Following Canada's passage of a law requiring tech giants to pay news organizations for their content, Meta, the owner of Facebook and Instagram, and Google say they will stop allowing local news on their platforms in that nation. What follows now?
Pierre-Elliott Levasseur, president of La Presse, a prominent French-language publication in Quebec, claims he tried for years to negotiate payment arrangements with tech giants who he believed were suckling up data and ad dollars based on news articles his 220 or so staff were supplying.
He told the BBC, "They've flat-out refused for years and years.
He had hoped that a new law, the Online News Act, would alter that and result in a surge of cash that could be used to invest in the company.
Tech companies are required to negotiate payment agreements with news outlets under the law, which targets Google and Meta. If the parties are unable to come to an agreement, the nation's broadcast regulator may compel arbitration.
That measure could potentially generate more than $300 million (£180 million; $226 million) in total annually, or funding for roughly 30% of the activities of a typical newsroom, according to an independent parliamentary budget watchdog.
La Presse and all other Canadian news organizations are now at risk of a blackout because the tech giants have promised to refuse to comply and instead will block links to news articles on their platform.
In the coming months, Meta, which had opposed the proposal from the beginning, will begin blocking news websites for Canadian users.
Google has reached payment agreements with news organizations in Europe, Australia, and other countries, and it had shown a willingness to bargain.
When the act takes effect in Canada in six months, however, it will be removed from its search, news, and discover products there, the company declared this week, calling the country's current law "unworkable.".
It claims to currently have agreements with over 150 Canadian news organizations and that its traffic contributes to the C$250 million in annual revenue that news websites make in Canada.
The business stated regarding payments, "We're willing to do more.". "We just can't do it in a way that breaks how the web and search engines are intended to work and that generates unworkable product and financial uncertainty. " .
Prime Minister Justin Trudeau had brushed off the tech companies' threats to censor news before the law was passed this month.
"It's a real problem that these internet behemoths would prefer to deny Canadians access to local news than to pay their fair share, and now they're using bullying techniques to try and get their way. He stated earlier in June, "It won't work.
Organizations in the tech sector have likened the effort to a "shakedown," but Mr. Levasseur claims that no one in the media is looking for a handout.
We're requesting the chance to negotiate a reasonable commercial agreement, he claims. They are monopolies, so that's the only explanation as to why they haven't done it. " .
As other nations, including Indonesia, South Africa, India, the UK, and the US consider similar measures, how the dispute is resolved could prove to be a turning point in a larger conflict.
According to Courtney Radsch, director of the Center for Journalism and Liberty at the Open Markets Institute, an anti-monopoly think tank, the funds under discussion represent a pittance in comparison to the tens of billions of dollars made by the tech giants annually but could save journalism.
"The idea that Google and Facebook are connected is becoming more widely accepted. should pay for the news they consume," the author claims. People are aware of the need to safeguard journalism as a crucial tenet of democracy. ".
Canada based its regulation on a law adopted in 2021 by Australia. Similar complaints about that law prompted Meta to enact a brief news blackout.
According to economist Rodney Sims, who oversaw Australia's competition agency and oversaw the bill's revisions, the two companies ultimately reached agreements with publishers for more than 30 titles totaling more than $130 million (A$200 million).
The CEO of Meta, Mark Zuckerberg, has been attempting to move the platform away from news in favor of more individualized content, but the author claims he still anticipates the companies acting similarly this time. .
He acknowledged, "Facebook just doesn't like the whole thing. But "without news, you can't have an effective search, and I think Facebook is going to find dot. that it is very difficult for them to send you your feed in the absence of any news," he claims.
It is what completes their service. ".
Others, however, have issued a warning that the way the conflict is resolved in Canada may differ.
The rise of chatbots like ChatGPT, which produce answers rather than a list of links in response to user questions, is one of the more significant changes in search that Phillip Crawley, CEO of the Globe and Mail, pointed out. This publication has licensing agreements in place with Google, Meta, Apple, and others.
According to him, businesses have more incentive to fight as more nations consider taking similar actions.
"The world is in a different place," said Mr. Crawley, who spoke in favor of the legislation but expressed worry that some authority given to Canada's broadcast regulator might endanger press freedom.
"Therefore, I don't think we should base too much of our decisions on the Australian model. Back then, that happened. Now is the time. ".
According to Google and Meta, there are significant legal distinctions between Australia and Canada. Notably, businesses in Australia could appease regulators without striking deals with everyone. There isn't such an out in Canada. It controls a wider range of content as well.
Prior to the bill's passage, Google claims it made an unsuccessful attempt to voice its concerns to the government. Even though the government returned to the negotiating table after the law was passed, those "overtime" talks came too late to resolve the issues, a source at the business told the BBC.
Given the changes in Meta's industry, according to noted bill critic and Canadian tech legal scholar Michael Geist, the government has made a mistake.
According to the business, from 2016 to 2022, only about a third of adults used Facebook for news, down from 45 percent to 30 percent, and user surveys indicate that they would prefer to see less news on the platform.
Why didn't the government read the room, asked Mr. Geist. Facebook is not playing a bluff; they want to escape the news. ".
In the regulatory process, which could take months to conclude and is causing more turbulence in many newsrooms, Google has stated that it will continue to participate.
According to Mr. Crawley's testimony to parliament last month, Google drives 30% of traffic to the Globe and Mail, which now generates two-thirds of its income from subscriptions.
Google accounts for 40% of traffic to Le Devoir, a significant French-language publication, and social media accounts for nearly 30%.
According to reports, Meta has already taken action to renegotiate its contracts with Canadian publishers, which, together with funding it had given to a fellowship program, could be worth millions of dollars.
At La Presse, which is profitable and primarily supported by reader donations and advertising, Mr. Levasseur acknowledged that a blackout would have an effect. But he added that he thought the newspaper, which reaches about 1 million readers every day, would adapt, just as it has to other changes in the news industry brought about by tech giants.
"Advertising revenue was falling when we discontinued the [print] paper. It is now getting worse, he claims. "Back then, we were able to adapt, and I have no doubt that we will be able to adapt in the future.