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Yesterday, the federal government tried to smooth things over with tech giants by offering them an exemption from the Online News Act, a contentious new law that requires Google and Meta to pay up for carrying links to news articles. For a price tag of $234 million, that is.
It didn’t go well. Google is yet to respond publicly, while Meta said the deal isn’t enough to restore Canadians’ access to news on its platforms. In fact, independent tracking firms have found the news ban has, so far, had almost no impact on Canadians’ usage of Facebook.
In light of the continued showdown between tech giants and the feds, Ricard Gil, a professor at the Smith School of Business, joined us on Free Lunch by The Peak to explain how a similar scenario played out in Spain over a decade ago (hint: it did not end well).
Why should big tech pay for news content?
“News outlets are struggling, and meanwhile big tech companies are racking up billions of dollars in ad revenue. Whenever you see a drop in one place and an increase in another, you tend to make a causal link. There are some claims that Big Tech is benefiting from content that is created by news media, and that news media should be compensated.”
What challenges does this law present?
“The number of news links on these platforms is extremely hard to count. You need an agency that has to monitor that, somehow, and makes sure that money changes hands. The government wants to let these big tech companies sit down with each one of these news publishers to figure that out, but that imposes a monstrous cost on everybody involved.”
How has this played out in other countries?
“There’s no Google News in Spain because of similar laws. When that happened, outlets saw an immediate drop in traffic between 8%-20%. Eventually, the bigger guys came out okay, but the smaller guys have been hurt the most. What I’m afraid of in Canada, is that smaller outlets, which rely on referral traffic, just aren’t going to be around in 10, 20 years.”
This interview has been edited for clarity and length. Listen to the full conversation here.