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Terence Corcoran: Online News Act goes off track

Pablo Rodriguez
Pablo Rodriguez

It is highly probable that 99 per cent of Canadians who get their “news” via Google, Facebook and other FAANG tech “monopolists” would be unaware that not too long ago the monopolists in charge of news were … newspaper owners. The biggest player was Southam News, which owned major city dailies from Montreal to Vancouver, where Southam’s ownership of both the Sun and the Province was considered an evil manifestation of monopoly corporate control over news and advertising. In 2006, a Senate committee on Canadian news media pronounced on the sorry state of the news business. In Atlantic Canada, it said, “The Irvings’ corporate interests form an industrial-media complex that dominates the province.” In opposition to such allegations, the former CEO of the Toronto Star told the same Senate committee that “Despite repeated allegations … that the chain ownership of newspapers is a negative force, no serious causal evidence of this proposition has ever been advanced. Some of Canada’s newspaper chains have in fact been the principal sources of advancement in innovation among Canadian newspapers. Perhaps immodestly we would cite Torstar and Southam Newspapers as good examples.”

Less than two decades later, Torstar is fighting for survival and Southam Newspapers — now part of the Postmedia operation — allege the FAANG monopolists have taken over their traditional status as holders of monopoly powers.

All of which goes to show that when it comes to competition, oligopolies and monopolies, the market has a way of chewing up the corporations that seem to be sitting atop a mountain of economic power. Despite historical evidence of competition’s success in bringing down large corporations, the dominant theory these days is that only government agencies, competition bureaus and regulators overturn market power. That markets function effectively outside the murky theories of competition regulators is a bit of economic science and history too often ignored — perhaps wilfully — by axe-grinders and power-seekers.


The history of the news business is certainly lost in Ottawa, where Heritage Minister Pablo Rodriguez is railroading a piece of legislation — Bill C-18, the Online News Act — through Parliament. Last Friday, Rodriguez abruptly pulled the plug on the House of Commons’ Heritage committee’s hearings on the bill, cutting off possible witnesses, including major corporations that are key targets of the act, including Facebook.

Rodriguez and news media companies say the Online News Act is an essential regulatory step to protect Canadians’ access to “news content” from being destroyed by the FAANGs. Typical commentaries include “Online News Act is good for journalism,” a column written by an editor at the American Economic Liberties Project, a radical U.S. group that claims “monopolistic corporations govern much of our economic lives and exert extraordinary influence over our democracy.” In another recent effort, political consultant Warren Kinsella argues that Google and the FAANGs are collecting advertising dollars by allowing newspapers and other news media to post content on their sites without compensating the news media. “That’s not fair. Hell, it’s essentially theft. And it’s killing our news media — and, in the process, actually putting democracy in peril.”

The Online News solution proposed by Rodriguez to fix this alleged threat to free expression is to force Google and Facebook to pay news media companies, including Postmedia, annual compensation — estimated at more than $390 million a year — on the grounds that they are unjustly profiting from the news content. Both Google and Facebook have provided significant counterpoints to this “theft” claim. Facebook (now called Meta) said in a statement last week that the news media case is based on what can only be described as a deliberate distortion of the facts.

According to Facebook data, the advantage might even run in the opposite direction. The company estimates that the Facebook feed “sent registered publishers more than 1.9 billion clicks in a single year — free marketing for their content in the form of link posts that has an estimated value of more than CDN $230 million. Simply put, this is what it would have cost news publishers to achieve the same outcome on Facebook if that space wasn’t provided to them for free.”

The Liberals abruptly ended the hearings on Friday. Facebook says it was not invited as a witness, a denial that has even old-line leftist publications such as Canadian Dimension coming to the defence of the FAANGs. Veteran Canadian media commentator Marc Edge said the Liberal effort to “ram through the bill has been anything but honest and fair.” Edge wonders if Google and Meta could quit Canada over Bill C-18.

At the heart of the Online News Act is the Canadian Radio-television and Telecommunications Commission. CRTC chair Ian Scott was one of the last witnesses to appear before the Heritage committee. He seemed keen on expanding his role as one of Ottawa’s top competition enforcers — despite the bizarre policy contradictions.

In telecom, the CRTC will force Bell and the other telcos to turn over parts of their wireless networks to smaller cellphone companies to create fake models of competition. In online news, the CRTC will force the global tech giants to continue to carry news media content and to make them pay the news producers compensation. But according to the Parliamentary Budget Officer, the bulk of the $390-million annual online news payments will go to the CBC and broadcast media owners, including Bell.

Under modern competition policy, Bell is simultaneously a registered member of the telco monopoly and must pay other companies to enter wireless — and it is a beleaguered news provider entitled to payment from the tech monopolists.