Google's $100 million to Canada's news industry is a small price to pay to avoid regulation

The deal between Google and the federal government to resolve their dispute over paying for news online will come as a relief for the media industry in Canada.

News publishers were facing the prospect of disappearing from Google Search and other services — the equivalent of vanishing from the internet — after Google had threatened to block news links in response to the Online News Act.

The deal is good news for Canadians, who had already seen news disappear from Facebook and Instagram in the summer after Meta carried out its threat to block news links rather than pay for them.

At the heart of the dispute is the Online News Act, also known as Bill C-18, which is due to come into force on Dec. 19. The legislation attempts to deal with the power technology giants have over how Canadians access news and information.

As a former journalist, researcher and co-founder of The Conversation Canada, this is a story that I have followed closely.

The deal in numbers

Under the agreement, Google will contribute $100 million annually, indexed to inflation, in financial support to newspapers, broadcasters and digital news outlets.

The money will be welcomed by journalism organizations, which have been facing declining revenues and audiences.

But the amount is far lower than the 2022 Parliamentary Budget Officer’s estimate of $329.2 million annually from Google and Meta. It’s also lower than later federal government estimates of $172 million from Google alone.

The funding is partly intended to compensate print and broadcast media for falls in advertising revenues as companies moved their ads online.

The $14.4 billion digital ad market is dominated by Google and Meta, which account for 77 per cent. Google’s share is $6.7 billion; the money Google will contribute to Canadian news media accounts for just under 1.5 per cent of its digital ad business in Canada.

The money from Google is small considering that the newspaper industry alone brought in $2 billion in revenues in 2022.

The battle over regulation

The numbers only tell part of the story. Bill C-18 is a test case of the power of platforms like Google and Meta to run and control Canada’s communications infrastructures.

While the agreement allows all sides to claim victory, it is clear that Google successfully extracted key concessions over how it is regulated in Canada.

The search giant got its core demand for funding to be capped at a set amount of $100 million — comparable to what Google agreed to in Australia, which adopted similar legislation in 2021.

Bloomberg News Corp. report on Google’s private arrangements with News Corp.

Similar to Australia, the deal with Ottawa means Google should end up being exempt from the Online News Act. The legislation in both countries contains provisions that enable platforms to be exempt if they make appropriate deals with the news media.

Differently to Australia though, Google will be able to work with a single body representing the news industry in Canada, though that remains to be determined.

Google made individual private arrangements with news outlets in Australia, deciding who to fund and by how much.

What is not clear, though, is how the negotiations will work in Canada, who will be involved and how transparent will the process be.

Picking winners and losers

Critics have warned that the lack of transparency in Australia allowed platforms to pick which outlets received the money and how much. The funding heavily benefitted mainstream media in Australia, notably Rupert Murdoch’s media empire.

Canadian Heritage has said that Google’s $100 million will be spread across the news industry, including independent news outlets, and those from Indigenous and official-language minority communities.

The provision to distribute the funding “based on the number of full-time equivalent journalists engaged by those businesses” risks repeating the missteps of Australia by failing to encourage newer, emergent journalism organizations often seeking to fill the gaps left by commercial media.

How all of this will play out, and what it means for Canadian news consumers, should become clearer in the coming weeks as Canadian Heritage sheds more light on how C-18 will work out in practice.