Online News Act: Now Canada to stop advertising on Meta

 Online News Act: Now Canada to stop advertising on Meta

Image courtesy: Pexels

In a significant development, the Canadian government has announced that it will cease advertising on Facebook and Instagram. This decision comes in response to a recent move by Meta to block news content for Canadians on its social platforms. Meta’s earlier move, currently in testing, was a retaliation to Canada’s recently-passed Online News Act, or Bill C-18.

Heritage Minister Pablo Rodriguez made the announcement on Wednesday. He stated that the government spends approximately CA$10M (around US$7.5M) annually on advertising on these platforms. The government will now redirect this budget to other advertising campaigns.

Within hours of the federal announcement, Quebec Premier Francois Legault and Montreal Mayor Valerie Plante followed suit. Quebec and the City of Montreal have also announced their suspension of advertising on Facebook and Instagram.

Advertising revenue sharing proposal in Online News Act is the core dispute

This dispute germinated when Prime Minister Justin Trudeau’s administration recently passed the Online News Act or Bill C-18 for Canada. The bill requires tech companies to pay publishers for linking to or repurposing their content online. Meta and Alphabet’s Google have vehemently opposed this legislation and the advertising revenue-sharing requirement. The law will come into effect by the year’s end.

The government drafted the legislation in response to calls from Canada’s largely-struggling media industry for tighter regulation of internet giants. It allows news businesses to recover financial losses incurred as Facebook and Google gained a larger share of online advertising. The government believes the law is required to “secure fair compensation” for news links provided on platforms by news groups.

In 2021, Australia passed a bill quite similar to Bill C-18. However, the Australian government modified it after Meta temporarily barred Australian users from posting or viewing news on its platform.

Meta has criticized Canada’s Online News Act as “flawed legislation,” arguing that it overlooks the realities of how platforms operate. The company has said it does not collect links to news content to display on its platforms. Meta argues that it is the publishers who decide to post the links on Facebook or Instagram. Moreover, Meta has previously stated that news does not hold economic value for the company. On the other hand, it claims that news organizations benefit from sharing their reports on Facebook.

Further, Meta earlier announced that it would block Canadian news content on its platforms instead of getting into revenue sharing. The company plans to comply with the legislation by ending news availability in Canada in the coming weeks.

Also read: Bell Canada lays off 1,300 staff, cites regulations for financial troubles

Canada acting tough with “unreasonable” Meta, unlike Google

Rodriguez revealed that 80% of all ad revenue in Canada, almost CA$10 billion in 2022, went to Google and Facebook. The government wants these platforms to contribute to domestic journalism. The decision to suspend government ads will cost Meta about CA$10M annually.

Rodriguez stated that the government is open to discussions with the platforms and sees a potential path forward for resolution. But he said, “Meta are not talking to us,” and labelled Meta’s decision as “unreasonable” and “irresponsible.” He was critical of Meta for not talking with the government and instead blocking news.

In the testing phase, Meta has already started limiting news access to some Canadians. Further, it has stated that it will enact a complete blackout in the upcoming weeks.

Google has also announced it’ll block Canadian news when the bill takes effect. However, Rodriguez expressed confidence that the government’s ongoing discussions with Google will address the company’s concerns. He said the government was convinced that Google’s current demands can be met. Google had earlier proposed amendments to the act that the government rejected. Google has since expressed doubts that the government’s regulatory process would resolve structural issues with the legislation.

For Meta, whose yearly revenue in 2022 was over US$116 billion, the loss of government advertising was a drop in the ocean. However, Rodriguez asserted that Canada is determined to make it clear that it won’t be intimidated. He said it would motivate other businesses, particularly Canadian ones, to follow suit.

And some Canadian companies are already joining in. Canadian telecoms operator Quebecor and Cogeco, which runs radio stations in Quebec, also announced they would stop advertising on Facebook and Instagram.

Also read: Binance exits Canada amid new crypto regulatory challenges

Global implications of how the dispute plays out in Canada

The development is significant in the ongoing global debate about the relationship between tech giants and news publishers.

According to Prime Minister Justin Trudeau, Canada has evolved into a worldwide test case for legislation like Bill C-18, he stated on Wednesday.

“It is extremely disappointing to see that Facebook continues to refuse to accept its responsibility towards our democracy by refusing to pay their fair share for Canadians to get local news and independent, rigorous journalistic content. Their decision to walk away, rather than engage constructively, is disappointing. This is what they want to do, make an example of us. Facebook decided that Canada is a small enough country that they could reject our asks. They made the wrong choice by deciding to attack Canada.”

Canadian Prime Minister Justin Trudeau

Therefore, the outcome of Canada’s dispute with the tech giants could set a precedent for other governments seeking to regulate internet companies. The tech giants may suffer a similar fate in the United States if they cannot obtain exemptions or amend the rules in Canada. Democratic US Senator Elizabeth Warren expressed support for Canada, commending the country’s leaders for standing firm against Big Tech’s “freeloading off local news.” According to Rodriguez, Brazil, Indonesia, and the UK are among other countries discussing with Canada to adopt similar laws.

Overall, the Canada dispute is turning out to be highly indicative of the future of advertising and news dissemination on social media platforms globally.


Also read: Canadian Digital Regulators Forum: AI surge & data in focus

Editor

The Tech Factor is a new-age media platform focused on Canada. Our mission is to provide insightful and comprehensive coverage of the Canadian startup and technology ecosystem. To connect with us, report any inaccuracy in our writing, or to share news about the ecosystem, please reach out at editor [at] thetechfactor.ca or fill the 'Submit Tips' form in the top menu.

Related post