Canada Is Right to Push Back Against Digital Platforms’ Power

Requirements for social media companies to distribute ad revenue are not novel.

August 30, 2023
Photo illustration by Dado Ruvic/REUTERS.

Unprecedented wildfires in the Northwest Territories and the Okanagan area of southern British Columbia are again highlighting the vital role that social media companies play in enabling people to access and share information during a natural disaster.

Many people have become accustomed to receiving news stories through Facebook and Instagram — about 30 percent and 10 percent of Canadians, respectively — but with Meta now blocking all Canadian news on its platforms, those fleeing wildfires have another thing to think about. As Prime Minister Justin Trudeau said on August 21, “Facebook is putting corporate profits ahead of our democracy and our well-being.”

Meta’s actions constitute a “chokepoint” — a tactic that only works when companies command significant market share and provide critical services. Worse, this news ban is political, intended to pressure the Canadian government into amending or repealing Bill C-18, the Online News Act, which will require fair revenue sharing between companies designated as “digital news intermediaries” such as Google and Meta and news outlets.

Requirements for social media companies to distribute ad revenue are not novel. In February 2021, Facebook reportedly used news blockades to bully the Australian government, which had introduced the News Media Bargaining Code, requiring Facebook and Google to establish commercial agreements with media companies in Australia for the remuneration of news content, or face legal consequences. The blockades resulted in the Australian government amending the bill, and Facebook lifting its news ban after eight days.

Meta’s Canadian news ban during a state of emergency starkly highlights the capriciousness and cruelty of corporate power. But it also provides an ideal opportunity to reflect on how we can regulate tech companies’ power, and why Meta’s decision is so consequential for news media organizations and for its users.

Meta, alongside Google, dominates the digital advertising industry. As digital advertisers, these companies courted the news industry and inserted themselves into the ecosystem. This relationship became interdependent: news organizations now rely on Google and Facebook for advertising revenue and traffic to their sites, while the social media companies benefit from users’ engagement with news stories, driving advertising. This relationship, however, is distinctly asymmetrical: social media companies control the advertising revenue flows by setting rates, and control user engagement through secret algorithms, allowing them to set rules that privilege their commercial interests over those of news organizations or the public.

Facebook and Instagram can also create chokepoints because they are designed to function not just as social media companies, but also as interfaces through which people would access other sites and services on the web. Facebook has long desired to be an “everything” or “mega” app that combines messaging, social media, payments and marketplace services in the same way that Tencent’s WeChat app has done in the Chinese market. This ambition has raised concerns of anti-competitive behaviour in the United States and elsewhere. While accessing news directly through a media organization’s app or its website is possible, this goes against Meta’s carefully constructed social media empire.

Recognizing how social media companies wield market power — including by instituting chokepoints that deprive other actors of revenue sources or audiences — better equips us for designing effective regulation. Canada’s efforts to implement the Online News Act can learn from Australia’s experience where, for example, researchers have found that a lack of transparency makes it difficult to determine which news outlets receives what amount of funds from social media companies. As a researcher from Swinburne University of Technology in Melbourne notes, under the code, social media companies may act to serve their “business priorities, rather than in the interest of the code’s stated aim of supporting public-interest journalism.”

The fight over the Online News Act is also a preview of the battles yet to come. The federal government has plans to introduce the right to repair for software-connected goods in 2024 and revive consultations on its long-stalled online harms legislation. These two initiatives will generate significant opposition from big tech, as has been evident in the United States, where high-powered lobby groups have pushed back against right-to-repair legislation. We need to plan how to regulate the wider digital economy and digital society, while addressing the problem of monopolies operated by incredibly powerful technology companies.

Meta’s extortive tactics during a wildfire-induced state of emergency are a dare for the Canadian government to back down. Instead, Canada needs to push back against unchecked corporate power.

This article first appeared in The Globe and Mail.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.

About the Author

Natasha Tusikov is an associate professor of criminology in the Department of Social Science at York University and a visiting fellow with the School of Regulation and Global Governance (RegNet) at the Australian National University.