Unpacking the Impact of Canada's Online News Act

The Online News Act, Bill C-18, received royal assent on June 22, 2023, prompting Meta to begin doing exactly what it said it would do; remove news access for Canadians from it’s Facebook and Instagram social media platforms. The process began last week, on August 1, and is expected to take the next few weeks to complete, meaning the end of the summer will also mean the end of Canadian news on Meta platforms for Canadians.

This has already had and will no doubt continue to have far reaching consequences for the industry. As we mentioned before, we estimate that more than 80% of all traffic to Canadian news publishing sites comes from Google and Facebook and removing these would create a wave of further consequences across, and beyond the news industry.

The Act is “estimated to bring in $329 million to Canadian newsrooms. By comparison, Google and Meta brought in $285 billion and $117 billion in revenue last year, respectively. Assuming each company had to pay out $329 million, this would only be 0.11% of Google's 2022 revenue and 0.28% for Meta.” 

Google maintains it creates more value than that each year by directing traffic to Canadian news publishers. Specifically “Google sends more than five billion visits to Canadian news publishers a year — at no cost to them — helping them grow their readership, build trust with readers, and make money.”

However, while a small sum of money for two of the most valuable companies in the world, Meta and Google have reacted the way they have almost certainly because of the precedent such legislation would set. If they had allowed themselves to be legislated by the Canadian government, governments around the world would take notice, such as the US government, which is currently contemplating similar legislation. This is no doubt a concern for both Meta and Google, as the US market and alone generates 40% of Meta's revenue.

Although Canada is the latest country to go head-to-head with Big Tech over this issue, it isn’t the first. Australia wrestled with the same issue in 2021 when they introduced similar legislation. Unsurprisingly, Meta reacted similarly and pulled Australian news from it’s platforms but quickly restored it after coming to an agreement with lawmakers. Since coming to an agreement, both Meta and Google have paid $200 million annually to Australian news publishers, which may offer hope that a similar outcome might occur in Canada.

Ultimately, as the situation unfolds, it will be smaller and medium sized Canadian news publishers that will feel the effects of the news blockade. Canadian publishers stated in a senate hearing that the legislation is “disastrous and amount to millions of dollars in losses.” Many news publishers in Canada reply on traffic from Facebook and Google, and without them, are now dealing with substantially reduced viewership. Tara Jeffrey, an editor of The Sarnia Journal in Ontario, states “We’re already sort of in a struggling industry trying to survive. So this has just been another blow really to small independent news outlets like ourselves”

The full ramifications of this act are yet to be seen, and the situation will certainly evolve further as Google hasn’t acted on their statements, yet. However, one thing is abundantly clear; this move is a disastrous scenario for almost all players involved. Users of these platforms have realized the implications over the past 7-10 days, and the magnitude of this change is now sinking in. We see the frustration within our own office as we are sure you do also.

A portion of publishers continue to toe the line on why this is important while others are being very transparent about the impact on their business. The reality of the impact, even if it hasn't yet been disclosed, is massive for them. It could potentially shine a light on the fact that many publishers have struggled to monetize web traffic that was previously generated via these organizations. A hand-out won't fix this, and as of this week, they are realizing the full magnitude of the commercial impact if their internal ability to monetize web traffic is not "mature" in nature. Some will get it right, others, unfortunately, may become a distant memory.

Meta & Google clearly understand the value they provide to the ecosystem in Canada, and we believe that publishers are also fully aware. Although we may not always agree with their moves, we do understand (particularly in Meta's case) why they have made these moves.