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Is sharing of ad revenue the best way to solve the tussle between Big Tech and news publishers?

Canadian Online News Act requires Big Tech giants to pay news publishers for news content published on their platforms. But it may not be the best solution to solve the tussle between the two parties, the guest author argues.

By Angelina Dash

This post was first published on CCG-NLU’s blog on September 14, 2023, and has been cross-posted with permission. You can read the original article here

As news consumption shifts online, a codependent relationship has developed between news publishers and Big Tech giants like Google and Meta. This move is accompanied by many users relying on online platforms like Facebook for news. As a result, Big Tech acts as an intermediary to generate traffic for news websites, while taking a portion of ad revenue in exchange. The problem arises when Google allegedly takes on a higher percentage of ad revenue generated (the extent of which is uncertain due to an opaque adtech ecosystem). A common response to this has been to mandate ad revenue sharing between Big Tech giants and news publishers. The most recent instance is the Canadian Online News Act(“the law”), which requires Big Tech giants to pay news publishers for news content published on their platforms. Here’s why this may not be the best solution.

The Canadian Tussle

Google has recently been in the news for pulling its Google News service from Canada in response to the law. Prior to this law, several news publishers had filed lawsuits against Google on multiple grounds. These grounds included Google’s monopoly in the adtech sector and the ad revenue gap arising out of this monopoly. Additionally, copyright concerns arose over the use of snippets of text from the linked article within the search results, due to which news publishers lost traffic to their websites.

Consequently, the law was enacted in Canada. Of late, this has been a common thread across countries, with similar iterations in Australia and France. It is currently being considered in India as well.

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What are the implications of this?

The primary issue that arises is free speech being hindered by the law itself. The Canadian law lays down a bargaining process for tech giants and news publishers to arrive at a fair revenue-sharing model. However, such a negotiation would be riddled by power imbalance in a scenario where an unsatisfied tech giant may simply threaten to pull its services from the country. Such negotiations would result in smaller publishers with asymmetrical bargaining power scrambling to secure a deal regardless of how equitable it is. Additionally, tech giants may prefer deals with established publishing houses that have better funding or stronger political affiliations. Since such preferential treatment may lead to skewed news reporting, the law essentially makes tech giants the final arbiter not only of which news publisher, but also of what news is worthy of being heard.

The Canadian law aims to bridge this gap through non-discrimination provisions, as well as mediation and arbitration as a backstop. However, a lack of transparency impedes the efficacy of these provisions. The law protects against disclosure of confidential information. This does not make the entire negotiation opaque by default. However, parties have the liberty to designate certain aspects of the negotiation as confidential information which would not be disclosed to the public, including other news publishers. This makes it virtually impossible for other news publishers to establish whether discrimination or preferential treatment has taken place when they themselves enter the bargaining process.

Moreover, the informational diversity and free speech restricted through the provisions of such laws are further limited when tech giants retaliate and “pull their services” from the country. What this effectively means is that when a user looks for a news item through the search engine or within a platform, they will only be shown links from other countries’ news websites and not from Canada. The only way they can access Canadian news sites is if they type the URL directly, or access the pages through the news publisher’s website, app, or online subscriptions.

Tech giants pulling their services from a country not only impacts the users’ right to know, but is also detrimental for news publishers themselves. This was the case in Germany, where a German publisher pulled its content from Google News services but had to rejoin due to a reduction in traffic generation. Moreover, fewer people today are willing to pay for online subscriptions, sounding the death knell for smaller news publishers who rely extensively on subscriptions for funding.

What does this mean for India? 

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A hot button issue like ad-revenue sharing is also being considered under the broader framework of the upcoming Digital India Bill. This is in the run up to the pleas filed with the Competition Commission of India (“CCI”) against Google by the Digital News Publishers Association and others, on grounds of ad market monopoly, inadequate remuneration, along with a failure to disclose ad revenue data and the basis for deciding the quantum of revenue distribution. This has resulted in the CCI ordering a probe into the matter. Additionally, the Australian MP, Paul Fletcher, recently lauded the Australian model, confident that such a model would be equally, if not more successful in the Indian market. This is because the size of the Indian population would give the Indian market better bargaining power while negotiating with tech giants.

In the event of the enactment of such a law, and of Google then retaliating and pulling its services out of the country, what this means for India is that free speech would similarly be hindered, and curbing misinformation would be virtually impossible. Not only does this impede the accessibility of private, non-partisan fact-checkers, but also, even in a scenario where the Press Information Bureau remains the official fact-checker, people will simply have fewer avenues to explore the veracity of the news they receive. This is especially significant in the backdrop of the 2024 general elections in India. For a country dealing with voter misinformation challenges, access to local news which is equal parts trustworthy, linguistically accessible, and accurate, becomes imperative to uphold democracy.

Even if the above scenario is avoided by ensuring that tech giants continue their services in India through bargaining and negotiating “equitable” deals, what will inevitably occur is what has already ensued elsewhere – the same backroom lobbying and smaller news publishers in jeopardy– unless adequate legislative and policy safeguards are put in place.

A Way Forward

Google itself has come out with measures like the Google News Initiative grants and Google News Showcasepartnerships that assist news publishers in growing ad revenue and fighting misinformation. However, these only perpetuate many of the pre-existing gaps, including confidentiality of terms of the agreement.

At this juncture, in the absence of definitive solutions, there are certain standards that India must adhere to while resolving the tussle between Big Tech and news publishers. These standards include transparency, sustainability, free speech, equity in compensation, informational diversity, and upholding the interests of smaller publishers. These were some of the goals behind a law envisioned by New Zealand. Collective bargaining is also a viable option, with open communication allowing several news publishers to jointly leverage better deals with tech giants.

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Any such law, if enacted in India, must ensure transparency is embedded into the law in a manner similar to the Digital Services Act and the Digital Markets Act. Particularly, in terms of accountability for the adtech sector and revenue distribution data, as well as in terms of commercial negotiations between news publishers and tech giants. Such a disclosure mechanism could look like legislation mandating some form of transparency output which is made publicly available post the bargaining process. This could include agreed upon metrics comprising broader terms of the negotiation process and division of percentages of revenue sharing where possible. Timelines can also be mutually decided upon between regulators, news publishers and online platforms to ensure these outputs are disclosed on a regular basis, whether annually or semi-annually. Some of these aspects of transparency have been covered by the Canadian law.

Undoubtedly, any such law will need to be contextualised to the Indian backdrop, with  emphasis on the dual rights of the freedom of speech of news outlets and the readers’ right to know and receive information. It must also provide clarity on what encompasses the term “news publisher”, because the broad ambit of the term could result in individual content creators being negatively impacted.

The law on fair and equitable compensation to news publishers in the digital ecosystem is still at a nascent stage globally. As India envisages its own variant of such a law, lessons in what to do and, more importantly, what not to do, must both be learnt from Canada and other jurisdictions.

Angelina is an Analyst at the Centre for Communication Governance. Her research focuses on platform governance and data protection. 

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