Minister of Canadian Heritage Pablo Rodriguez speaks during a news conference on Bill C-18, the Online News Act, along Bloc MP Martin Champoux, right, in Ottawa, on Wednesday, July 5, 2023. Tensions between Ottawa and tech giants further escalated on Wednesday over Canada's recently passed Online News Act. THE CANADIAN PRESS/Justin Tang

Tensions between Ottawa and tech giants further escalated on Wednesday over Canada's recently passed Online News Act.

The new law, also known as Bill C-18, will require tech giants pay media outlets for content they share or otherwise repurpose on their platforms, drawing the ire of Google and Meta, the parent company of Facebook and Instagram.

Here's how the situation reached this point.

What happened on Wednesday?

Heritage Minister Pablo Rodriguez announced the federal government will stop advertising on Facebook and Instagram after Meta promised to block Canadian news content on its platforms in response to the legislation.

Rodriguez blasted Meta for refusing to negotiate with the federal government, calling the company's decision "unreasonable" and "irresponsible." He said Ottawa spends about $10 million in advertisements on its platforms per year, which will be reinvested in other ad campaigns.

Earlier in the day, news and telecommunications company Quebecor Inc. also announced it would immediately withdraw advertising from Meta's platforms, saying "any move by Meta to circumvent Canadian law, block news for its users or discriminate against Canadian media content on its platforms, through its algorithms or otherwise, cannot be tolerated."

Following Rodriguez's announcement,Quebec Premier François Legault tweeted the province is suspending advertising on Facebook and Instagram until Meta resumes talks about the implementation of the bill.

"No company is above the law," Legault tweeted in French.

Why didn't Google get the same treatment?

Google has also promised to start blocking Canadian news when the bill comes into force in six months, saying last week that Bill C-18 "remains unworkable" and the government "has not given us reason to believe that the regulatory process will be able to resolve structural issues with the legislation."

Back in February, Google Canada ran a five-week test in which it limited access to news content for around four per cent of its Canadian users.

But Rodriguez said the government remains in talks with the company and believes its concerns will be managed by the regulations to come as it implements the bill.

Why do the companies take issue with the law?

Ottawa has said the law creates a level playing field between online advertising giants and the shrinking news industry.

But at a Senate committee hearing in May, Meta representatives made the case that news is a tiny fraction of its business. The company said users clicked on publishers' links more than 1.9 billion times in the last year from Facebook feeds, which it said is worth an estimated $230 million.

"It is publishers that benefit from being on our platforms, not the reverse," Rachel Curran, Meta Canada's head of public policy, told the committee. She said posts linking to news articles are less than three per cent of what people see in their Facebook feeds, and more than 90 per cent of views on news publishers' articles are on links posted by the publishers themselves.

"We don't lose any revenue, or very little revenue, if news content is substituted by something else," she said.

Google's president of global affairs Kent Walker said the legislation requires "two companies to pay for simply showing links to news, something that everyone else does for free."

"The unprecedented decision to put a price on links (a so-called “link tax”) creates uncertainty for our products and exposes us to uncapped financial liability simply for facilitating Canadians’ access to news from Canadian publishers," he said in an online post on June 29, adding "we’re disappointed it has come to this."

"We already pay to support Canadian journalism through our programs and partnerships — and we’ve been clear we’re prepared to do more."

Can I still get my news from Facebook or Instagram today?

Most users should still have access to Canadian news links and account pages for now.

Meta has not offered details about the precise timeline for its move to block news for Canadian users, but said it will do so before the Online News Act takes effect in half a year.

But a small amount of Canadian users may have already noticed a change in recent weeks. That's because Meta, like Google, launched a temporary test last month, blocking news for up to five per cent of its 24 million Canadian users on Facebook and Instagram.

Some users have reported seeing a message on Canadian news pages that states "people in Canada can't see this comment," citing "Canadian government legislation."

Has there been any other fallout?

Although it'll be another six months before regulations get sorted out, the law's ripple effects have already begun.

For instance, Meta announced last week it would terminate contracts with multiple Canadian media outlets including six daily newspapers in Quebec part of a coalition called Coopérative nationale de l'information indépendante.

It also ended an agreement with The Canadian Press that saw the digital giant support the hiring of a limited number of emerging journalists at the national newswire service.

Bill C-18 was also central to Bell Canada's stated rationale last month when it announced it would slash 1,300 positions, including six per cent of its media arm. Bell chief legal and regulatory officer Robert Malcolmson blamed the job cuts on a challenging public policy and regulatory environment, raising specific concerns about the Online News Act, as well as Bill C-11, the Online Streaming Act.

Malcolmson, who called Bill C-18 a "great piece of legislation," said in an interview that it came too late warned it would be ineffective if Google and Meta followed through on their threats to block Canadian news links.

"We're still not going to be able to monetize our news content because Meta is just going to turn it off," he told The Canadian Press. "Public policymakers need to think about how to deal with that. Do we let the global tech platforms kind of dictate to Canada or do we say, 'No, we need to do something?'"

This report by The Canadian Press was first published July 5, 2023.

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Meta funds a limited number of fellowships that support emerging journalists at The Canadian Press.

News from © The Canadian Press, 2023