Google, Facebook, and Instagram are now required to pay media companies in order to display links to their news articles, under Canada’s new law, the Online News Act.

Immediately after the law passed, Facebook and Instagram announced they would be shutting down all news access for Canadian users.

Justin Trudeau and his political allies who passed the Online News Act have said they believe this withdrawal is only temporary and point to Australia which passed a similar bill two years ago. In that case, Facebook also pulled out in protest but restored news access less than a week later.

However, in Australia, many small media companies were losers in the end. Independent journalist bloggers and reporters didn’t have the resources to navigate the government’s negotiation process, even as part of a collective bargaining group, so they simply got nothing while their larger competitors received subsidies from Facebook.

Putting that aside though, there is still a critical difference between what Canada is doing now and what Australia did two years ago: generative AI.

This time when Facebook said it was shutting off news access, it also said it was conducting ongoing “product tests to help us build an effective [replacement for Facebook news]”. If Facebook decides to replace the 3% of its news feed that consists of actual news articles with AI generated paraphrases, it’s not clear that Facebook’s business would suffer any more than it would by paying news companies for links.

What is clear is that media companies would suffer. A lot. Because media companies gain a LOT more benefit from the free distribution of their links on social media than the social media companies do. Those links funnel users to ads and paywalls that monetize readers directly on media company websites. That’s why you see everyone from small bloggers to the biggest media conglomerates in the world pushing their links on social media without tech companies paying them anything. In fact, about 8 years ago, Facebook was losing so much traffic to media company links posted by its users that the company began systematically throttling the reach of posts that contained links. Most social media companies still do that today.

Despite those issues, a group of 15 U.S. senators led by Amy Klobuchar have advocated for a U.S. version of the Online News Act.

List of Senators that Sponsored a U.S. Version of the Online News Act in 2022

In 2022, Senator Amy Klobuchar led a charge to give America its very own version of the Online News Act, which was called the “Journalism Competition and Preservation Act“. Here are the 15 senators who cosponsored the bill:

1. Senator Amy Klobuchar [D-MN]
2. Senator John Kennedy [R-LA]
3. Senator Cory Booker [D-NJ]
4. Senator Sheldon Whitehouse [D-RI]
5. Senator Cynthia Lummis [R-WY]
6. Senator Dianne Feinstein [D-CA]
7. Senator Susan Collins [R-ME]
8. Senator Lindsey Graham [R-SC]
9. Senator Mazie Hirono [D-HI]
10. Senator Bill Cassidy [R-LA]
11. Senator Richard Blumenthal [D-CT]
12. Senator John Thune [R-SD]
13. Senator Richard Durbin [D-IL]
14. Senator Joe Manchin [D-WV]
15. Senator Roger Wicker [R-MS]

References

[1] Canada Bill C-18 — “The Online News Act”

[2] U.S. Senate Bill S.673 (Proposal): Journalism Competition and Preservation Act of 2022

[3] Meta won’t negotiate with publishers, will end Facebook news in Canada

Terms Defined by the Online News Act

Commission means the Canadian Radio-television and Telecommunications Commission.

News content means content — in any format, including an audio or audiovisual format — that reports on, investigates or explains current issues or events of public interest.

News outlet means an undertaking or any distinct part of an undertaking, such as a section of a newspaper, the primary purpose of which is to produce news content.

NOTE: Even if a news business (defined later) qualifies as “eligible” (defined later) under the Online News Act, the Commission may deny the new outlet the right to be bargained about under the Online News Act if the Commission is of the opinion that the outlet fails to satisfy any of the following five criteria:

• The outlet is operated exclusively for the purpose of producing news content that consists primarily of original news content that is:
• (a) produced primarily for the Canadian news marketplace;
• (b) focused on matters of general interest and reports of current events, including coverage of democratic institutions and processes;
• (c) not focused on a particular topic such as industry-specific news, sports, recreation, arts, lifestyle, or entertainment; and
• (d) not intended to promote the interests, or report on the activities, of an organization, an association, or its members

News business means an individual or entity that operates a news outlet in Canada.

A news business is eligible under the Online News Act if it meets at least one of the following four criteria.

• It is a qualified Canadian journalism organization as defined in subsection 248(1) of the Income Tax Act.
• It is licensed by the Commission under paragraph 9(1)(b) of the Broadcasting Act as a campus station, community station, or native station, as those terms are defined in regulations made under that Act or other categories of licensees established by the Commission with a similar community mandate.
• It produces news content of public interest that (1) is primarily focused on matters of general interest and reports of current events, including coverage of democratic institutions and processes, (2) regularly employs two or more journalists in Canada, which journalists may include journalists who own or are a partner in the news business and journalists who do not deal at arm’s length with the business, (3) operates in Canada, having content edited and designed in Canada, (4) produces news content that is not primarily focused on a particular topic such as industry-specific news, sports, recreation, arts, lifestyle, or entertainment; and (5) is either a member of a recognized journalistic association and follows the code of ethics of a recognized journalistic association or has its own code of ethics whose standards of professional conduct require adherence to the recognized processes and principles of the journalism profession, including fairness, independence, and rigor in reporting news and handling sources.
• It operates an indigenous news outlet in Canada and produces news content that includes matters of general interest, including coverage of matters relating to the rights of Indigenous peoples, including the right of self-government and treaty rights.

Notwithstanding the preceding eligibility description, a news business cannot be deemed eligible if it meets at least one of the following three conditions:

• It is the subject of sanctions under the United Nations Act, the Special Economic Measures Act, or the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), or is owned or controlled by an individual or entity that is the subject of such sanctions.
• It has its headquarters in a foreign state (as defined in section 2 of the Special Economic Measures Act) that is the subject of measures under one of the previously mentioned acts.
• It was previously designated as eligible but had its designation revoked under paragraph 59(1)(c) of the Online News Act.

News content is made available if (a) the news content, or any portion of it, is reproduced; or (b) access to the news content, or any portion of it, is facilitated by any means, including an index, aggregation, or ranking of news content.

Digital news intermediary means an online communications platform, including a search engine or social media service, that is subject to the legislative authority of Parliament and makes news content produced by news outlets available to persons in Canada. It does not include an online communications platform that is a messaging service the primary purpose of which is to allow persons to communicate with each other privately.

Operator means an individual or entity that, through any means, operates a digital news intermediary.

The Bargaining Process

Here is how the bargaining process works under the Online News Act:

• A news business requests the Commission designate it as “eligible”.
• The news business (on its own or collectively with other eligible news businesses) notifies the operator of a digital news intermediary that it is initiating a bargaining process under the Online News Act. The news business must specify which of its news outlets will be the subject(s) of the bargaining process.
• If the operator contests the initiation, the Commission will decide (based on the criteria discussed above with the definition of news outlet) whether or not to allow the bargaining. If the bargaining is allowed, then:
• The news business and the (digital news intermediary) operator will begin negotiation or bargaining sessions over a period of 90 days.
• If the parties are unable, within the negotiation and bargaining period, to reach an agreement, they may jointly request the Commission extend this period. If both parties do not share a desire to extend, or if the Commission rejects the request, then:
• The news business and operator will engage in mediated sessions over a period of 120 days.
• If the parties are unable, within the mediation period, to reach an agreement, they may jointly request the Commission extend this period. If both parties do not share a desire to extend, or if the Commission rejects the request, then:
• Forced final arbitration sessions will take place over a period of 45 days. The Commission has ultimate authority to decide who qualifies to be an arbitrator. From the Commission’s list of arbitrators, the parties must select three arbitrators. If the parties cannot agree, then the Commission may fill any of the three slots with its own appointees from its roster of qualified arbitrators. As part of the arbitration process, both of the parties must submit a final offer, and the arbitration board (consisting of the three arbitrators) will ultimately select one of the offers to be binding. However, the arbitration can dismiss any offer and require the submitting party submit a new offer if the original offer (1) allows a party to exercise undue influence over the amount of compensation to be paid or received; (2) is not in the public interest because the offer would be highly likely to result in serious detriment to the provision of news content to persons in Canada, or (3) is inconsistent with the purposes of enhancing fairness in the Canadian digital news marketplace and contributing to its sustainability.