Canada seems to be having difficulty understanding and regulating the internet.
That’s an easy conclusion to reach given the track record and negative responses so far to the Online News Act, the Online Streaming Act, and the Digital Services Tax.
This month marks the first anniversary of Meta’s implementation of its decision to no longer permit the posting of links to news stories and their websites in Canada. This came in response to the Online News Act, which was based on the false premise that Meta was stealing news content and profiting from it without fairly compensating the companies that produce news. Rather than pay out hundreds of millions of dollars and face the prospect of governments around the world duplicating Canada’s law, Meta chose to get out of the business of carrying news, something it estimated produced a value of $230 million annually in referred traffic to publishers.
This also resulted, at least initially, in a great deal of anxiety and accusations regarding how people would access information in the event of emergencies such as the wildfires that forced the evacuation of Yellowknife in August 2023. But as it sunk in that the internet, including Facebook, could supply people with all the information they need without having to go to a news site, this concern faded. So much so that, this summer, when Jasper was evacuated, the Facebook issue wasn’t raised at all by politicians.
The government, though, still hasn’t given up. Heritage Minister Pascale St-Onge has signalled that she believes the Online News Act could still cause Meta to pay up. That’s apparently based on the belief that some people are getting around Meta’s ban on links by taking a frame grab of a news story and sharing it (a violation of Meta’s user policies).
Frame grabs are not links. Nor do they in any way facilitate access (wording important in terms of the act) to news sites. Posting a picture of a news organization’s website is no different than writing a post that says “hey, the Daily Bugle is reporting that …” It is user-generated content, which is something Ms. St-Onge has explicitly instructed the Canadian Radio-television and Telecommunications Commission (CRTC) to leave alone—at least when it comes to its implementation of the Online Streaming Act. The policy contradiction should be obvious which, thankfully, it appears to be to the CRTC.
“The CRTC does not control the types of content that platforms make available to their users under the Act,” it said in a statement reported by Canadian Press. “Some reports have claimed that Meta continues to make news available; however, the CRTC would require further evidence to take further action.”
Next up in terms of not fully anticipating consequences is the new Digital Services Tax (DST). There is broad consensus that web giants such as Google should be paying taxes within the countries where they operate and, in order to avoid a “race to the bottom,” governments have been trying to reach agreement on what that should look like.
The matter has dragged on, however, and Canada—anxious for an estimated $1.4 billion in additional annual revenue—broke ranks and in June passed legislation imposing a 3 percent DST. In doing so, it went against the advice of many in the Canadian business sector and seemed skeptical that there would be consequences of significance.
But Google announced that, come October, it will impose a 2.5 percent fee on its advertisers to recover part of the cost of the DST. Other companies may follow, which raises the likelihood the new tax will be passed on by web giants to advertisers who will in turn pass it on to consumers through price increases. Given that Google has responded similarly to DSTs imposed unilaterally in other countries, the response was highly predictable. Further, the addition of the DST to new fees imposed on streamers by the CRTC makes it almost certain the cost of online subscriptions will soar.
Then there’s the possibility that the United States will retaliate with trade sanctions that could do real harm to other sectors of the Canadian economy. Finance Minister Chrystia Freeland has downplayed that, even while tech companies have called upon U.S. President Joe Biden to impose some form of economic tit for tat.
When it employed the Online News Act, Ottawa bet heavily that Meta was bluffing about blocking news links. It wasn’t, and the news industry has paid a heavy price. When it brought in the Online Streaming Act, it assumed music and video streamers would play ball. Many of them have now taken the CRTC to court, and Spotify has hinted that leaving the country is among its options. Canada is again gambling that there won’t be serious consequences to its decision to break from the pack on the Digital Services Tax.
Given its track record, the odds are not in its favour.
