Canada’s recently passed Online News Act, will limit Canadians’ access to news and hurt the revenues of the companies it was intended to help. This act targets Google and Meta with “link taxes, ” which require both companies to pay news outlets to show consumers links to articles. The Canadian government predicts it will transfer $329.2 million per year from Google and Meta to news agencies. In response, Google and Meta threatened to stop showing Canadian-based news sources in Canada once the bill goes into effect, reducing the expected financing for local newspapers to $0.
Proponents of the Online News Act justify it with a commonly held, but wrong, idea that big tech companies control the digital advertising market which has diminished newspapers’ advertising revenue. In Canada, much like the US, many local newspapers have been closing in recent years with 450 closing since 2008. Newspapers have been on the decline for decades as better services become available online and consumer preferences change. However, this is not due to Google and Meta as the relationship is mutually beneficial.
Companies like Google and Meta have undoubtedly influenced online advertising. However, newspapers haven’t unilaterally been harmed by these changes as even proponents of the bill admit that newspapers benefit from the visibility these two companies provide.
Instead of Canadian newspapers investing in ways to optimize their visibility through online tools, the Canadian government is demanding Google and Meta pay newspapers for the privilege of connecting readers with those newspapers.
Google plans to stop including links to Canadian news outlets in their searches and pull its Google News Showcase program from Canada due to the “uncapped financial liability” they face. Meta plans to cut all news availability for Canadian users of Instagram and Facebook. In both cases, visits to Canadian news outlets will fall, exacerbating the financial problems of Canadian newspapers instead of helpingthem. Canadian consumers will be left without valuable tools for keeping apprised of ongoing events.
When Australia imposed a similar law the two companies showed how willing they are to pull services from an entire country. Facebook stopped allowing news articles in Australia and Google threatened to pull its news links entirely until adequate deals were struck. News links are a small enough part of Google’s and Meta’s revenue that giving them up is a less costly option than complying with onerous legal restrictions.
Despite this recent example, not only has the Online News Act passed, but there is also a proposal in California and a proposal at the national level in the US as well. The California proposal, the California Journalism Protection Act, seeks to protect local news outlets at the expense of online platforms like Meta and Google. Just as in Canada and Australia, Google and Meta will be incentivized not to provide links to news reports in the jurisdictions in which they have to pay, lessening the newspapers’ revenue faster as fewer people see their headlines. For consumers, this means a harder time finding important news stories.
National legislation proposed by Senator Klobuchar in the US contains several counterproductive ideas intended to support newspapers’ revenue. One would restrict Google’s and Meta’s choices of what articles they do or do not show and limit the ability of Google and Meta to remove content that is offensive or does not meet community standards. The restrictions are so harmful that Meta has threatened to remove news from Facebook entirely. These restrictions will artificially limit consumers’ access to news sources while deteriorating the standards of the platforms and the experience of consumers on those platforms.
Google and Meta provide a valuable service to news outlets by connecting them with their readers. Making these platforms pay for doing so only provides encouragement to stop. Trying to fix the financial problems of local newspapers by putting the responsibility on digital platforms that connect those papers with readers will diminish everyone’s access to the news and hasten the decline of many local news outlets.
Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.