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Alphabet, Netflix and Meta are luring Canada as a source of money to fund cultural content

Ottawa’s proposed legislation could net more than $1 billion a year by forcing streaming services to fund local media and offer Canadian content

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Canada walks a narrow path in regulating global tech giants, seeking to slash corporate profits rather than attempting to curb their dominance.

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Prime Minister Justin Trudeau’s government has proposed legislation that could rake in more than $1 billion a year by forcing streaming services to fund local media and offer Canadian content. For example, it is urging search and social platforms to negotiate commercial deals with news publishers to offset losses in advertising revenue.

Efforts to tame tech giants in Europe and elsewhere focus on encouraging competition and imposing fines. But Canada is mostly focused on funneling money from US companies like Alphabet Inc., Meta Platforms Inc., and Netflix Inc. to the local broadcast and news industries.

“This is not an attack on big tech,” said Vivek Krishnamurthy, a law professor at the University of Ottawa who directs the Canadian Internet Policy and Public Interest Clinic. “This is the government trying to fund much of its cultural and media policies with the exorbitant profits of big tech.”

This is not an attack on Big Tech

Vivek Krishnamurthy

Heritage Minister Pablo Rodriguez, who introduced the Online Streaming Act and the Online News Act in the Legislature, said in an interview that the two bills will help “modernize” regulations needed for the internet and be “fair” to tech companies ” will be.

“We want more investment from them, but we want to make sure they contribute a little bit more, and to make sure they’re all able to do that, the bills would be extremely flexible,” Rodriguez said. “We’re taking the lead on some legislation and other countries are watching, so it’s important that we get it right.”

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We have serious concerns about some unintended consequences

Lauren Skelle

The bills are another step in Canada’s history of protecting its media and culture industries. State programming rules mean anyone tuning in to local radio stations, for example, gets a healthy dose of Canadian artists from Bryan Adams to Celine Dion. However, opponents of the law warn it creates a dependency on funding from the tech giants and violates freedom of expression and privacy.

Although Alphabet’s Google isn’t directly opposed to the online news law, spokeswoman Lauren Skelly said, “We have serious concerns about some unintended consequences” it will give Canadians the ability to find and share news online. Meta didn’t respond to a request for comment on this, nor did Netflix on the proposed streaming law.

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Broadcasters in Canada are required to have between 40 and 60 percent of their content written, produced or performed in part by Canadians. The Streaming Act aims to force services like Walt Disney Co.’s Netflix, YouTube and Disney+ to similarly highlight Canadian content and contribute to the Canada Media Fund. The government said in 2020 that it expects annual revenue from streaming platforms to reach $830 by next year.

While Canada’s content rules apply to linear media such as television and radio, their application to on-demand services may violate the nation’s charter of rights and freedoms and require the collection of more personal data than is currently required, according to a privacy advocate.

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“The way platforms show content to viewers is platform driven, but viewer driven,” David Fraser, a partner at law firm McInnes Cooper in Halifax, Nova Scotia, said by phone. “This should be an interaction solely between the viewer and the platform.”

The way platforms show content to viewers is platform driven, but viewer driven

David Fraser

Although television and film productions that use Canadian cities and wilderness as backdrops contribute to local services and the economy, they don’t necessarily result in more jobs for Canadian talent. “The big media giants aren’t paying their fair share, and they shouldn’t,” said Eleanor Noble, actress and president of the Alliance of Canadian Cinema, Television and Radio Artists, which represents more than 28,000 artists.

But extending broadcasting rules to streaming platforms could lead to a drop in investment in Canada, according to a former deputy chairman of the Canadian Radio-television and Telecommunications Commission, a regulator working under the legislation.

The big media giants aren’t paying their fair share, and neither should they

Eleanor Edel

“It’s taking a period of tremendous prosperity for Canadian film and television production over the last 10 or 12 years and it’s creating uncertainty,” said Peter Menzies, now a senior fellow at the Macdonald-Laurier Institute, an Ottawa-based think tank. “There was a great opportunity here to create a new Canadian communications law that focuses on the Internet,” he said, adding that the government had “taken a very conservative position” and was “trying to make the Internet broadcast.” .

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Canada’s Online News Act, modeled after similar legislation in Australia, would allow publishers to negotiate in groups with tech giants for commercial deals. Bill Grueskin, a journalism professor at Columbia University who studied the Australian move, estimated by extrapolating market size that about CA$300 million could be raised annually from deals between tech giants and news outlets in Canada.

Publications that will benefit include Torstar Corp. newspapers, including the Toronto Star; the Globe and Mail, owned by the billionaire Thomson family’s Woodbridge Co. Ltd; and Postmedia Network Canada Corp.’s newspapers, including the National Post, as well as smaller publications.

But while the bill has been called a win for news publishers, one analyst sees it as a win for tech companies instead.

“The platforms’ business model remains unchallenged,” said Robert Fay, Managing Director of Digital Economy at the Center for International Governance Innovation in Waterloo, Ontario. “What drives these business models is data, and this would allow the platforms to continue collecting the data, further increasing their market power.”

Bloomberg.com

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