Michael Geist: Skillful Negotiation or Legislative Fail? Taking Stock of the Bill C-18 Deal With Google

Canadian Heritage Minister Pascale St-Onge’s deal with Google on Bill C-18 for an annual $100 million contribution has sparked some unsurprising crowing from partisans who insist the fears that the government had mishandled the Online News Act failed to recognize a well-executed negotiation strategy. Yet the response from industry supporters of the bill has been noticeably muted: News Media Canada did not issue a press release with CEO Paul Deegan noting that the impact would depend on the forthcoming regulations, the Canadian Association of Broadcasters said it was relieved there was a deal and that links would not be blocked, Quebec broadcasters are already calling for more support, and Friends of Canadian Broadcasting said the deal did not deliver the support it originally hoped for. These comments come closer to reflecting the reality of the deal, namely that the government misread the market, passed deeply flawed legislation, and was ultimately forced to row back core elements of the law and accept payments consistent with what was on the table over a year ago.

The case that this has been a successful outcome is a weak one, but would largely emphasize that there is some new money coming into the news sector. It is reasonable to argue that Google and Meta’s one-off deals with many Canadian news outlets in advance of Bill C-18 were part of their failed strategy to stop the introduction new legislation, so the mere prospect of a new law generated some financial support. The Meta support has now disappeared and Google’s financial agreements will be cancelled as they are rolled into the $100 million payment, but there is no denying that the payment will inject some new additional funding.

But additional funding alone is not sufficient to make the case that the government handled this issue well. Friends of Canadian Broadcasting is not wrong when it says that many hoped for far more. In fact, so did the government. As recently as a few months ago it said it expected to generate $172 million from Google alone. There were various estimates raised throughout the legislative process: the government said $150 million last December, later raised it to $215 million and then to 35% of actual costs by Senator Peter Harder. Meanwhile, the Parliamentary Budget Officer estimated the value at $329 million by comparing the expected Canadian benefits with Australia. No matter the number, the $100 million is far below any of the promised estimates.

A more realistic assessment of the Bill C-18 outcome involves more than just the failure to meet the expected targets, however. There are at least two important issues. First, critics argued that the structure of Bill C-18 with mandated payments for links and an unworkable process made link blocking likely on Meta and a real possibility (though not a certainty) on Google. I think that remains the case. Meta has blocked news links for months in Canada and continues to maintain that is the only way it can comply with the law. As for Google, this deal completely alters the Bill C-18 process.

The government once claimed it would not negotiate directly with Google or any platform. Rather, it said it was creating a framework to allow the media companies to do so with the CRTC in the role of arbiter to determine if the various deals met the government’s policy objectives. Instead, it ended up negotiating with Google on a single payment rather than the individual deals promised by the bill, creating what amounts to a fund model that Google supported from the outset. Even the independence of the CRTC in the process is long gone with the government striking a deal and dictating to the Commission that it must exempt Google provided it cuts the $100 million cheque. This is a near complete reversal of Bill C-18 and provides confirmation that the law was unworkable.

Second, even the $100 million is far less than meets the eye, particularly for print and digital publications who were broadly viewed as most in need of assistance. As noted above, Google already has deals with many of these publications. While the precise value is unknown, it is rumoured to be in the tens of millions. The monetary value of those deals will be rolled into the $100 million payment, meaning that it is not entirely $100 million in money. Further, the bill has created some obvious losses including the lost Meta deals and the cost of lost news links. The estimates of those losses are similarly in the tens of millions and must be considered in assessing the overall Bill C-18 outcome.

Perhaps most notably for the print and digital publications, the majority of the $100 million will likely be going toward broadcasters such as Bell, Rogers and the CBC (unless the government uses regulations to specify how the money should be allocated which would further whittle away at the bill and the independence of the sector). The PBO estimated that it would be a 75/25 breakdown, suggesting that all of Canadian print and digital would share in just $25 million. That amount won’t even offset the lost Google deals and Meta links. It appears the government has recognized that this is the likely outcome since its $129 million media bailout announced in the Fall Economic Statement is only available to Canadian print and digital outlets that are eligible as Qualified Canadian Journalism Organizations. In fact, by more than doubling tax credit for journalist costs from $13,750 to $29,750, the government has clearly used the bailout to compensate for the costs of its own media policy. In judging the outcome of Bill C-18, it is instructive to note that even the government seems to admit that it needed to find additional funding to make up for what is far more legislative fail than negotiating brilliance.