The government’s draft regulations to address concerns with Bill C-18 have again failed to sway Google.
“While the Government has publicly indicated its confidence that our concerns can be resolved through the regulatory process, unfortunately the regulations fail to sufficiently address the critical structural problems with the Act that regrettably were not dealt with during the legislative process. We continue to have serious concerns that the core issues ultimately may not be solvable through regulation and that legislative changes may be necessary,” the company said in a statement.
Google said that the regulations do not remedy, and in certain instances, exacerbate the flawed premise and unworkable framework of the legislation.
Its biggest gripe is the government’s proposed formula forcing Google and Meta to cough up four per cent of their annual Canadian search revenue to Canadian news media. Government officials said that will result in Google contributing $172 million annually and Facebook $62 million.
While the government claimed that the four per cent link tax is designed to provide business certainty to businesses, Google says that its financial liability remains unclear.
The four per cent contribution requirement, the company says, sets a “minimum floor instead of a ceiling”, with no assurances that the company’s contribution won’t be much higher than that threshold.
Additionally, the four per cent is inflated, exceeding Canadian Heritage’s previous estimates of Google’s expected contribution of C$150 million, the company contended.
The government basing the four per cent requirement on the 5 per cent contribution rate imposed upon broadcast distributors is also unwarranted, as a broadcast distributor is licensed by the CRTC to distribute programming, and obtains the full benefit for itself, the company stressed. The broadcast obligation is also based on a defined set of revenue, and not total revenue, rendering the comparison invalid.
Google added, “[Four per cent] is also significantly out of line with other relevant global precedents, including those from other markets such as Europe, where we have contributed under regulation.”
News businesses are not compensated for linking, Google further explained, because there has never been a link tax on the internet, and no one is compensated for merely providing links, headlines and short snippets, as reflected in domestic and international copyright law granting the right to quotation.
Plus, Google argues that it does not “appropriate” news content, as claimed by the government, and instead just provides links on Google’s platforms, from which news businesses can opt out, adding, “Most publishers do not opt-out because they find the free referral traffic they receive to be very valuable.”
The company also complained that the legislation is discriminatory and aimed at a single company to subsidize the costs of the Canadian news industry, now that Meta has ended news availability in Canada from its platforms.
Some other concerns highlighted by the company include:
Eligibility criteria for news businesses to be compensated under the law are vague, expansive and often inconsistent
Even non-online outlets can take part in collective bargaining to be compensated
Government final offer arbitration provisions are heavily weighted against Google as “they require an arbitration panel to dismiss any offer that is not in the public interest because the offer would be highly likely to result in serious detriment to the provision of news content to persons in Canada”
Fixed timelines for negotiation and dispute resolution will incentivize news businesses to simply wait out the clock rather than negotiate in good faith.
The regulations exclude many forms of support, like training, digital transformation products and services that Google provides to Canadian news businesses
As a result, the company is asking for, among other things, an exemption process that includes a firm cap on financial liability consistent with global precedents and the government’s previous estimates, and clear guidance on the range and number of news businesses to be supported under the legislation.
The legislation takes effect in December. Meta has already started ending news availability in Canada, and remained unconvinced by the draft regulations, tabled last month.
Google maintained that its decision to end news in Canada if no resolution is worked out remains standing.
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