Canadian Heritage has provided more clarity on which platforms will be subject to the Online News Act and what they will need to do to be exempted from the mandatory bargaining process.

Set to go into effect on Dec. 19, ahead of a public consultation process that will get underway this fall, the Act will only apply to digital platforms providing news content with total global revenue of more than $1 billion a year, with 20 million or more Canadian average monthly unique visitors or active users.

According to Canadian Heritage, the bargaining process with search engines and platforms like Google, Meta and Bing, should result in approximately $230 million a year made available to support news organizations. Based on government estimates, made without the benefit of published market data from digital operators, their formula multiplies global revenue by Canadian share of global GDP, multiplied by a further four per cent contribution rate. Google would stand to contribute about $172 million a year, under the formula, followed by Facebook at $62 million. A department spokesperson told a media technical briefing there is still a question of whether Instagram will be subject to the legislation as it may fall under the 20 million user threshold in Canada.

Platforms can, however, obtain an exemption by entering into their own agreements supporting Canadian news production, if those agreements exceed the formula.

Canadian Heritage said it is seeking an outcome similar to what transpired in Australia under its “News Media Bargaining Code,” governing conduct between Australian news outlets and designated digital platforms. It’s resulted in more than 30 commercial agreements, valued at over $200 million annually.

Google currently values referral traffic from its Google News Showcase program with Canadian publishers at $250M CAD annually.

The department said the goal is to provide flexibility for platforms and news providers to negotiate different kinds of agreements, but those proposals will all have to fall within fair range (20%) of each other to ensure there are no significant outliers.

Market abandonment risks

What if digital platforms simply abandon news content, like Meta has done in Canada since early August?

Canadian Heritage says the government remains focused on what it sees as a reasonable, viable framework for platforms to come to the table and bargain fairly. A spokesperson told reporters that it has heard concerns from Google and Meta regarding uncapped liability, calling Meta’s move to back away from news content in Canada “premature” before the bargaining framework is in place.

A Regulatory Impact Analysis Statement (RIAS) will be published in the Canada Gazette  Friday afternoon.

“Canadians rely on digital platforms to access their news and information, but these tech platforms have to act responsibly and support the news sharing they and Canadians both benefit from,” said Canadian Heritage Min. Pascale St-Onge, in a statement. “The Online News Act requires these dominant platforms to bargain fairly with news businesses—both big and small. The consultation on the proposed regulations today helps to provide clarity for platforms and news organizations while opening a dialogue toward real results. I look forward to engaging with platforms in a constructive way. I believe we share the goal of ensuring quality access to information and news for Canadians. Tech giants can and must contribute their fair share—nothing more. Canadians expect a vibrant news landscape where we can get the facts when we need them.”

Under the consultation timeline, mandatory bargaining between digital platforms and news outlets isn’t anticipated to begin until late 2024 or early 2025.

Despite the government olive branch, Meta issued a statement maintaining its position that the legislation is “fundamentally flawed” and that its ban on news content will continue.

“As we have communicated to the government, the regulatory process is not equipped to address the fundamentally flawed premise of the Online News Act,” said Rachel Curran, Head of Public Policy, Meta Canada. “As the legislation is based on the incorrect assertion that Meta benefits unfairly from the news content shared on our platforms, today’s proposed regulations will not impact our business decision to end news availability in Canada.”

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