Big techs against Canada is another test for the media – 06/16/2023 – Market

Barring an unlikely political upheaval or corporate backlash in the coming days, headlines will soon be on how big tech is clashing with a sovereign nation over demands that it pay to support its local news industry.

Canada’s Parliament is moving fast to finalize a law that would force major internet platforms to pay news publishers for links to their content, with a conclusion expected by the end of next week. That would make the country the first to follow the lead set by the Australian News Media Trading Code three years ago.

There, last-minute changes to the law averted a threat by Google and Meta to block their services from showing links to news from local publishers. This time, the chances of a deal seem slimmer.

If the aim in Australia was to create a stronger financial foundation for an ailing news industry, the result was mixed. This has led Google and Meta to strike private deals with media companies. The terms of these deals were never disclosed, making it difficult to assess how the money was used or what the overall impact on the Australian news industry was.

Canada’s approach to the issue makes it seem like the country will avoid these mistakes, but the outcome could turn out to be worse for internet users and news publishers, with Meta and Google laying the groundwork to eliminate news links from their services in the country. .

As in Australia, the public debate on the issue has been distorted by rhetoric that portrays big tech as greedy bullies. It could be a case of a country looking for ways to support its fragile news industry and taxing a group of highly profitable tech companies to provide the cash. But that doesn’t mean technology has somehow plundered the local news business.

Canada has justified its proposed law by claiming it will lead to a “fair” division of revenue between tech and media companies, suggesting the current deal is somehow unfair. The big tech platforms have certainly benefited from including links to news on their services. But this did not happen at the expense of newspaper companies, which profit from the generated traffic.

It’s not that Google and Facebook have enjoyed a ride on the back of the news industry’s valuable content; they were part of a brutally disruptive technology wave that undermined the industry’s economic value. Whatever the economic reality, however, political pragmatism prevailed in Australia.

Canada’s new law, on the other hand, would force arbitration on companies rather than allow commercial negotiation. Tech companies complain that this would also expose them to unlimited liability for “disadvantaging” any newspaper company, making it difficult to prioritize more credible news over lower quality content. The law would apply more widely than it does in Australia, to any organization with at least two journalists and even to businesses that are not online.

It may be that tech companies eventually decide to tolerate these and other provisions, but the signs are not good. Facebook and Instagram last week tested blocking news links for some users in Canada, following a similar test by Google earlier this year. The tests appeared calculated, prompting Prime Minister Justin Trudeau last week to accuse the companies of “bullying tactics”.

As Canada heads toward confrontation, the news industry’s long history of clashes with big tech shows that other, less contentious solutions exist.

Spain’s attempt to force Google to pay publishers led to the closure of Google News there in 2014. But the service was re-established last year after Europe’s Copyright Directive brought changes to the law that created a way for editors get paid for short snippets of news.

The directive led to deals with publishers across Europe. Google has also experimented with new formats, sharing revenue with publishers: its News Showcase, which gives publishers more control over how their content is displayed, has now spread to 22 countries, including Canada.

It also proposed establishing a fund in Canada that tech companies could pay to support initiatives designed to help local publishers — a much cleaner way to use tech profits to subsidize digital transformation in the news industry. But with political opposition to tech companies hardening, it looks like the time for compromise is over.

Translated by Luiz Roberto M. Gonçalves