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Big Tech will fail to get U.S. government help over Online News Act

Written by: Hugh Stephens
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The threat of trade retaliation is one more trick in big tech’s bag of tricks, but it won’t happen

U.S. tech giants Google and Facebook are trying to up the ante and bring maximum pressure to bear on Canadian parliamentarians as Bill C-18, the Online News Act, begins its process through the Senate, having cleared the legislative process in the House of Commons in December. The Bill will require “digital news intermediaries” that have a “significant bargaining power imbalance” or occupy a “prominent market position” to negotiate compensation with news businesses in Canada when such intermediaries make news content available to online audiences.

The Bill is modelled on similar legislation passed in Australia that succeeded in bringing the two major digital platforms together with most of that country’s news media players, both large and small, to reach compensation deals. While not named in C-18, Google and Facebook are the most likely immediate targets of the legislation — but not because they are U.S. companies but because of their size and market dominance.

In recent weeks, the U.S. digital giants have enlisted the support of the U.S. Trade Representative’s Office in raising their concerns over the bill and have even managed to get the powerful U.S. Senate Finance Committee to include C-18 in its laundry list of trade complaints against Canada and Mexico in a recent letter to U.S Trade Representative Katherine Tai. Last fall, their industry association, the Computer & Communications Industry Association (CCIA) produced an amusing White Paper comparing the role of Google and Facebook to that of Canadian maple syrup producers in terms of market dominance. Their arguments were not convincing — but were entertaining.

The tech giants must now feel under pressure because the Trudeau government is showing no signs of backing down on C-18. It passed the House with support from both the NDP and Bloc and is unlikely to undergo much change in the Senate. The platforms are also concerned because there are increasing calls in the U.S. for similar legislation, an initiative they would like to smother. U.S. legislation with many of the same features as C-18, the Journalism Competition and Preservation Act (JCPA), almost passed into law in last year’s lame-duck session of Congress.

It was attached to the National Defense Appropriations Bill (thus almost guaranteed of passage) and was only dropped at the last minute after a furious lobbying campaign in Washington by the tech giants. While they succeeded this time, the JCPA is almost certain to return. Passage of C-18 in Canada will make it that much more difficult for Silicon Valley to resist similar provisions coming from Congress.

The fact that the interests of the United States do not always align with those of Google and Facebook was made abundantly clear in a recent letter sent to USTR Tai by the Washington DC-based News/Media Alliance, a U.S. industry association representing over 2,000 news publishers across the breadth of the United States.

In its letter to Tai, after noting that, “Numerous studies, reports, and investigations have shown without question the ways that (a few dominant) platforms impose unfair terms on news publishers and other actors in the online ecosystem and reap the majority of the benefits, including digital advertising dollars and user data, the news publishers,’’ letter went on to say, “The fact that many of the dominant companies engaging in these damaging practices, and therefore affected by the legislations, are incorporated in the United States does not make these laws discriminatory.” It closed with, “we urge you to refrain from taking positions that benefit one sector of the U.S. economy at the expense of others.”

The lobbying game is underway. The tech industry is trying to enlist the U.S. government to fire warning shots across Canada’s bow, grasping for arguments to turn back the ship. The U.S. news publishing industry is pushing back. The threat of trade retaliation is one more trick in big tech’s bag of tricks, but it won’t happen. First, the Trudeau government will ensure that the legislation is fully compliant with the terms of the new NAFTA, (known as the CUSMA in Canada and the USMCA in the U.S.).

Canada can accomplish what Australia accomplished without having to resort to discriminatory, non-trade compliant measures. Second, U.S. interests extend beyond those of Google and Facebook, both on C-18 and other issues, like dairy. They will pick their issues carefully. The sabre may rattle, but on this issue it will be put back in its scabbard with no blood drawn.

Hugh Stephens is an Executive Fellow, The School of Public Policy; and Distinguished Fellow, Asia Pacific Foundation of Canada

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