The Online News Act: federal government tables digital news revenue-sharing legislation

Introduction

On April 5, 2022, the Government of Canada tabled Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada (the Online News Act). The proposed purpose of Bill C-18 is to enhance fairness in and contribute to the sustainability of the Canadian digital news marketplace by regulating digital news intermediaries.

If passed, this legislation would impose a bargaining, mediation, and arbitration process aimed at transferring advertising revenue from tech companies (whose services provide access to the news) to Canadian news outlets (who produce news content). In this bulletin, we highlight key features and potential implications of the draft legislation, which confers significant discretion on the CRTC and its roster of arbitrators to determine the appropriate sharing of advertising revenues.

What you need to know

• Bill C-18 would apply to operators of online communications platforms (including search engines and social media services) that make news content produced by news outlets available to the Canadian public. These platforms are defined as “digital news intermediaries”. The legislation would apply if there is a “significant bargaining power imbalance” between news businesses and the operator of a digital news intermediary. Operators to whom the Act would apply are required to notify the Canadian Radio-television and Telecommunications (CRTC) of same.
• The scope of applicable news content is circumscribed to focus on transferring revenue to businesses who primarily produce news for the Canadian marketplace regarding matters of general interest and current events. The CRTC would decide whether a given news business is eligible to participate in the bargaining process.
• The legislation would allow any eligible news business to initiate a mandatory bargaining, mediation, and arbitration process with a given operator of digital news intermediaries. The only proposed alternative to this process is for an operator to obtain CRTC approval of privately negotiated compensation agreements.
  • Any eligible news business or group of news businesses may initiate the bargaining process with a given operator of digital news intermediaries. The legislation does not appear to contemplate the involvement of multiple operators in the same bargaining process.
  • If bargaining and mediation are unsuccessful, any party may initiate a final offer arbitration process, under which a panel of three arbitrators from a CRTC roster will select the final offer made by one of the parties. This is often called “baseball” arbitration. The bill appears to intend that the arbitral result be final and binding.
  • To avoid this process, the operator of a digital news intermediary must obtain CRTC approval of privately negotiated agreements between the operator and eligible news businesses. The CRTC must grant such approval (called an “exemption order”) if the agreements satisfy certain conditions relating to fair compensation of news businesses, sustainability and independence of the Canadian news marketplace, and support for a diverse range of news outlets.
• The legislation is high-level and leaves much detail to future regulations to be made by the federal government or the CRTC, including:
  • By the CRTC:
    • A code of conduct governing bargaining between operators of digital news intermediaries and eligible news businesses, which the CRTC must establish by regulation
    • Regulations respecting the mandatory bargaining, mediation, and arbitration process
    • Regulations respecting the CRTC’s practices and procedure in relation to the Act
  • By the federal government:
    • Regulations respecting how the CRTC is to interpret the conditions that must be satisfied to grant an exemption order
    • Regulations respecting the factors to be considered in determining whether the legislation applies to a given operator of a digital news intermediary

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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