big bad tech giants to get a win for the little guy (spoiler: the little guy has already lost) while in actuality, they’re supporting the interests of a few corporate insiders who they feel are beneficial to their longer-term political fortunes.

The bottom line:

The C-18 clusterf*%k is impacting every Canadian. You'll see less news, and fewer journalists will be able to work to inform you of what's happening.

And while I'm not a journalist (I'm a Member of Parliament), I will keep writing here about what I see happening in federal politics. Lord knows we need every writer possible to get the word out. So on that note, share this article and get a friend subscribe before they figure out how to block this newsletter too.