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Facebook has yet to begin negotiations with news publishers about licensing their content or funding new programs, but it plans to do so this year, Canadian public policy head Kevin Chan told The Logic on a Tuesday conference call. The company also has not completed a shift in how it records revenue that would give policymakers more visibility into how much it earns here.
Here are some highlights from that conversation—which subscribers can watch here—with Chan.
The news about news: Chan said Facebook will seek commercial agreements with news publishers “to license their content for some net new purpose, somewhere on the Facebook platform.
“We are then very much using that content deliberately for some purpose, where news is central to the experience, and so we want to obviously compensate publishers for that.” The company will also spend on “programmatic efforts” like its Canadian Press fellows initiative, announced in June 2020, which provided $1.25 million for the wire service owned by newspaper publishers to hire 10 reporters.
The backstory: The company’s plans for licensing and programs come as Ottawa has promised legislation modelled on Australia’s new rules requiring social media platforms to reach financial agreements with news publishers for content. In late January, Heritage Minister Steven Guilbeault told The Logic he’d introduce such a bill in the spring. Facebook objected to the Australian rules—which include binding arbitration if platforms and publishers can’t make a deal on their own—on the grounds that users and outlets, not the company itself, post links to news articles on Facebook products. “We would pay for things that we didn’t have any say on,” Chan said.
For nearly a week last month, Facebook blocked news content for Australian users and prevented outlets based there from posting to their pages; it restored those features after the government amended the rules with an exemption for companies that make a “significant contribution to the sustainability of the Australian news industry.”
The numbers: In a blog post last week about Australia’s move, Facebook vice-president Nick Clegg announced plans to spend “at least $1 billion more over the next three years” on news. On Tuesday, Chan told The Logic that promise “was not tied to any particular negotiation with any particular organization—governmental or otherwise.”
He declined to specify how much of that money will be spent in Canada, citing commercial confidentiality. In a September 2020 report, lobby group News Media Canada estimated publishers would earn $620 million in licensing revenues under the Australian model from Google and Facebook. Chan took issue with the group’s methodology, which he said didn’t describe Facebook.
The timeline: The Liberal government’s intention to move on platforms’ relationships with publications has been clear for some time, even if it has yet to present legislation. Asked why Facebook has yet to launch negotiations, given the Australian example and Guilbeault’s comments, Chan said the company has been working on the “principles” behind “appropriately licensing news”—including avoiding the idea that platforms should have to pay for links—as well as to develop a product to display those stories.
The news about tax: In December 2017, Facebook announced it would move to a “local selling model,” essentially booking income made from its teams selling ads in a particular country locally, rather than with its Irish international headquarters. “When we do that, everybody will be able to see what our revenue is in-country,” Chan said, though he declined to disclose how much income tax Facebook paid in Canada last year, citing commercial confidentiality. The shift to a local selling model would also lead to Facebook collecting and remitting sales tax on ads sold from its physical offices in the country, the company told The Logic in August 2018.
The timeline: At the time, Facebook told The Logic the new setup “should be in place globally by mid-2019,” but on Tuesday, Chan confirmed it still isn’t. “COVID has unfortunately delayed some of the work in that regard, but we hope to get there relatively shortly,” he said. That means Ottawa isn’t receiving sales-tax revenues it otherwise would have. Chan also cited the 2019 election, when he said the company spent substantially on election integrity. “It is hard sometimes to do a million things,” he added. “That’s just a reality. But it doesn’t change our intent, which is to get this done.” Ottawa will start requiring companies that sell digital products and services to charge the federal sales tax from July 1.
The backstory (income tax edition): The OECD and G20 are currently leading negotiations involving more than 130 governments to overhaul the way multinational companies are taxed. Under the proposals, firms would pay more of their taxes to the countries in which they make revenue, rather than the ones in which they’re headquartered. Facebook CEO Mark Zuckerberg has expressed support for the OECD process. Chan reiterated that backing Tuesday. Ottawa has said it’ll impose its own digital-services tax if those negotiations don’t result in an agreement this year.
