News Publishers Break Ranks, Have Google and Facebook Won?

November 15, 2021

Pablo Rodriguez returns to the Heritage portfolio.

On October 27th the Toronto Star caved to Google by signing a take-it-or-leave deal on payment for news content appearing in Google. Six days later, it caved to Facebook too.

Don’t be too hard on Torstar owners Jordan Bitove and Paul Rivett: almost every other Canadian news publisher had knuckled under, months earlier.

It’s all down to the web giants’ global strategy countering national governments trying to make them share those unseemly profits earned from news content appearing on Google Search and Facebook’s Newsfeed.

With the re-elected Liberal government promising Canadian voters to compel Google and Facebook to make a much bigger contribution to journalism, the Silicon Valley digital titans have been making pre-emptive agreements with financially desperate publishers. Getting the Star to join the Globe and Mail, Saltwire, Black Press, La Presse et al in cutting a deal (the details of which are shielded by non-disclosure agreements) on pay for content was a victory for the giants.

Postmedia CEO Andrew MacLeod now stands alone in holding out for a better deal through legislated measures. Let’s hope he has a winning game plan, because it’s starting to look like a long shot that the Liberals will get a Platform Bill through Parliament in 2022 and that the “market price” of pay-for-content hasn’t already been set as a fait accompli by the other Platform-publisher deals, which is the Google-Facebook game plan.

Only ten months ago in February 2021 it looked like Australia had whipped the American giants into line after Facebook’s failed capital strike which shut off its Australian Newsfeed for one week in an attempt to scupper the pending legislation creating a mandatory Media Bargaining Code.

Australian PM Scott Morrison’s unflinching performance inspired sovereign countries around the world: Canada’s Heritage Minister Steven Guilbeault made it clear we were getting something much like the Australian model of “collective bargaining” between publishers and Platforms.

If it weren’t for the Conservatives’ filibuster of the Netflix Bill last May, we might well have got the Australian solution through Parliament before the election call.

Instead we didn’t and Canadian news publishers were too desperate and too divided to wait any longer. They signed Google and Facebook’s offer sheets dictating which news content they would pay for and for how much.

The deals vindicate Google’s and Facebook’s triumphalist talking point which goes something like We bring more value to news publishers through distribution than news publishers give back to us through advertising revenue, but here’s a little bit of cash to get everyone off our backs.

At this point we might do well to revisit whether the Australian model is as good as it looked last February. This requires a bit of a drill down on the legislation.

To refresh our memories, the Australian Bill (An Act to Amend the Competition and Consumer Act) is intended to fix the imbalance in bargaining power between Platforms and news companies. It authorizes the government to create a Media Bargaining Code in which the Platforms are forced to negotiate with publishers and broadcasters mostly over pay-for-content, but also over secondary matters like changes to content-ranking algorithms. If negotiations aren’t successful, binding arbitration is available. That’s the key to correcting the imbalance in bargaining power and getting news organizations a better deal.

But none of that applies unless the government first exercises its discretion to enforce the legislation by “designating” a Platform. And the government won’t necessarily designate Google or Facebook —-this being the key amendment that Morrison surrendered to end the Facebook strike— if the Platform “has made a significant contribution to the sustainability of the Australian news industry through agreements relating to the news content of Australian news businesses (including agreements to remunerate those businesses for their content) [s. 52E (3)].

A significant contribution to journalism. Remember those deliciously vague words.

Having made deals with almost every major domestic news publisher and broadcaster in the month before the legislation was passed (again, the details including price are secret), the Australian government elected not to “designate” either Google or Facebook.

Fast forward a few months: Facebook (but not Google) refuses to negotiate with two small but well established domestic news organizations, the non-profit investigative news website The Conversation (which has parallel news organizations in seven other countries including Canada) and the Special Broadcasting Service, a public broadcaster providing multi-ethnic news and documentary programming not unlike Canada’s OMNI News.

The Conversation’s CEO Lisa Watts said “I think they’ve just sought to avoid arbitration by sealing several multimillion dollar deals with major influential media companies and they feel they’ve done enough to avoid it.”

Rod Sims, the scrappy Competition Bureau chief responsible for potentially recommending to the Australian government that it “designate” Facebook under the still-suspended Media Bargaining Code, is not happy. He publicly hinted he might ask the government to designate Facebook and force them to negotiate with all legitimate Australian news organizations, not just the one’s they like.

So far, Facebook isn’t blinking: its existing deals with other publishers and broadcasters might mean it is already “significantly contributing to journalism” without paying a dime to two news organizations that without question meet the eligibility requirements under the yet-to-be-imposed Bargaining Code.

It’s worth noting the legislation does not say that Facebook has to get a deal with every legitimate news organization to avoid designation and arbitration.

Here in Canada, the new again Heritage Minister Pablo Rodriguez (it’s his second tour of duty) is due to table a Platform Bill by Christmas, according to the Liberal election promise.

We will see then if the Australian model has lost any of its lustre for the federal government or whether Rodriguez will instead propose a conventional news fund in which the government sets the ground rules for recognizing legitimate news organizations and the price of “a significant contribution to journalism.”