Facebook has fired a shot across the bow of the Trudeau government’s plan to bail out cash-starved mainstream media.
In a withering response to Australia’s 12-month review of legislation forcing online entities to share revenue with designated news publishers, Facebook’s parent company, Meta, makes it clear that, as things stand, it has no interest in playing sugar daddy to legacy news organizations. Canada’s Online News Act (Bill C-18), tabled earlier this year, will force online companies such as Meta and Google to reach “commercial agreements” with government-approved media—including the CBC—to fund their newsrooms. Heritage Minister Pablo Rodriguez has frequently pointed to Australia as Canada’s inspiration for Bill C-18.
“Given there has been significant global attention on the law in Australia, we provide comments to this review to contribute to the local and global public policy debate about the consequences of its application and to be transparent about the business decisions Meta will face in future,” Meta writes in its response to the Treasury Department’s review of the news media bargaining law.
“It is not certain that digital platforms like Meta will be able to continue or increase on our investment in Australian news (given the flaws in the legislative framework).”
Chief among Meta’s concerns (also applicable to Canada) is how the law favours politically connected old school media at the expense of entrepreneurs and innovators, and that the news organizations in question provide little commercial value to Facebook.
“We have faced concerted lobbying from news publishers who have no regard for the economic reality that commercial agreements need to be able to generate a return for both parties,” Meta’s report states.
“The legislation has misled them into thinking they are entitled to payment simply for using our free services to expand their own audience. It is a near-impossible task to make commercially sound and innovative investments in news that could potentially bring a high enough return to trigger more investment in future - while balancing impossible expectations from news publishers.”
News Media Canada is the force driving those expectations in Canada and has already convinced the Trudeau government to implement tax breaks worth $120 million annually to news organizations approved by a panel of government appointees. Another government-approved panel doles out $10 million through the Local Journalism Initiative and the Canada Periodical Fund subsidizes community newspapers and magazines to the tune of $75 million annually. That’s more than $200 million annually in taxpayers’ money for media that have so far failed to adapt to the age of the internet.
Back when such cozy relationships with government were considered inappropriate, newspapers’ primary sources of revenue were classified and display advertising. Innovations such as Kijiji wiped out classified revenue while display advertising shifted to where consumer eyeballs went: search engines and social media. As a result, thousands of jobs have disappeared at traditional newsrooms, while on the bright side more than 100 startups—many subscription-based and reader-focused—launched.
News Media Canada, while short on specifics and positioning its members as vital to the survival of democracy, insists Google and Facebook are unfairly profiting from their news content. While Meta has been publicly mute regarding Canada’s legislation, in its Australian response it points out that “Facebook’s Feed sent Australian news publishers more than 3.5 billion clicks in the last 12 months. Publishers are free to monetise this traffic however they wish. This referral traffic is provided at no cost to news publishers. We estimate the value of these organic referrals to be approximately US$340 million per year.”
Given Australia’s population is about two-thirds that of Canada’s, those numbers would translate into about 5 billion clicks and C$650 million in value. For free. And still the government insists it is social media and search engines that should be paying the publishers?
Meta also points out that while news has never been of anything more than niche interest to most Facebook users, it is becoming even less relevant as consumers shift to video reels and stories for amusement.
Bill C-18 will permanently insert the state, via the Canadian Radio-television and Telecommunications Commission (CRTC), into the selected newsrooms of the nation. It will create a toxic co-dependency which, given the Australian evidence, will prop up failed and increasingly needy business models at the expense of entrepreneurs and those in the media who remain proud of their independence. It will have the CRTC patrol how the money is spent. Public trust in legacy, agenda-laced, and at times nakedly sycophantic media, already at all-time lows, will plummet further and incentives to innovate will disappear. Canadian news organizations will become permanently reliant on the approval of the politically powerful and the fiscal health of American tech giants.
Little wonder Meta, for its sins, might want to get as far away from this shakedown as possible.
