Canada’s news link tax law that Meta and Google hate, explained

Update, August 1, 4:15 pm ET: Meta announced that it has begun ending news on its platforms for all Canadian users, a process that it expects to take “a few weeks.” Canadians will no longer be able to see or share news links on Facebook and Instagram.

“While the process of drafting regulations under the Online News Act is ongoing, that process is unfortunately not equipped to make changes to the fundamental features of the legislation that have always been unworkable. The only way we can reasonably comply with this legislation is to end news availability for people in Canada,” the company said in a statement.

The original article, published July 14, continues below:

Brodie Fenlon, the editor-in-chief of one of the largest news outlets in Canada, the Canadian Broadcasting Corporation, has a problem: He can’t see his own publication’s Instagram feed.

On July 3, Fenlon checked it after a reader emailed to say they were blocked from seeing its content, only for the feed to disappear before his eyes. In its place, there was a message from Instagram: “People in Canada can’t see this content.” The notice went on to suggest that the Canadian government was responsible for this, saying, “in response to Canadian government legislation, news content can’t be viewed in Canada.”

“It’s an interesting experience to be editor in chief of a news organization and yet locked out of your own news account and prevented from accessing the great work your teams produce for the platform every day,” Fenlon told Vox in an email.

A considerably smaller Canadian publication, the Tyee, reported on Wednesday that its social media manager, Sarah Krichel, was similarly blocked from viewing its Instagram account which, considering her job title, might be a bit of an issue. She was able to get in using a second device for just long enough to throw up a post telling readers where else they can go to find Tyee’s content before she was blocked there, too.

Instagram isn’t glitching — this is a feature, not a bug. Meta, Instagram’s owner, is just making good on its promise to block Canadian users from seeing or sharing links to news content on its platforms, starting with a small test pool of users that Fenlon, that CBC reader who alerted him, and Krichel apparently just happened to fall into. Google says it will do the same, and conducted its own link-blocking test run in February. So while the application of Meta’s blockade has been spotty in Fenlon’s case — he says he can see some publications’ feeds but not others, and he can see them all on Facebook just fine — it may not be long before he and every other Canadian user can’t see any news links on Instagram, Facebook, or Google at all.

“It also gave me a real glimpse of what the future might look like if Meta and Google make good on their threats to drop news from their platforms in Canada,” Fenlon said. “Our focus now is to ensure Canadians know where else they can go to get CBC journalism should they be suddenly cut off by Meta or Google, including by raising awareness of our free news app and websites.”

The government legislation that both companies are protesting is called the Online News Act, or C-18. The intention is to give the long-suffering journalism industry a little cash boost, likely at the expense of two companies that are partially responsible for its woes. It accomplishes this by compelling them to pay Canadian news outlets if they host links to their content. (Fenlon’s employer, which is a public broadcaster, officially supports the Online News Act.) That’s why Meta and Google are threatening to remove news links for all Canadian users, permanently, if the law applies to them when it takes effect, likely by the end of this year.

This may have an impact well beyond Canada’s borders, as many countries — including the United States — are considering passing similar laws, and Meta and Google may respond similarly to them. Those countries are surely very interested in seeing how this all plays out in Canada as a guide to how things might go for them in the future. Meta and Google don’t want to back down, pay up, and set a further precedent. The Canadian government, on the other hand, doesn’t want to appear to give in to giant American companies and further illustrate how influential and powerful those companies are.

“Canada is this testbed for platforms, government, and media, and who gets to decide what the role of those platforms is and the power they have,” Alfred Hermida, a journalism professor at the University of British Columbia, told Vox. “This is going to set the tone.”

There are signs that Canada will compromise. On July 10, three weeks after the law was passed and with Meta and Google seemingly digging in their heels, it released the “next steps” for the Online News Act, and those steps suggest it’s looking for ways to adjust the law and make it more palatable to the companies. For now, it’s a standoff between the Canadian government and Big Tech, with Canadian news stuck in the middle.

The Australian origins of the Online News Act

Briefly summarized, the Online News Act lets the government designate platforms as “digital news intermediaries,” or DNIs, if they fit certain criteria. It’s believed that only Google and Meta, which are massive and own the majority of the online advertising market, will qualify. DNIs will have to make payment agreements with eligible news outlets whose content they host, like Google search links or Facebook shares. If the two sides can’t come to an agreement, an arbitration panel will do it for them.

The new Canadian law is modeled on a controversial Australian law, the News Media and Digital Platforms Mandatory Bargaining Code, which went into effect in 2021. Google and Meta’s responses to that law were similar threats to pull links, but both companies ended up making payments to some news organizations. The Australian government estimates that news outlets got AU$200 million, although it doesn’t know that for sure — nor does it know how that money was distributed — because the companies were allowed to keep those figures private. Even so, other countries, like Canada, likely assumed they’d get similar results with similar laws and were less apt to take Google and Meta’s threats seriously.

If you’re Google and Meta, this may not seem fair. Links are meant to drive people to websites, right? News sites are getting traffic through those links they otherwise may not have gotten, and the platform loses eyeballs when people click away from it. Meta contends that it doesn’t even post the links in the first place; its users, including the outlets themselves, do that. In the eyes of Google and Meta, they’re doing news sites a favor. And, Meta has said, news content is a very small draw for its users. If the companies don’t really need news links to attract users, why should they be forced to pay for them and be subject to government regulation, something they want to avoid at all costs?

“The Online News Act is fundamentally flawed legislation that ignores the realities of how our platforms work, the preferences of the people who use them, and the value we provide news publishers,” Meta said in a statement. And Google has said, “the bill creates an unprecedented requirement that platforms pay for simply showing links to news, something that everyone else does for free. This creates uncertainty for our products and exposes us to uncapped financial liability simply for facilitating access to news.”

For his part, Hermida believes the law is “flawed,” in part because the big legacy publications (and the handful of major corporations that own them in Canada’s highly concentrated media landscape) will almost certainly get the lion’s share of Big Tech’s money, which will further entrench their power over the industry. That’s on top of the CA$600 million they already get from the government, although how that money is distributed remains mostly a mystery. There’s nothing in the law, Hermida said, that ensures news startups and innovators get funding, too.

“That’s the wrong approach, because that doesn’t actually build for the future,” said Hermida, who also co-founded The Conversation Canada, a nonprofit news startup. “What it does is support a failing commercial legacy media model.”

In the eyes of the law’s supporters, however, Google and Meta’s business models have taken a lot away from journalism, and this “link tax” is the least they can do to pay some of that back. And, yes, the internet has decimated the journalism industry. One way is digital ad revenues: They’re a fraction of what news outlets commanded for their print and broadcast products, and that already smaller sum is reduced even further because online advertising companies — an industry dominated by Meta and Google — take a cut of it for themselves. One oft-cited statistic has Google and Meta getting 80 percent of online advertising revenue in the country. While Google and Meta have programs that pay news companies, including in Canada, they’re not legally required to do it, they can pick and choose who and what to support (and, by extension, who and what not to support), and they can change the terms whenever they want. Meta, for example, ended an emerging journalists fellowship program in Canada in response to C-18’s passage. The Online News Act is meant to ensure that even the smallest publications get something and that the DNIs have to pay at all. The Canadian government estimates the law will generate about CA$330 million a year for its news outlets.

But that’s all if there are links to Canadian news outlets on those platforms in the first place, which brings us to the current game of chicken between the Canadian government and Big Tech — and the yawning gaps on the news feeds of people like Fenlon and Krichel.

We’re waiting to see who blinks first. It might be Canada.

Google and Meta both are threatening to remove links to eligible content entirely in Canada if its government goes through with the law. Google will remove news links on its news, search, and discover products, while Meta will remove them from Facebook and Instagram. That would be a major blow to news organizations, many of which get a lot of traffic from those platforms. The Tyee’s editor-in-chief, David Beers, called it “a big deal” with the potential “to dent our reach and revenues” and “curtail the kind of news industry innovation needed right now.”

It’s a threat these companies like to pull out whenever the specter of a link tax law rears its ugly head, but they’ve never really followed through. They’ve also never had to. Google shut down Google News Spain when that country passed a link tax law that applied to news aggregators, but pulling links from Google search is a much bigger step. Meta did pull news links from Australian users in response to its law, only to get worldwide backlash and quickly restore them.

The Canadian government seems determined to test Meta and Google’s resolve. Prime Minister Justin Trudeau said that Meta and Google’s “bullying tactics” won’t work, the bill became law on June 22 despite the threats, and Minister of Canadian Heritage Pablo Rodriguez announced on July 5 that the federal government was taking the “necessary step” of pulling its CA$10 million of advertising from Meta’s platforms, which amounts to a tiny fraction of Meta’s $117 billion annual revenue and a sum that the company will barely notice losing.

On the other hand, that July 10 update from the Canadian government about the next steps for the law said it was working on regulations that could set caps for how much the companies were required to give or allow them to avoid the law entirely. If they give enough money or in-kind contributions to enough news outlets, they may be able to get an exemption. Canada has a good idea that platforms are more likely to go for that because that’s pretty much what happened in Australia. The Australian government never actually designated any platform to be subject to the law because Meta and Google made enough deals with enough news outlets to be exempt. After all that, the Online News Act may never apply to Meta and Google at all. University of Ottawa law professor Michael Geist, an outspoken critic of the law, accused the government of “caving” to Big Tech with this “face-saving compromise.”

But there’s another factor that doesn’t have anything to do with the law’s terms: In just two short years, Meta and Google’s fortunes have changed a bit. They’re cutting costs, not trying to add more of them. They may well not even want to offer the Australian outlets the same terms whenever those deals come up for renewal, and that’s if they want to pay them at all. If they ultimately pay up in Canada, whether to get an exemption or because the law requires them to do so, other countries considering similar bills will be that much more motivated to pass them so their news outlets can benefit, too.

But if Meta and Google stand firm and remove those links, even if they get an exemption, that could be devastating for news outlets that get much of their traffic from those platforms. Other countries may not be so eager to go forward with their legislation in that case.

Why American news consumers should pay attention to a Canadian law

One country that will surely be paying close attention is the United States, where a bipartisan bill called the Journalism Competition and Preservation Act is making its way through Congress. Headed up by Sens. Amy Klobuchar (D-MN) and John Kennedy (R-LA), the bill allows news outlets to negotiate collectively with covered platforms, which are defined as having at least 50 million US users and are worth at least $550 billion or have 1 billion global active users. Those platforms are required to negotiate with outlets and — stop me if you’ve heard this before — an arbiter will step in if they can’t come to an agreement.

As it has so many times before, Meta threatened to pull news links if the bill passes. But it may not have to worry too much about that. The bill did pass out of committee in June, but it also passed out of committee in the last session of Congress and never got a floor vote. A last-minute attempt to tack it onto a defense spending bill at the end of 2022 failed. And Rep. Kevin McCarthy, the speaker of the House, has said it’s “dead in the House,” which makes its chances of going anywhere in that chamber of Congress pretty slim.

McCarthy is not JCPA’s only critic. There are also Big Tech and industry groups (whose interests should be obvious) as well as digital rights groups like the ACLU, which sees potential First Amendment issues, and the EFF, which thinks the government should do something about Meta and Google’s dominant online advertising business instead. The JCPA has the support of the American Economic Liberties Project, an antitrust advocacy group, and many news outlets, including Vox Media, Vox’s parent company.

The JCPA isn’t the only link tax bill in the US. California has a bill, the Journalism Preservation Act, which would require certain online platforms to pay a percentage of their advertising revenue to news outlets. As is its custom, Meta threatened to remove links to news stories from California users’ Facebook and Instagram feeds if the bill becomes law. The bill passed the state’s assembly, but the senate won’t be considering it until next year.

When Canada hammers out the law’s details and it goes into effect, we’ll see who actually sticks to their guns, and which side is willing to compromise. As Rodriguez, the Canadian heritage minister, said, “the world is watching Canada.”

Depending on the outcome, Canadians might have a harder time finding out who wins. There may not be any links to their favorite Canadian news sites on Google, Facebook, or Instagram to let them know. Then again, those links might still be there, leading to news sites that are about to get a little bit of Big Tech’s cash.