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Publishers ask Ottawa for sweeping legal changes to limit power of tech giants

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Several of Canada’s largest media organizations have quietly asked the federal government for new laws to make Facebook and Google pay more taxes in the country, help pay for the creation of their content and make it more visible on their platforms.

The publishers, which include The Globe and Mail, CBC and Le Devoir, asked the federal government to overhaul several Canadian laws in submissions earlier this year to an expert panel tasked with reviewing Canada’s broadcasting, telecommunications and radiocommunications laws.

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Talking Point

The Globe and Mail, the CBC, Le Devoir, Magazines Canada and Quebecor are asking for new rules requiring foreign digital platforms to help pay for Canadian content and that the government require digital platforms to make it easier to find Canadian content, in submissions to a government panel exploring a legislative overhaul.

Ottawa launched the Broadcasting and Telecommunications Legislative Review in June 2018, led by a seven-person expert panel and overseen by Innovation Minister Navdeep Bains and Heritage Minister Pablo Rodriguez. Its members are reviewing ways to update the Telecommunications, Broadcasting and Radiocommunication acts so they better support Canadian media amid digital disruption and promote cultural diversity, among other issues.

In their submissions to the panel, which Ottawa released this June, the five media organizations, including Magazines Canada and Quebecor, singled out Google and Facebook for eroding the news business in Canada, saying they shifted advertising dollars from Canadian content producers to the digital tech giants. The Globe and Mail also named Apple in its submission, and Quebecor explicitly called on Netflix to be taxed.

The media companies suggested that, to bolster news media in the country, the government consider requiring that foreign tech companies help pay for Canadian content. The Globe and Mail and the CBC recommended bringing digital media services—both foreign and domestic—under the jurisdiction of the Broadcasting Act, which stipulates that broadcasters must develop and promote a certain amount of Canadian content. 

The public broadcaster cited rules being developed in the EU that will require video-streaming services like Netflix to dedicate at least 30 per cent of its content to local programing. 

Le Devoir, The Globe and Mail and Quebecor all noted that foreign news publishers and other digital platforms don’t have to pay sales tax in most of the country, which, they argued, gives firms like Facebook and Netflix an unfair advantage. “Tax legislation has been the sole means of implementing Canadian cultural policies in the news publishing industry,” notes The Globe and Mail in its submission. 

Quebec and Saskatchewan began collecting sales tax on foreign digital companies in January; they are the only provinces in Canada to do so.

On Monday, Rodriguez told the Toronto Star that there will be “no more free rides” when it comes to digital platforms and their contributions to Canadian culture. He also said his department was looking at discoverability and algorithmic transparency in search results. Both are issues media organizations are lobbying on. However, Simon Ross, press secretary for the minister, would not say whether or not the government would implement any of the media organizations’ specific recommendations. “We will take appropriate measures to ensure that all players, including the Internet giants: offer meaningful levels of Canadian content in their catalogues; contribute to the creation of Canadian content; and, promote Canadian content and make it easily accessible on platforms,” said Ross.  

Google and Facebook told The Logic they would comply with any new laws that might stem from the consultations, but did not answer questions of whether they would implement the firms’ recommendations without the government requiring them to. Apple, Netflix and Amazon did not respond to The Logic’s request for comment.

The recommendations come as governments in Canada explore ways to stymie the hollowing-out of newsrooms across Canada. In November 2018, Ottawa announced a $595-million journalism support fund to be rolled out over five years. And, in August, Quebec pledged $5 million for Le Groupe Capitales Médias, a French-language newspaper chain in the province, to help prevent it from going bankrupt. 

In their submissions to the expert panel, the media organizations suggested digital platforms make it easier to find Canadian news and entertainment. “There needs to be an appetite on the part of Canadians to make the choice to consume Canadian content, but there also has to be the ability to discover and access it,” wrote Magazines Canada. The Globe and Mail wrote, “Algorithms should prioritize news stories that are flagged as important by Canadian news producers.” 

Two organizations—The Globe and Mail and the CBC—also addressed challenges accessing their readers’ data and how that can limit their ability to reach them. “For large digital companies, that data is currency,” wrote the CBC. “This data should be available to the Canadian rights holder, to help them understand how their content is being used and how to make it better.” The Globe and Mail recommended the government “mandate sharing of audience and content performance data to ensure all digital participants have the information necessary to innovate their products.” 

Separately, The Globe and Mail has lobbied the government for financing through its Strategic Innovation Fund “for the development and commercialization of technology to increase efficiencies in the news industry,” according to a lobbying report from February 2018.

Big Tech is increasingly forging into the traditional media space. In March, Apple expanded its news business with Apple News Plus, partnering with Canadian outlets including the Toronto Star, Global News and La Presse, whose content appears on the tech giant’s app. The companies criticizing the tech giants to the government are not on the platform, although The Globe and Mail said it will eventually be on the app. 

In August, News Corp, Rupert Murdoch’s media company, revealed it’s developing its own news-aggregation app called Knewz.com. The platform, which could compete with services like Apple News Plus, as well as platforms like Facebook and Google News, aims to help “drive traffic and data to publishers,” a company spokesperson told The Wall Street Journal, which first reported the news.

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Governments around the world—including in France, the Czech Republic and Spain—are pushing forward with new digital-tax laws targeting large tech companies. The OECD is also negotiating a global tax for foreign-based tech companies that all member countries will implement simultaneously. It’s aiming to have a draft of proposed changes by the end of 2020. Proponents of such measures have cited “tax fairness and sovereignty” as reasons for needing to tax tech giants. 

While the Canadian media outlets originally made their recommendations to the expert panel in January and those recommendations became public in June, the four firms that responded to The Logic said they stood by their submissions. Quebecor did not reply to multiple requests for comment.

More than 100 stakeholders—including telecommunications companies, municipal governments and think tanks—have provided input to the panel since the legislative review began. Ross did not answer The Logic’s question of whether the government will adopt the panel’s forthcoming recommendations. The panel is due to publish its final report by January 2020, after the fall election.