It was a shot across the bow. In a warning of potential escalations to come, Google disabled news search results for a small percentage of Canadian users. “We’re briefly testing potential product responses to Bill C-18,” a spokesperson said in a statement emailed to journalists.

Based on an Australian law, Bill C-18 would force tech companies to pay Canadian media outlets for the news they distribute and profit from. The government says it will “level the playing field” between global platforms and Canadian media, which is a wasteland of mass layoffs and shuttered outlets.

Prime Minister Justin Trudeau and Heritage Minister Pablo Rodriguez took pains to appear affronted by Google’s move. In an unprompted addendum to an unrelated press conference, Trudeau lectured Google about its “terrible mistake.”

The government is going after Google’s profits for good reason. The company commands  around 50 per cent of all Canadian digital ad revenues, siphoning billions that had been the lifeblood of news media. 

But branding the Liberals as champions of journalism is premature at best. In fact, they’re squandering the single biggest opportunity in a generation to set up truly public interest journalism, choosing instead to prop up corporate outlets like Postmedia as their credibility plumbs new depths.

Prime Minister Justin Trudeau went out of his way to condemn Google’s move to block news content for some users in response to Bill C-18. Credit: Office of the Prime Minister of Canada

The duopoly’s new model

Google’s ascent over the last decade mirrors a precipitous decline of TV and print advertising and the closure of hundreds of media outlets over the same period.

There’s not much to mourn about the flush corporate outlets of the 1980s and 90s. Journalists were more numerous—and in many cases, better paid—but most of the money went to the fortunes of the owners, with a percentage off the top for executive salaries, gilded offices, expense accounts, and three-martini lunches.

Today, Google and Facebook’s massive revenues are amassed without the benefits that came from the previous wave of media: they don’t create any content, they just deliver it by hijacking readers’ attention. The dominance of the Google-Facebook duopoly—which controls 80 per cent of digital ad sales in Canada—offers an unprecedented clarity: market power has been decoupled completely from social utility. Their extraction of ad profits is unadorned by the prestige of journalistic institutions that protected the media moguls of yesteryear. 

The first country to pass a law like Bill C-18 was Australia. Their law requires Google and Facebook’s parent company Meta to strike payment deals with media outlets designated by the government. And if they can’t come to an arrangement, the corporations face hefty fines.

The result in Australia is an estimated US$140 million in new funds for media outlets. The money is distributed mostly through secret bilateral deals between Meta, Google and various media outlets. 

Adjusting for Canada’s larger economy and assuming the total take is similar, that would put Canada’s slice of duopoly revenues in the neighbourhood of $180 million per year. That’s enough to hire 2,500 new journalists, increasing the national total by around 20 per cent—if it’s spent correctly.

Google and Facebook have been taking bigger pieces of the Canadian ad industry from traditional media every year for the past decade. Graphic: The Breach 

Redirecting tech profits to corporate raiders

But if Australia and Canada’s previous efforts are any precedent, the primary beneficiaries will be companies like Postmedia. 

Controlled by a New Jersey hedge fund staffed by generous donors to right-wing campaigns, Postmedia is known for keeping a stable of noxious right-wing columnists, but less for its commitment to public interest journalism.

And yet, Postmedia has been a prime recipient of government largesse. 

In recent years, the company has cut hundreds of jobs, closed dozens of outlets and shut down a union drive among its workers. During the same period, Postmedia hoovered up millions in journalism subsidies and COVID-19 relief funds.

The cuts are not finished. In January, Postmedia cut 11 per cent of its editorial staff.

Far from investing in journalism, most of its revenues have gone to debt payments—an estimated $127 million over a two-year period, according to The New York Times. In its 2020 annual report, Postmedia boasted about the millions in tax credits, subsidies and COVID relief funding it had received. 

Postmedia has absorbed millions of dollars in government subsidies for journalism and COVID-19 relief funds while using most of its revenue to pay off debts. Credit: Shutterstock

Profits first, news second

What about the new players who say they are investing in journalism? 

Overstory Media Group (OMG), controlled by tech centi-millionaire Andrew Wilkinson, has been acquiring media outlets from coast to coast. A pitch deck leaked to The Logic revealed that OMG called the government its “silent partner,” noting that journalism subsidies cover a quarter of their journalists’ wages in eligible positions.

But OMG’s plans to create what they call the “Chipotle of news,” has been received like an overripe avocado. In the midst of a union drive, the company fired editorial staff at its flagship publication and signaled plans to pivot away from public interest journalism.

While the Liberals’ plan to dole out millions to legacy media owners and tech bros may yet turn out to be politically advantageous, their schemes share a glaring, systemic shortcoming. If you give money to for-profit companies that cover the news, the money will go to profits before it goes to journalism.

Deals between Google and Canadian media outlets will be kept secret, as they were in Australia. Credit: Wikimedia Commons

Deals will be kept secret

It’s hard to know what Google’s end game is by “testing” blocking users from Canadian news. Google pulled a similar maneuver in Australia, deprioritizing news links for some users, while Facebook “went dark” for news content for a while.

Did the duopoly benefit from these tactics? It’s impossible to know because the terms of the deals Meta and Google struck in Australia are secret, as they will be in Canada. 

What we do know is that smaller outlets in Australia had to fight to get anything at all. A coalition of local publishers had to rely on a billionaire’s foundation to get Meta and Google to even return their calls.

The opportunity to channel funds into non-profit media—that exist to serve their communities, not investor returns—is right there. 

For decades, non-profit news organizations have punched above their weight on shoestring budgets. It’s not just community TV and radio stations using the non-profit model—large newspapers like La Presse, which went non-profit in 2018, and new media outlets are generating informative content without generating profits. In underserved U.S. markets, non-profits have proliferated

If the duopoly’s spoils were earmarked for non-profit news with democratic governance, the sector would blossom, ensuring that the money is actually spent on much-needed coverage.

By using Australia’s model, Canada has missed an opportunity to pour tech money into non-profit, public-interest journalism that strengthens a fair and independent Canadian press, while creating stable jobs. The duopoly responsible for setting journalistic institutions on fire for the last decade should indeed hand over their profits for the public good—just not to the people who are looting the buildings as they burn.

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