Canada tries to address news law concerns, Facebook not convinced

A 3D printed Facebook's new rebrand logo Meta is seen in front of displayed Google logo in this illustration

By Ismail Shakil and David Ljunggren

OTTAWA (Reuters) - Canada unveiled draft rules on Friday for a law to compel internet giants to pay news outlets, saying it was addressing the tech companies' concerns, but Facebook said it would stick to plans to block news in the country.

Canada said the draft rules, designed to implement the recently-passed Online News Act, would address worries at Alphabet's Google and Facebook-parent Meta that they could face an uncapped liability.

"The regulatory process is not equipped to address the fundamentally flawed premise of the Online News Act ... today's proposed regulations will not impact our business decision to end news availability in Canada," Rachel Curran, Meta Canada's head of public policy, said in a statement.

Canada's Online News Act, part of a global trend to make internet giants pay for news, became law in June and is expected to come into effect in December after rules are finalized.

The legislation came after complaints from Canada's media industry, which wants tighter regulation of tech companies to prevent them from elbowing news businesses out of the online advertising market.

Both Google and Facebook have said the law is unworkable for their businesses, and Meta ended news sharing on its platforms in Canada last month.

A spokesperson for Google said the company was reviewing the proposed regulations "to assess whether they resolve the serious structural issues" with the law.

According to the draft regulations, companies would need to voluntarily negotiate deals with news publishers and pay a portion of their global revenues, based on a set calculation.

The draft proposals are expected to raise C$172 million ($126.6 million) per year from Google and about C$60 million per year from Facebook, a government official said.

Meta's revenue last year was about $117 billion, or about $320 million a day. Its decision to block news links in Canada has had almost no impact on Canadians' usage of Facebook, according to data from independent tracking firms.

If companies do not meet a payments threshold through voluntary deals, they may have to go through mandatory bargaining overseen by the Canadian Radio-television and Telecommunications Commission (CRTC).

Government officials in a briefing side-stepped questions about what would happen if companies blocked news on their platforms and did not participate in negotiations at all.

"The position of the Canadian government is that in light of that dominant position that they occupy in terms of being that gatekeeper to content, there is a responsibility on their part to come forward and bargain fairly with us," an official said.

The Canadian regulator responsible said last week that it would start setting up a framework for negotiations between news organizations and internet giants this autumn, with the aim of initiating mandatory bargaining by early 2025.

The draft rules allow for both monetary and non-monetary contributions to news businesses and consideration of pre-existing deals.

Any agreements that Google and Facebook reach must also cover independent local, Indigenous and official language minority community news businesses, according to the draft regulations.

($1 = 1.3583 Canadian dollars)

(Reporting by Ismail Shakil and David Ljunggren in Ottawa; Additional reporting by Katie Paul; Editing by Mark Porter and Mark Potter)