Canada’s Online News Act Shows Small Countries Can Still Govern Tech Giants

The law is an improvement on Australian legislation, which served as its model.

January 18, 2024
Daily newspaper boxes line the sidewalk in downtown Ottawa, April 4, 2005. (Chris Wattie/REUTERS)

In one of its last moves of 2023, the Government of Canada published the final regulations for Bill C-18, the Online News Act, on December 15. The law requires large “digital news intermediaries” — in practice, Meta and Google — to negotiate payments to Canadian news organizations.

This is a big deal. “The world is watching” how Canada handles this legislation, was a constant refrain throughout six-plus months of drama, mudslinging and brinksmanship that characterized the run-up to the law’s implementation. Meta banned all news from Facebook and Instagram and continues to refuse to submit to the law.

Google, after threatening to remove Canadian news from search, reached an agreement on November 29 to negotiate a $100-million, inflation-adjusted annual payment to a single news media collective, rather than with separate media groups. While it received an exemption from the law’s mandatory arbitration provision, it is most likely still subject to the rest of the bill’s provisions.

The world has been watching to see whether Canada could stick the landing, and what kind of deal the federal government would end up with. Observers want to know whether a small country can regulate the online giants, which tend to resist domestic governance.

In the words of international political economy scholar Susan Strange, at issue is whether small countries are capable of exerting “structural power” in the global political economy. Structural power, said Strange, is real power: it’s one thing to use your skill to win a game; it’s another thing entirely to set the rules and norms that constitute the game.

To see who has structural power, according to Strange, study the “bargains” — the fights over what the rules will be. The C-18 debate and subsequent negotiations is a prime example of just such a bargain.

Most importantly, the C-18 outcome reveals that while online giants possess significant structural power, even small countries such as Canada can bring them to heel. Platform regulation by smaller countries is possible.

Two key points speak to how structural power was used, and by whom, in this battle.

First, we see evidence of Canadian structural power in the degree to which the law and its regulations are an improvement over the 2021 Australian law that served as a model for the Online News Act. Canada’s approach more completely brings the online companies under the law. In contrast, Australia’s News Media Bargaining Code, negotiated following a similar Facebook blockade, eventually allowed the companies to negotiate funding agreements outside the legislation and with less oversight. The content of these agreements is secret, although new legislation aims to make them public. What’s more, reports suggests that Meta may “not renew its deals under the code.”

While some long-standing critics of the concept of the Online News Act have mocked the size of the
$100-million payment, they’re missing the bigger picture. What’s important is that payment is now mandatory. That Google must now pay into a fund removes its ability to exert the influence over media companies that comes with voluntary funding arrangements.

Even better, Google is most likely still required to follow the legislation, most significantly an obligation not to unduly discriminate against Canadian news organizations (section 51 of the act). Also, unlike in Australia, the terms of funding agreements will be public knowledge. These outcomes are all evidence of Canada’s structural power.

If Meta shares news like a news intermediary, Canada should continue to treat it as a news intermediary and seek ways to force it into compliance with the law of the land.

Second, and in contrast, Google demonstrated its structural power in being able to convince the government to reduce the desired payment and change the nature of the funding structure. Seeing this negotiation in terms of structural power also makes clear that it is Google, not the federal government, that is to blame for the government receiving less than it had hoped for. Similarly, in agreeing to a single collective, Google effectively forced the government to get involved in determining the membership of the collective and how the money would be distributed; the original legislation would have left the government much further removed from this process.

If you don’t like the lowballing or government involvement in setting the collective, blame Google, not the government.

The big outstanding issue, of course, is the fate of Meta. Meta claims it is not subject to the Online News Act because it has banned all news from its Canadian networks, and thus is not a “digital news intermediary” as defined in the legislation. As I’ve argued elsewhere, this assertion is laughable. This from a company that, over the years, has set itself up to be Canadians’ and the world’s information intermediary, and on whose networks users, in defiance of the ban, still share forbidden news links via JPEGs, a form of digital samizdat more fitting for life under the former Soviet Union.

If Meta shares news like a news intermediary, Canada should continue to treat it as a news intermediary and seek ways to force it into compliance with the law of the land. The rule of law demands as much.

Meta’s intransigence shouldn’t detract from how, with C-18, the federal government took on the world’s biggest, most powerful companies and got the job done. Canadian law makers took the ball that Australia handed to them and ran with it.

In so doing, Canada showed the world that we need not leave platform regulation to the big players, such as the United States and the European Union.

That the government had to compromise along the way reflects the structural power of these companies. But while large online companies may possess significant structural power, the Online News Act demonstrates that smaller countries are not as helpless as we might have thought.

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

Blayne Haggart is a CIGI senior fellow and associate professor of political science at Brock University in St. Catharines, Canada. His latest book, with Natasha Tusikov, is The New Knowledge: Information, Data and the Remaking of Global Power.