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Compliance with the Online News Act to cost Google and Meta $170 million

The regulations will remain under consultation till October 3, and the commission will publish a list of all the platforms covered by it once the act comes into effect.

The Canadian government has proposed regulations to implement its Online News Act which requires social media platforms to pay news organizations for the content shared on their platforms. According to a Network 18 report, compliance with these regulations will cost the social media giants Google and Meta Can$230 million (US$170 million) collectively. 

The proposed regulations define who the act applies to, the criteria for exemption, and explain how the compensation for news platforms would be calculated. These will remain under consultation till October 3, 2023.

For context:


Who does the act apply to?

As per the regulations, the Online News Act would apply to digital platforms that: 

  • Earn a total global revenue of Can$1 billion or more in a calendar year.
  • Operate in a search engine or social media market involving the distribution and access of online news content in Canada.
  • Have more than 20 million or more average monthly unique visitors or average monthly active users in Canada.

Platforms are expected to assess whether they meet these thresholds and inform the Canadian Radio-television and Telecommunications Commission (CRTC), if they do, within a period of 30 days. Once the act applies the commission will publish a list of all the platforms covered by it.

Who would be exempt from the act?

If a platform already has commercial agreements with news organizations and provides fair compensation to them, it can be used as grounds for exemption from the mandatory bargaining provisions of the act (note: the mandatory bargaining process has not been clarified yet and regulations for the same will be created by the CRTC). These agreements would have to meet the following criteria: 

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  • Sufficiently ensure that an appropriate portion of the compensation is used to support the production of local, regional, and national news content and contribute to the sustainability of the Canadian news marketplace.
  • Ensure that the freedom of expression and journalistic independence enjoyed by news outlets is being upheld.
  • Must involve a range of news outlets in both the non-profit and for-profit sectors, with diverse audiences (local and regional markets including various communities).
  • Must ensure that a significant portion of Indigenous news businesses and official language minority communities benefit from them.

Compensation criteria for exemption:

The compensation given to a news organization under these agreements should be within 20% of the average relative compensation of all agreements. This means that the compensation in a specific agreement should not vary significantly (from the average compensation in similar agreements.

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The annual compensation will be calculated using the following formula: 

(Intermediary global revenue) × (Canadian share of global GDP [≈2%]) × (Contribution rate [4%])

The compensation assessment will be conducted by the CRTC  and such an assessment will be valid for the entire life span of the exemption order. If the annual compensation paid out drops below the threshold set out by the formula at the time a digital platform is applying for the exemption, the CRTC may revoke the exemption order. 

Compliance costs: The proposed regulations suggest that it would cost digital platforms less than $1 million (Ca$) a year to negotiate with news businesses and engage with the CRTC.

Powers held by CRTC under the act:

The CRTC can request platforms to provide information to verify that the platform has followed through with the requirements of the act and notified the commission of its eligibility. If a platform meets the requirements of the application section but does not notify, the CRTC can issue a notice of violation to a platform requesting compliance and informing the platform of the proposed monetary penalty (note: the regulations do not state penalty charges) for non-compliance.

Corporate response to the Online News Act: 

On September 1, the day the regulations were announced Meta released a statement saying this would not impact its business decision to end news availability in Canada. “The regulatory process is not equipped to address the fundamentally flawed premise of the Online News Act,” said Rachel Curran, Meta Canada’s head of public policy, according to a report by Al Jazeera. 

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Meta had decided to make an exit from the Canadian news market in June this year. Soon after, Google also announced its exit saying that charging platforms was, “the wrong approach to supporting journalism in Canada.” With respect to the proposed regulation, Google says that it would, “carefully study the proposed regulations to assess whether they address (Online News Act’s) major structural challenges.”

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