Online News Act Application and Exemption Regulations: SOR/2023-276

Canada Gazette, Part II, Volume 158, Number 1

Registration
SOR/2023-276 December 15, 2023

ONLINE NEWS ACT

P.C. 2023-1296 December 15, 2023

Her Excellency the Governor General in Council, on the recommendation of the Minister of Canadian Heritage, makes the annexed Online News Act Application and Exemption Regulations under section 84 of the Online News Act footnote a.

Online News Act Application and Exemption Regulations

Definition

Definition of Act

1 In these Regulations, Act means the Online News Act.

Application of Act

Imbalance — factors

2 For the purposes of section 6 of the Act, there is a significant bargaining power imbalance between an operator and news businesses only if,

Notification of Commission

3 An operator that is required to notify the Commission under subsection 7(1) of the Act must do so within 180 days after the day on which the Act begins to apply in respect of the digital news intermediary.

Conditions for Exemption

Conditions

4 (1) The following are, for the purposes of paragraph 11(1)(b) of the Act, conditions for the making of an exemption order:

Request for information

(2) For greater certainty, for the purpose of complying with paragraph (1)(b), the operator may request relevant information from news businesses and groups of news businesses, including information in respect of the news outlets operated by those news businesses.

Interpretation of criteria — attestations

5 When interpreting subparagraphs 11(1)(a)(i) to (viii) of the Act, the Commission must consider the impact of the agreements on only the following news businesses and news outlets:

Interpretation — fair compensation

6 (1) For the purposes of subparagraph 11(1)(a)(i) of the Act, the Commission must interpret the agreements as providing for fair compensation if they provide for comparable compensation to news businesses of a similar size, with a similar business model and similar capabilities that provide a similar type of news content to comparable markets and communities.

Precision

(2) Agreements need not provide any consideration for merely facilitating access to news content or for otherwise making news content available in a manner that would fall under a limitation or exception in the Copyright Act for the Commission to be of the opinion that they provide for fair compensation.

Interpretation — appropriate portion

7 For the purposes of subparagraph 11(1)(a)(ii) of the Act, the Commission must interpret the agreements as providing that an appropriate portion of the compensation will be used to support the production of local, regional and national news content if the agreements include a commitment by the news businesses or groups of news businesses that are party to them to use a majority of the monetary compensation provided under the agreements to support the production of local, regional and national news content.

Interpretation — freedom and independence

8 For the purposes of subparagraph 11(1)(a)(iii) of the Act, the Commission must interpret the agreements as not allowing corporate influence to undermine the freedom of expression and journalistic independence enjoyed by news outlets if the agreements include a commitment that the operator will not, directly or through its digital news intermediary, take any action that undermines freedom of expression or journalistic independence, including

Interpretation — sustainability

9 (1) When interpreting subparagraph 11(1)(a)(iv) of the Act, the Commission must consider the sufficiency of the total monetary compensation provided for in the agreements in contributing to the sustainability of the Canadian news marketplace, including by having regard to the digital news intermediary’s share of Canadian Internet advertising revenues in the calendar year before the calendar year in which the request for exemption is made.

Exception — largest search engine

(2) Despite subsection (1), in the case of the digital news intermediary that is the search engine with the greatest share of Canadian Internet advertising revenues among all search engines in respect of which the Act applies, the Commission must interpret the agreements as contributing to the sustainability of the Canadian news marketplace if and only if, for each year covered by the potential exemption order, the agreements provide for monetary compensation in accordance with the formula

$100 million × CPIx ÷ CPI2023
where
CPIx
is the highest Consumer Price Index for any calendar year beginning with 2023 and ending with the calendar year before the year for which the compensation is paid; and
CPI2023
is the Consumer Price Index for 2023.

Consumer Price Index

(3) For the purpose of subsection (2), a reference to the Consumer Price Index for a calendar year is a reference to the all-items Consumer Price Index for Canada, annual average, not seasonally adjusted, for that year, as published by Statistics Canada under the authority of the Statistics Act.

Non-monetary compensation

(4) For greater certainty, the fact that the Commission, in interpreting subparagraph 11(1)(a)(iv) of the Act, is to consider only the contribution of monetary compensation to the sustainability of the Canadian news marketplace does not preclude an operator from providing non-monetary compensation to a news business or group of news businesses, nor does it preclude the Commission from having regard to that non-monetary compensation when determining whether other criteria under paragraph 11(1)(a) of the Act are satisfied.

Interpretation — agreement with group

10 (1) In the case of an agreement entered into by an operator with a group of news businesses, the Commission must interpret the criteria set out in subparagraphs 11(1)(a)(i) and (v) to (viii) of the Act as being satisfied if

Equitable distribution

(2) For the purpose of paragraph (1)(a), the equitable distribution of monetary compensation is to be determined, subject to subsection (3), having regard to the number of full-time equivalent employees who, in the previous calendar year, were employed by each news business for the purpose of producing, for news outlets operated by that business, original news content that is intended to be made available online.

Exception — broadcasters

(3) No more than 30% of the monetary compensation may be allocated to news businesses — other than the Canadian Broadcasting Corporation — that carry on a programming undertaking as defined in subsection 2(1) of the Broadcasting Act, in relation to news outlets that are or are part of a broadcasting undertaking as defined in that subsection, and no more than 7% of the monetary compensation may be allocated to the Canadian Broadcasting Corporation.

Precision

(4) The agreement need not provide any consideration for merely facilitating access to news content or for otherwise making news content available in a manner that would fall under a limitation or exception in the Copyright Act.

Definitions

(5) The following definitions apply in this section.

news business
means a news business that
  • (a) could be designated as eligible under section 27 of the Act; and
  • (b) operates a news outlet as defined in this subsection. (entreprise de nouvelles)
news outlet
means a news outlet that is operated exclusively for the purpose of producing news content referred to in subsection 31(2) of the Act or that is a news outlet referred to in subsection 31(2.1) of the Act, whose news content is made available by the digital news intermediary in question. (média d’information)

Coming into Force

December 19, 2023

11 These Regulations come into force on December 19, 2023, but if they are registered after that day, they come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Digital platforms, such as search engines and social media networks, have emerged as common gateways that Canadians use to access news content. At the same time, a small number of digital platforms have come to dominate the online advertising market. The Canadian news sector has been impacted by these developments, seeing a significant decline in advertising revenues and an increase in the closures of news businesses over the past decade. Canadian news businesses continue to produce content that attracts web traffic and adds value to digital platforms, while seeing their advertising revenues dwindle as a result of the market control exerted by large digital platforms. The Online News Act (the Act) was enacted to address the growing imbalance between digital platforms and news businesses in Canada by establishing a bargaining regime to ensure news businesses are fairly compensated for the news they produce.

Establishing a regulatory framework under the Act is critical to its effective implementation. The regulatory framework provides clarity on the application of the Act and provides greater direction to the Canadian Radio-television and Telecommunications Commission (CRTC) on how to interpret the exemption criteria set out in the Act.

The Act requires that digital platforms notify the CRTC when the Act applies to them. The Online News Act Application and Exemption Regulations (the Regulations) establish clear criteria so platforms can determine if the Act applies to them. The Regulations also specify the timeframe by which platforms must notify the CRTC that the Act applies to them.

The Act provides that digital platforms may negotiate voluntary commercial agreements with news businesses to qualify for an exemption from the mandatory bargaining provisions of the Act. The exemption section is a key component of the Act, as it offers digital platforms the opportunity to reach fair commercial agreements with a wide range of news businesses and contribute to the sustainability of the news marketplace. The Regulations provide more specific direction on how select exemption criteria can be met, with a view to providing greater business certainty to both platforms and news businesses.

Background

On June 22, 2023, Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada (known as the Online News Act) received royal assent.

The intent of the Act is to ensure digital platforms contribute to the sustainability of the Canadian news marketplace, while upholding press independence and promoting diversity and innovation. The Act ensures fair revenue sharing between digital platforms and news businesses by supporting voluntary commercial agreements between the parties. It also establishes a mandatory arbitration framework as a last resort where voluntary agreements have not successfully been reached. The Act also stipulates that the CRTC may issue an exemption from the mandatory arbitration framework provided that the platform can demonstrate that voluntary agreements with news businesses have met the requirements of the Act. The Act allows news businesses to bargain collectively and defines the powers, duties, and functions of the CRTC as the regulator in the process.

Current state of the news sector

Many Canadians use digital platforms, including search engines and social media networks, as gateways to access news content. A small number of digital platforms have come to play an integral role in Canada’s news ecosystem. While the Canadian news sector has seen a significant decline in revenues and an increase in the closures of news businesses over the past decade, these digital platforms have seen their revenues increase significantly. In 2021, online advertising revenues in Canada reached $12.3 billion, with Google and Meta having a combined share of 79% of these revenues.

Policy response

The Act is the culmination of years of calls for action and key government priorities. Publications from the Standing Committee on Canadian Heritage (2016–2017), the Public Policy Forum (2017), and the Standing Committee on Industry, Science and Technology (INDU) [2019] reported that the news sector in Canada had been severely disrupted by digital consumption and the online sharing of news, and that further government action was needed to address the issue. In 2020, the Broadcasting and Telecommunications Review Panel Report recommended regulating the relationship between social media platforms that share news content and news content creators. Encouraged by international developments on the subject in early 2020, major Canadian news publishers called on the Government to implement measures similar to those adopted in France and Australia to level the playing field between digital platforms and news media.

Government priorities

In the 2020 Speech from the Throne, the Government of Canada committed to ensuring that the revenues of web giants are shared more fairly with Canadian creators and media. The December 2021 mandate letter to the Minister of Canadian Heritage committed to introducing legislation, based on the Australian approach (which relies on a bargaining and arbitration framework), to require digital platforms that generate revenues from news content to share a portion of their revenues with Canadian news media. Bill C-18, the Online News Act, was introduced in Parliament in April 2022, was reviewed by members of the Standing Committee on Canadian Heritage in Fall 2022 and was subsequently studied by Senate members of the Standing Committee on Transport and Communication in Spring 2023. The Act passed Third Reading in the Senate and received royal assent on June 22, 2023.

Designing a legislative response

The Act seeks to capture the largest and most prominent digital platforms that operate in the markets that have a strategic advantage over news businesses. Regulations specifying the application of the Act and how digital platforms can be exempted from the mandatory bargaining process are a key part of supporting this implementation process.

The Act introduces a new legislative and regulatory framework that ensures fair revenue sharing between digital platforms and news businesses. The Act is expected to enhance fairness in the Canadian news ecosystem and contribute to its sustainability. The key objective of the Act is to encourage platforms and news businesses to reach voluntary commercial agreements. Failing that, it provides for a mandatory bargaining process, backstopped by final offer arbitration. Large platforms that have a significant bargaining power imbalance with news businesses are subject to this legislation. A platform is considered to have a significant bargaining power imbalance if it is large and occupies a prominent position in a Canadian market (e.g. social media, search) that gives them a strategic advantage over news businesses. The legislation facilitates fair commercial agreements between digital platforms and news outlets while maintaining press independence, with minimal government intervention.

The Governor in Council (GIC) may issue regulations pertaining to the application, the duty to notify, and the exemption provisions of the Act. While the legislation outlines general factors, the Regulations establish specific criteria crucial for the implementation of the Act.

Objective

The Regulations establish the factors that determine if the Act applies (section 6) to a digital platform and when it is required to notify (section 7) the CRTC that the Act applies to it. The Regulations also provide greater direction to the CRTC on how to interpret the exemption criteria set out in the Act (section 11) to determine if a digital platform qualifies for an exemption.

Application (section 6)

The Regulations establish clear criteria so that digital platforms (defined in the Act as digital news intermediaries, or DNIs) can determine if the Act applies to them. The intent is to scope into the regulatory regime the largest and most prominent digital operators that have a significant bargaining power imbalance with news businesses.

Notification (section 7)

The Regulations specify the timeframe for operators of digital platforms to notify the CRTC that the Act applies to them. The intent is to provide platforms with ample time (180 days) to notify the CRTC.

Exemption (section 11)

The Regulations provide more specific direction on how select exemption criteria can be met, with a view to providing greater business certainty to both the operators of digital platforms and news businesses. The intent is to provide platforms the opportunity to reach fair commercial agreements with news businesses, including the possibility of a single agreement with a group of news businesses, and thereby contribute to the overall sustainability of the Canadian news marketplace.

Description

Application of the “bargaining imbalance test”

The Regulations establish specific thresholds applicable to the factors set out in the application section of the Act to determine which platforms are subject to the Act.

A digital platform must meet all the following thresholds in order to be subject to the framework:

Together, these thresholds establish when there is a significant bargaining imbalance between the operator of a digital platform and news businesses.

Digital platforms and their operators are expected to assess whether they meet these thresholds and are required by the Act to notify the CRTC if they do. The Act requires the CRTC to publish a list of digital platforms to which the Act applies.

Application of “duty to notify”

The notification section of the Act requires the operator of digital platforms to notify the CRTC if the Act applies to them. The Regulations establish a timeframe of 180 days for this notification to occur. This allows platforms time to bargain with news businesses and to prepare a request for exemption without being subject to mandatory bargaining and final offer arbitration.

Exemption of platforms from mandatory bargaining and final offer arbitration

In assessing whether a platform has met the criteria for an exemption order, the CRTC must consider whether agreements between the platform’s operator and a news business or a group of news businesses

The Regulations provide more specific direction on how certain exemption criteria can be met.

Condition — open call process

The open call is intended to identify news businesses or groups of news businesses that wish to obtain compensation from the operator of a digital platform and that meet the definition of a news business under the Regulations and operate news outlets for the purposes of producing original news content of general interest. The news businesses that come forward during the open call represent the closed universe of news businesses that must be considered as part of the exemption application. The operator will be required to publicize this open call for 60 days and must request that the CRTC publish the open call on its website. The operator must also publish a list of all respondents to the open call notice and request that the CRTC publish this list on its website.

In responding to the open call, news businesses will be asked to attest that they meet the eligibility criteria under section 27 of the Act, i.e. either (1) as a qualified Canadian journalism organization, as defined in subsection 248(1) of the Income Tax Act or as a licensed campus station, community station or native station by the CRTC under paragraph 9(1)(b) of the Broadcasting Act; (2) by producing news content of public interest that is primarily focused on matters of general interest; or (3) as an Indigenous news outlet that produces news content that includes matters of general interest.

Respondents to the open call must also attest that they operate a news outlet that is a subject of the bargaining process as set out in section 31 of the Act, meaning that it is operated exclusively for the purpose of producing news content or is an Indigenous news outlet, whose news content is made available by the platform, in order to be considered for the exemption by the CRTC. Finally, news businesses must also attest that their news content is made available on the platform in question.

The open call will help to define the number of news businesses and outlets that will participate in voluntary bargaining and ensure that the compensation supports news that is produced for the digital market. As such, platforms are not required to negotiate with or compensate news businesses that would not be eligible under the Act, and the attestation requirement adds certainty to the bargaining process.

Pathway to exemption

The Regulations outline a specific pathway to satisfy exemption requirements through an agreement with a single group or collective that agrees to represent the news businesses that came forward as part of the open call process. In this scenario, the platform would be required to negotiate a single agreement with a group that would then be responsible for distributing compensation to all news businesses that responded to the open call and wish to receive it as members of the group. Under section 10 of the Regulations, this agreement must satisfy the following:

If these conditions are met, the CRTC must interpret the agreement with the group as satisfying the conditions in subparagraphs 11(1)(a)(i) and (v) to (viii) of the Act.

By remaining open to all respondents of the open call process, the group allows all news businesses that have attested that they are eligible for the ability to receive compensation from the single agreement. Independent, Indigenous and OLMC news businesses will have an opportunity to receive compensation from an agreement, as long as they respond to the open call process and are part of the group. Compensation provided to the group of news businesses as part of an agreement will be distributed based on the number of full-time equivalent employees engaged in the production of original news content.

In this scenario, there is a cap on compensation for broadcasters. For the group of news outlets that are, or are part of, a broadcasting undertaking that carries on a programming undertaking, the share of total monetary compensation from an agreement cannot exceed 30%. The share of total monetary compensation for the Canadian Broadcasting Corporation (CBC/R-C) cannot exceed 7%. These caps ensure an appropriate distribution between broadcasters and the written press, reflecting the latter’s high dependence on digital platforms for distribution of their news content. The cap on CBC/R-C also reflects that it has supplementary funding in the form of parliamentary appropriations that help to finance the cost of producing news content.

The governance and administration of the single group of news businesses are a matter for that group’s determination, subject to regulation by the CRTC. The CRTC has the authority under paragraph 85(f) of the Act to regulate the formation and structure of a group of eligible news businesses, as well as the authority to regulate the manner in which they exercise their rights or privileges and carry out their obligations under the Act. The CRTC also has the authority under paragraph 85(g) to obtain information from news businesses on the structure of the group.

In addition to the specific pathway outlined in regulation and discussed above, a platform may apply for an exemption on the strength of multiple agreements which, taken as a whole, satisfy criteria set out in subparagraphs 11(1)(a)(i) to (viii) of the Act.

Fair compensation

The Regulations stipulate that an agreement is fair if compensation is comparable to the compensation received by other news businesses of comparable size, with a similar business model and similar capabilities that provide a similar type of news content to comparable markets and communities. A news business’s capabilities include the resources it employs to facilitate the production and distribution of news content for online consumption.

For an agreement with a single collective group, the CRTC must consider equitable distribution within that collective. Equitable distribution will be assessed according to the number of full-time equivalent employees engaged in the production of original news content employed by a news business over the previous calendar year.

Supporting news

This criterion requires all agreements with news businesses and groups of news businesses to include a commitment from news businesses to use a majority of the monetary compensation received from an agreement to support the production of local, regional and national news content. The intent is to ensure news businesses meaningfully reinvest these revenues in Canadian newsrooms.

Protecting editorial independence

Agreements with news businesses and groups of news businesses are required to include a commitment from platforms that (a) no retaliatory action will be taken in response to an editorial decision taken by a news business; (b) no restrictions will be placed on any effort by the news business to protect its journalistic independence; and c) no interventions will be made in a news business’s editorial process. These criteria ensure agreements uphold the principles of journalistic independence and freedom of expression.

Contribution to the sustainability of the Canadian news marketplace

The Regulations stipulate that, in assessing whether a platform has contributed to the sustainability of the Canadian news marketplace, the CRTC must determine the sufficiency of monetary compensation, including having regard to the platform’s share of the Canadian internet advertising market.

The Regulations are more specific in the special case of a digital platform that is the largest search engine in Canada, by advertising market share, to which the Act applies. In that case, the operator must provide at least Can$100 million of monetary compensation per year by way of one or multiple agreements with news businesses. The Regulations are clear that if the digital platform reaches this monetary threshold, then the CRTC must interpret the agreement(s) as contributing “to the sustainability of the Canadian news marketplace.” The amount of compensation is indexed to inflation via Statistics Canada’s published Consumer Price Index.

The Regulations clarify that the monetary contribution to fulfill the sustainability criterion does not preclude additional non-monetary contributions.

Regulatory development

Consultation

In the spring of 2021, Canadian Heritage initiated a phased approach to stakeholder engagement, beginning with targeted engagement with existing contacts and planned engagement activities with Indigenous organizations and partners. During the initial engagement, Canadian Heritage reached out to a variety of stakeholders within the Canadian news and information sector, including publishers, broadcasters, digital platforms, academics, unions, journalist associations and organizations representing the interests of racialized communities, official language minority communities (OLMCs), remote communities and persons with disabilities.

Stakeholders were asked to provide feedback on two approaches for how digital platform revenues could be shared more fairly with Canadian news media: (1) a mandatory code and arbitration regime; and (2) mandatory financial contributions from platforms distributed by an independent fund. Feedback provided by stakeholders were summarized in a “What We Heard” report. Following the release of the Report, Canadian Heritage began the next engagement phase by launching a public consultation where stakeholders and the public could comment on the Report and conclusions reached following the initial engagement phase.

The feedback Canadian Heritage received during the engagement was used to inform the design and objectives of the proposed regulatory approach. Following the conclusion of the public consultation, the Government announced intentions to proceed with developing a mandatory bargaining and final-offer arbitration approach.

Throughout the Parliamentary process, Canadian Heritage continued to engage with stakeholders on the application and exemption sections of the Act to gain feedback to incorporate in the drafting of the regulatory framework.

The largest digital platforms expressed concerns about the Act and the Regulations. On June 29, Google announced that once the law took effect, it would need to remove links to Canadian news from its Search, News, and Discover products and would no longer be able to operate Google News Showcase in Canada. On July 18, Meta announced that in response to the Act, content from global news outlets, including news publishers and broadcasters, would not be available to people accessing Facebook and Instagram in Canada. The news blockage came into effect in August.

Prepublication results

The proposed Regulations were published in the Canada Gazette, Part I, on September 2, 2023, followed by a 30-day comment period. The Government received feedback from approximately 100 commenters. They raised questions about specific metrics and criteria laid out in the draft Regulations, including key aspects of the framework listed below. Google, the largest platform to provide feedback to the Regulations, indicated a number of core issues that might not be resolved through the Regulations, and that might, in Google’s view, require legislative changes.

Notification period

Google expressed concern that they could be subjected to the mandatory bargaining and final offer arbitration process prior to reaching the voluntary agreements needed to apply for an exemption. The notification period was extended from 30 days to 180 days to allow platforms time to bargain with news businesses and to prepare a request for exemption without being subject to mandatory bargaining and final offer arbitration.

Definition of compensation

Large and small news businesses raised concerns about the scope and definition of non-monetary contributions included in compensation agreements, and requested some clarity about how non-monetary contributions would be evaluated. While platforms may offer additional non-monetary considerations, a baseline financial contribution is established through these Regulations. Under the pathway with a single collective, compensation is entirely monetary, pre-empting any dispute over the value of non-monetary considerations.

Google sought clarity that compensation provided under the bargaining framework under the Act could not be interpreted as a so-called “link tax.” In response, clarifications were added in sections 6 and 10 of the Regulations to clarify that agreements need not include any consideration for merely facilitating access to news content in a manner that would fall under a limitation or exception in the Copyright Act.

Imbalance factors

News businesses raised concerns about the measurement of and fluctuations in unique visitor data. One stakeholder suggested that the threshold of 20 million users is too high for the Canadian marketplace, and another suggested that the threshold of 20 million monthly users be reviewed every three years to keep pace with changes in the digital news ecosystem. In the end, no changes were made to the imbalance factors laid out in the draft Regulations, with the understanding that the digital news marketplace is constantly changing and that these metrics could be revisited during the Ministerial review required in section 87 of the Act.

Open call process

Independent news businesses shared concerns about how their relatively limited resources and lack of sector-wide information could negatively impact their ability to participate in the bargaining process. As part of the open call process, the Regulations now require platforms to publish a list of respondents to the open call process (and request that the CRTC do the same on its website) so that all parties have full information about which businesses are intending to participate in the bargaining process.

Fair compensation

The draft Regulations stipulated that the CRTC must interpret agreements as providing fair compensation if the relative compensation in each agreement submitted by the operator as part of its request for exemption was within 20% of the average relative compensation for all agreements, where relative compensation was defined as the ratio of compensation relative to the number of full-time equivalent journalists paid by a news business. Stakeholders raised concerns that a 20% variation would provide too wide a range among agreements. There were also concerns raised about how to operationalize the 20% range prior to the end of the bargaining process, and whether early agreements would need to be renegotiated if later agreements significantly skewed the average relative compensation figure. News sector stakeholders also raised questions about the definition of “journalist” in the relative compensation definition. Several independent news businesses requested that freelancers be included in the assessment of full-time equivalent journalists.

In response, the 20% range requirement has been replaced by a more flexible standard that the CRTC can use to assess whether compensation in an agreement is fair for the purposes of the exemption process. Under the final Regulations, an agreement is deemed fair if compensation is comparable to the compensation received by other news businesses of comparable size, market, and technical capabilities. A news business’s technical capabilities are the resources it employs to facilitate the production and distribution of news content for online consumption.

For an agreement with a single collective, the CRTC must consider equitable distribution within that collective. Equitable distribution will be assessed according to the number of full-time equivalent employees of a news business over the previous calendar year to produce news content that is intended to be made available online.

Appropriate portion

The draft Regulations required that, in their agreements with digital platforms, news businesses commit to spending a portion of compensation for the production of local, regional, and national news content. Several stakeholders asked for a clearer definition of appropriate portion, and a link between compensation received and journalism expenditures. Some made the counterargument that marketing, business intelligence and online engagement are all key aspects of contemporary digital journalism and should be considered legitimate newsroom expenditures. The revised Regulations clarify that agreements must include a commitment by the news businesses or group of news businesses to use a majority of the compensation provided to support the production of local, regional and national news content, but do not provide an exhaustive list of what activities are included within the scope of the production of news content. This gives news businesses the flexibility to decide how to support the production of news, including by investing in equipment or developing online engagement strategies.

Sustainability

Google stated that the sustainability formula in the draft Regulations represented a floor rather than a ceiling and exposed the company to unlimited financial liability. Several news sector stakeholders shared the concern about uncapped liability and described the negative impact that Google’s withdrawal from Canada’s news marketplace would have on their businesses. Both Google and news businesses viewed the inputs for the variables in the formula as ambiguous thereby creating uncertainty about the amount of financial contribution needed to meet the sustainability criterion. The sustainability formula has been removed from the Regulations and replaced with the broader criterion that the CRTC must consider the digital platform’s share of Canadian Internet advertising revenues. It is expected that the share of this market can be established by reference to available market analytics.

In order to create stability and predictability, and to ensure Google’s continued participation in the Canadian online news marketplace, a separate provision was made for the largest search engine (in terms of Canadian Internet advertising revenues). The largest search engine can meet the sustainability criterion by providing $100 million in monetary compensation, without precluding that search engine from offering additional non-monetary contributions. This represents a meaningful contribution to the news ecosystem, in line with the contributions the platform has made in other jurisdictions, while also responding to Google’s concerns about certainty, and uncapped financial liability.

Modern treaty obligations and Indigenous engagement and consultation

The initial assessment of modern treaty implications examined the geographical scope and subject matter of the initiative in relation to modern treaties in effect and did not identify any potential modern treaty implications or duty to consult with any Indigenous rights holders.

While the Regulations do not have any treaty implications that triggers a duty to consult, the Nunavut Land Claims Agreement states that “Inuit have the right … to participate in the development of social and cultural policies, and in the design of social and cultural programs and services, including their method of delivery, within the Nunavut Settlement Area” (section 32.1.1). As legislation implementing a bargaining framework for news businesses will impact the Canadian North, Canadian Heritage engaged Nunavut Tunngavik Incorporated (NTI) during the development process of the legislation and regulatory framework to ensure that the provisions of the Nunavut Land Claims Agreement are honoured.

Prior to introducing legislation, Canadian Heritage engaged with Indigenous organizations and news businesses during the development phase of the Act to hear more about their unique needs and perspectives in relation to the news media ecosystem. In January 2022, Canadian Heritage contracted a facilitator who conducted a series of roundtables with Indigenous news businesses and organizations. The sessions revealed a general support for measures within the news media ecosystem that could provide publishers with increased funding. Participants highlighted barriers that could stymie their ability to benefit from the proposed regime, including limited financial and human resources. They expressed concerns about how this might hinder negotiating and collective bargaining in particular. There were also concerns about the regime being implemented by a regulator without consideration or representation of Indigenous voices.

The issues raised by and on behalf of Indigenous peoples are particularly important and were considered in developing the Act. Engagement with Indigenous publishers continued as the Act proceeded through the Parliamentary process. Definitions and an exemption criterion relating to Indigenous news were proposed by Indigenous stakeholders and added to the Act.

Indigenous news businesses may face resource barriers to negotiating with digital platforms. Provisions in the Act and Regulations serve to mitigate potential power imbalances by allowing collectives of news businesses to pool resources and encourage digital platforms to reach agreements those collectives in order to obtain an exemption.

During the prepublication period, Canadian Heritage received insights on the experiences of Indigenous news businesses within the digital news marketplace and collected specific feedback on the proposed Regulations. Many Indigenous stakeholders raised concerns about the impact that the withdrawal of large digital platforms could have on the ability of their communities to access and share news. This concern was at the forefront during the revisions of the Regulations, in order to ensure the continued participation of large digital platforms in the Canadian news marketplace.

Canada has committed to a renewed, nation-to-nation relationship with Indigenous peoples based on recognition of rights, respect, cooperation, and partnership. In line with this commitment, Canadian Heritage continues to engage with Indigenous publishers and National Indigenous organizations to ensure Indigenous perspectives are reflected in future legislative, regulatory and programming initiatives for the Canadian news sector.

Instrument choice

The Regulations were chosen to ensure clarity and effectiveness during the implementation of the application, notification, and exemption sections of the Act.

Section 6: Bargaining imbalance test metrics

Clear thresholds were chosen for the bargaining test in the application section to provide platforms with an objective set of criteria to assess their eligibility to the Act. Total global revenue was selected as a metric to scope in large digital platforms to the Act. The threshold amount of Can$1 billion was chosen as it aligned with the revenue threshold proposed in Canada’s Digital Services Tax and follows similar regulatory thresholds used internationally including the European Union’s Digital Markets Act.

Monthly unique visitors (MUV) were selected as a metric to measure site traffic for search engine platforms and monthly active users (MAU) were selected for social media platforms as both metrics are widely used across digital services industries and both metrics attempt to mitigate the risk of double-counting visitors present in other metrics such as total site views. There is not currently an industry standard for defining and calculating “monthly active users.” MAU is calculated using internal business data and can be defined differently across platforms. MUV is commonly calculated by measuring the number of unique visitors to a site within a specific period.

The threshold of 20 million visitors and users was chosen to ensure platforms that are visited by a significant portion of the Canadian digital audience will be subject to the Act.

Section 7: Duty to notify timeframe

A 180-day timeframe was chosen for the notification section to allow digital platforms to voluntarily sign deals with news businesses and seek an exemption without being subject to mandatory bargaining and final offer arbitration.

Section 11: Exemption criteria

The exemption Regulations use both qualitative and quantitative criteria to reflect the legislative factors prescribed in the exemption section of the Act. Criteria using only qualitative factors were considered but presented the risk that the criteria would not reflect the full intent of the legislative principles set out in the Act. Metrics used in the regulatory criteria were chosen based on information available on the digital news landscape in Canada.

Regulatory analysis

Benefits and costs

Cost benefit analysis measures impacts as incremental differences between forecasted outcomes without the regulatory framework (baseline scenario) versus with it (regulatory scenario). This allows a focus on results that are directly attributable to the Regulations versus unrelated ones. Costs of the Regulations include both incremental resources committed to achieving the desired outcome and the opportunity cost of alternative uses of those resources.

Baseline scenario

In the absence of the GIC Regulations, the CRTC would have to commit additional resources to collect information on the news market and develop regulations related to the legislative criteria presently in the application, notification, and exemptions sections of the Act. This process could delay the implementation of the Act at a time of crisis in the news sector, potentially undermining the Act’s effectiveness in supporting the Canadian news ecosystem.

Regulatory scenario

Under the GIC regulatory framework, the CRTC will require fewer resources to develop its own regulatory process. This regulatory scenario will also result in a shorter timeline to reaching agreements, reducing uncertainty and costs for all parties.

Costs

Compliance with the Regulations entails a cost to both digital platforms and the CRTC. The costs for platforms to negotiate with news businesses and to engage with the CRTC are expected to be less than $1 million annually.

Digital platforms will need to designate resources to carry out internal assessments and notify the CRTC about whether the Act applies to them. For example, platforms will notify the CRTC about whether their number of monthly active users meets the threshold laid out in section 2 of the Regulations. These costs are anticipated to be low and are outlined in the administrative burden section below.

The costs to the CRTC include those related to implementing the Regulations. This could include interacting with the platforms during the self-notification period (when platforms will notify the CRTC that they meet the criteria outlined in the Regulations) and open call process (when platforms will request that the CRTC publish the open call notification and list of respondents on its own website). These costs are expected to be modest. The CRTC may also be called upon to make decisions about the manner in which groups of news businesses, including the single collective, are structured and the manner in which they operate. However, as this falls under their regulatory authority in paragraph 85(f) of the Act, these Regulations do not impose an additional burden in that respect.

Benefits

The Regulations will provide clarity to all parties affected by the Act, including the CRTC, large digital platforms, and news businesses operating in Canada. The regulatory framework clarifies which digital platforms will be included in the Act, when they need to notify the CRTC, and how they can meet the criteria for exemption from mandatory bargaining and final offer arbitration. The regulatory framework also provides the CRTC with details about how to implement the legislative criteria for the application and exemption components of the Act. Finally, the Regulations, by laying out timelines for notification and criteria for exemption, also inform news businesses about which platforms will be included in the Act, the types of agreements platforms will be seeking, and when they may be able to reach out to platforms to express interest in bargaining.

Anticipated benefits for parties are described hereafter.

Addressing bargaining imbalances between digital platforms and news businesses

The application factors aim to ensure digital platforms with the largest power imbalances within the news sector are subject to the Act. Eligible news businesses will then have opportunities to receive fair compensation for the news content they produce.

Providing clarity on platform application

The Regulations provide clarity to digital platforms on whether they are subject to the Act and on the specific notification timeline to inform the CRTC.

Supporting Canadian news businesses

By establishing an appropriate bar for contributing to the sustainability of the Canadian news sector, the Regulations ensure that news businesses receive compensation for the online news content they produce. The appropriate portion criterion ensures that the majority of that compensation goes towards supporting local, regional, and national news production.

Promoting diversity within the news sector

Section 11 of the Act stipulates that, to be eligible for an exemption, agreements must benefit a significant portion of Indigenous news outlets and official language minority community news outlets. Agreements must also involve a range of news outlets of different sizes and business models that offer services to a variety of markets across the country. The Regulations offer a path to exemption that keeps the door open to all news businesses that respond to the open call process, ensuring that no eligible news business is left out of an agreement.

Small business lens

Analysis under the small business lens concluded that the Regulations will not impose administrative or compliance requirements on Canadian small businesses.

The Regulations target large digital platforms. However, there may be indirect impacts on smaller news businesses hoping to benefit from agreements with platforms. Smaller news businesses may have limited resources to engage in negotiations with digital platforms. To limit negative impacts on smaller news businesses, the Regulations require that digital platforms publicly solicit applications of interest in pursuing negotiations and publish a list of respondents. Promoting awareness about the negotiations among businesses of all sizes helps promote fairness.

The Regulations encourage platforms to bargain with collectives of news businesses. For small news businesses that may have limited resources to engage in negotiations, the opportunity to pool resources and bargain via a larger collective presents a greater opportunity to benefit from the bargaining framework laid out in the Act.

One-for-one rule

The one-for-one rule applies since there will be an incremental increase in administrative burden on business, and a new regulatory title (Online News Act Application and Exemption Regulations) will be introduced.

Section 7: Duty to notify

These Regulations entail an administrative burden on platforms by requiring them to self-identify to the CRTC, as per the notification section of the Act. This requires platforms to verify whether they meet the criteria established in the application section.

The administrative burden posed by collecting the required information for the application section is expected to be small, as it requires information that is readily available to platforms.

This costing exercise was based on the following assumptions:

Section 11: Exemption order

The Act provides the CRTC the authority to grant an exemption to platforms that reach an agreement with news businesses, provided certain conditions (as outlined in section 11 of the Act) are met. The Regulations lay out a path to exemption that involves reaching an agreement with an open-membership group of news businesses. Whether the platform takes the path of multiple agreements or a single agreement with an open-membership group, the administrative burden involves collecting information about the agreement(s) and notifying the CRTC that the exemption criteria have been met through the agreement(s). The cost estimate of this administrative burden is estimated based on the following assumptions:

The total annualized administrative cost for completing both tasks related to the notification and exemption sections described above is estimated to be $801.00 (2012 Canadian dollars, a 7% discount rate over a 10-year period, and a 2012 present value base year) and the annualized administrative cost per business is estimated to be $400.60.

Regulatory cooperation and alignment

The Regulations are not related to a work plan or commitment under a formal regulatory cooperation forum. The Regulations themselves do not directly regulate platforms. Rather, they provide details to inform the CRTC on the regulation of the application, notification, and exemption sections of the Act. As an independent regulator, the CRTC will develop and issue further regulations that apply directly to platforms for those respective sections of the Act.

The CRTC may regulate the following areas:

This type of relationship between the regulator and Cabinet is specific to the federal legislative and machinery context of Canada and, as such, alignment of this specific instrument to other jurisdictions is not directly applicable. However, given that the Regulations provide details to the CRTC regarding the application of a broader regulatory regime to platforms within the news sector, analysis on how Canada’s general approach to news regulation compares to other jurisdictions is still relevant.

Linkages to international agreements

At this time, it is expected that the Regulations will scope in only major United States search engines and social media platforms offering their services in Canada that meet the thresholds set out in the application section. It is expected that some stakeholders may believe that the regulatory framework engages Canada’s commitments under the Canada–United States–Mexico Agreement (CUSMA). The Government has considered its commitments and developed the proposal in a way consistent with them.

Alignment with other jurisdictions

The Act builds on international approaches that have succeeded in achieving fair compensation for news media. International examples of intervention in this space have primarily focused on ensuring platforms compensate news media for content. Jurisdictions including Australia, the European Commission, Spain, and the United Kingdom have sought to enact legislation and regulatory codes involving the news sector. The example of the News Media Bargaining Code in Australia illustrates how legislation can have a positive impact on the health of the online news ecosystem. One research report showed that journalism job advertisement numbers increased 46% after their mandatory bargaining code was introduced.

In December 2022, New Zealand announced intentions to introduce a bargaining code which, similar to the Online News Act, would incentivize voluntary agreements between digital platforms and local news outlets. In the United States, California recently introduced the California Journalism Competition and Preservation Act which if approved, would direct large digital companies to pay news outlets a “journalism usage fee” when they sell advertising alongside news content.

The policy approach taken by Canada is modelled most closely on the Australian approach, which, thus far, has resulted in deals that represent a meaningful amount of editorial expenses. There are, however, notable differences between the Australian approach and the proposed regulatory approach. The Australian approach allows the Minister to designate which digital platforms are captured in the Act. Canada’s approach to designating which platforms are captured in the Act is based on establishing clear criteria in the application section. In the Australian approach, exemptions are granted by the Minister following the determination that a digital platform has significantly contributed to the sustainability of the Australian news industry. The exemption process in Canada’s proposal is novel and based on regulatory criteria set in the GIC Regulations. These GIC Regulations provide details to the CRTC about the interpretation of the exemption section of the Act. Lastly, the bargaining framework in the Australian model is set out in legislation. In the Online News Act, the framework would be set out in regulations made by the CRTC and directed by a timeline established in the Act.

Strategic environmental assessment

A strategic environmental assessment preliminary scan concluded that this regulatory framework, which is administrative in nature, does not generate environmental effects. A detailed analysis was deemed not to be required. Subject to the Prime Minister’s prerogative over the machinery of government, the Regulations will largely be implemented by the CRTC, an administrative tribunal that regulates and supervises Canadian broadcasting and telecommunications. The CRTC’s plans, programs and policies are not subject to strategic environmental assessments.

Gender-based analysis plus

Newsrooms that reflect population diversity are more likely to produce news content that reflects the social and political concerns of all Canadians, but research shows that newsrooms continue to not be representative of the racial diversity of the communities they serve, particularly in smaller local markets.

An annual national survey conducted by the Canadian Association of Journalists reports that in 2022, 8 out of 10 Canadian newsrooms do not have Latin, Middle Eastern or mixed-race journalists on staff. Furthermore, 77% of newsrooms report having no visible minorities or Indigenous people in the top three leadership roles in newsrooms. Most Black, Indigenous, Middle Eastern, Latin, and mixed-race journalists are employed by a handful of large newsrooms and are further underrepresented within smaller newsrooms. The same study found that over half of Black, Middle Eastern and Latin journalists work at CBC or Radio-Canada (55% of Middle Eastern journalists, 51% of Latin journalists and 62% of Black journalists). Of the Indigenous journalists who responded to the survey, 63% of them are employed at CBC or the Aboriginal Peoples Television Network.

While women, trans, and non-binary people are employed in journalism at rates on par with census population data, they tend to be overrepresented in part-time and internship roles. Studies have also shown that when persons with disabilities are employed in the news sector, they are at increased risk of losing their job if the news sector downsizes.

During consultations held in advance of tabling the Act, stakeholders raised concerns that this regime could create outcomes more favourable to larger national news businesses that have more bargaining power. Smaller news businesses that often serve specific communities (e.g. Indigenous, local, and ethnic communities, OLMCs) raised concerns that they might benefit less than larger businesses. The exemption criteria under Section 11 of the Act address these concerns by ensuring that agreements commit support to news businesses that are diverse in terms of size, business model, language, communities served and geographical area. Section 10 of the Regulations requires that, if a digital platform enters into an agreement with a single group of news businesses, this group must distribute compensation equitably within the group, and it must remain open to all respondents to the open call process. This ensures that news businesses of all types are able to derive some benefit from the agreement.

The application section and notification section of the Act have a neutral impact across different populations, as these sections pertain to providing greater clarity in identifying to which digital platforms the Act applies. Regulations in either section only directly impact digital platforms and will not have either a positive or negative impact on unrepresented communities or equity seeking groups.

The legislative criteria in the exemption section of the Act stipulate that agreements meet key requirements, including committing compensation to support local, regional, and national news content, contributing to the sustainability of the Canadian news sector, and ensuring agreements contribute to the sustainability of outlets that provide services to Canada’s diverse communities. The regulatory framework establishes criteria for the CRTC to assess whether agreements meet the legislative requirements in the exemption section and provides digital platforms with the necessary information to seek out agreements with Canadian news publishers. Specifically, in the case of an agreement with a group described in section 10 of the Regulations, any eligible news business that responds to the open call may benefit from funds distributed through an agreement with a platform. This reduces barriers to participation for smaller news businesses that otherwise may not have been able to negotiate directly with a platform. Subsequently, Canadians from underrepresented groups and equity seeking populations may benefit from the increased funds that news businesses receive.

The absence of agreements between digital platforms and news businesses would likely have negative impacts on equity-deserving communities because of the continued downsizing of newsrooms within the sector. Regulations can positively impact the issue of representation within the news sector.

Annual surveys on newsroom diversity, such as that undertaken by the Canadian Association of Journalists, provide an opportunity for Canadian Heritage to monitor any gender-based analysis plus (GBA+) impacts of the Regulations.

Implementation, compliance and enforcement, and service standards

Implementation

The Regulations come into force 180 days after the day on which the Online News Act received royal assent. The CRTC is responsible for determining how to implement the detailed interpretation provided in the regulatory framework and is required to hold public consultations to determine whether news agreements between digital platforms and news businesses meet the requirements of the exemption criteria. It is anticipated the CRTC will begin public consultations on its regulatory approach in the near future.

Compliance and enforcement

The Act prescribes the powers and scope of the CRTC in enforcing the regulatory framework. Digital platforms are required to provide information to the CRTC if requested for the purpose of verifying whether a digital platform has followed the requirements outlined in the notification section. In instances where a platform meets the requirements of the application section but does not notify, the CRTC can issue a notice of violation to a platform requesting compliance and informing the intermediary of the proposed monetary penalty if the platform does not comply.

The CRTC may issue an interim exemption order if a platform has met conditions prescribed in the Interim Order section of the Act. The CRTC can review exemption and interim exemption orders and repeal such an order if the circumstances satisfy the conditions prescribed in the review section of the Act. The CRTC is required to publish on its website any issuance or repeal of an exemption or interim exemption order and the for the decision.

Contact

Amy Awad
Director General
Digital and Creative Marketplace Frameworks Branch
Department of Canadian Heritage
25 Eddy Street
Gatineau, Quebec
K1A 0M5
Email: reglementsnouvellesenligne-onlinenewsactregulations@pch.gc.ca