A Tale of Two Copyrights

Registration of AI-Generated Works in the United States and Canada: A Comparison

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Human Creation

The question of whether works that are generated in whole or in part by Artificial Intelligence (AI) should enjoy copyright protection is a hot topic at the moment. It is wrapped up in the question of who can claim the protection of copyright. As we learned from the Monkey Selfie case, in the US the holder of a copyright must be a human, which has obvious implications for works created by AI where there is no or minimal human engagement. That is generally true everywhere although UK copyright law has a limited exception. [i] Although humans could use AI to assist them in creating a work, yet still retain creative control, when AI is introduced into the creative process the question arises as to whether there is sufficient human creativity in the work to qualify for copyright protection.

Optional Registration

The question is further complicated by the nature of how copyright is established. Under the Berne Convention, to which 181 countries have acceded, copyright is established automatically when three fundamental conditions are met; the work is original (not copied from another work), when it is the expression of an idea, i.e expressing creativity (rather than the idea itself) and it is fixed in some material form. It is not necessary that it be registered, as used to be the case in the early days of copyright and until 1989 in the US, when the United States joined the Berne Convention. However, in both the US and Canada, registration is possible as a voluntary option. (In the US it is required if legal action is to be brought in an infringement case). The advantage of registration is additional proof that a creator owns the copyright in a particular work, although registration and receipt of a certificate is no guarantee that the copyright will not be challenged or that it is not infringing on the rights of another copyright holder. Those issues must be decided in a court of law. Nonetheless, registration could help clarify whether AI generated works qualify for copyright protection. That is certainly the case in the United States; in Canada not so much.

Situation in the US

When we put the two requirements of human creativity and registration together, we face the possibility that registration could be denied because the work was created not by a person but instead by an autonomous AI program. That issue has played out recently in two cases in the US where the authors of works using generative AI were seeking copyright registration from the US Copyright Office (USCO). In the first, the case of Stephen Thaler and his self-described “Creativity Machine”, Thaler sought to register a work of art he claimed was created entirely by his machine. I wrote about this case last year in a blog post titled “The Humanity of Copyright”. Thaler first tried to register the work, a two dimensional image called “A Recent Entrance to Paradise”, back in 2018. He was refused and appealed through various channels. His final appeal was dismissed in August of this year by the US Court for the District of Columbia.

The most recent unsuccessful attempt to register an AI generated work with the USCO was a request by artist Jason M. Allen for a copyright covering an award-winning image he created with the generative AI program Midjourney. As reported by the Verge, Allen shook up the art world last year by submitting his AI generated work “Theatre d’Opera Spatial” to the Colorado State Fair fine arts competition in the “Digital Arts / Digitally-Manipulated Photography” category, winning first prize. In his appeal of the USCO’s initial rejection of his copyright registration application, Allen told the Copyright Review Panel that he input over 600 text prompts to arrive at the initial version of the image using the Midjourney program, with the images later altered with Adobe Photoshop. But the USCO wasn’t buying it. The Board’s rejection letter states, “when an AI technology receives solely a prompt from a human and produces complex written, visual, or musical works in response, the ‘traditional elements of authorship’ are determined and executed by the technology—not the human user.”

As a result, the Review Board, concluded, ;

“…the Work contains more than a de minimis amount of AI generated content, which must be disclaimed in an application for registration. Because Mr. Allen has refused to disclaim the material produced by AI, the Work cannot be registered as submitted.”

That decision could not be clearer nor better substantiated. See the full 9 page ruling (here). Works of non-human authorship, including those produced by generative AI programs with minimal human intervention, are not subject to copyright protection and cannot be registered with the US Copyright Office.

The Canadian Experience

Now let’s compare the situation in Canada, where copyright registration is handled by the Canadian Intellectual Property Office (CIPO), an agency of the Department of Innovation, Science and Economic Development. CIPO doesn’t actually care what is in a copyright application, nor does it examine a registration application or keep any record of what the application contained other than the title and brief description of the work. As a result, an AI generated work can be, and has been, accorded Canadian copyright registration as I demonstrated with my application for registration of a piece of AI generated doggerel produced by ChatGPT accompanied by an image produced by the AI program DALL-E-2. (“Canadian Copyright Registration for my 100 Percent AI-Generated Work”).

You can read about it through the preceding link, but suffice to say that I submitted a request for copyright registration for a work titled, “Sunset Serenity”, being “an image and poem about sunset at an Ontario lake created entirely by AI programs DALL-E2 (Image) and ChatGPT (Poem) on the basis of prompts demonstrating minimal skill and judgement on the part of the human claiming copyright”. I inserted the phrase about “skill and judgement” as these are supposed to be the criteria by which originality is determined in Canada, according to the Supreme Court of Canada ruling in 2004 in CCH Canadian Ltd. v. Law Society of Upper Canada. I had exercised almost no skill and judgement, except to make two prompts and two choices (DALL E2 provided me with 4 images to chose from in response to my request for it to generate an image of me on the cottage dock at sunset, and ChatGPT generated several poems when I asked for a poem in  “in iambic pentameter involving watching the sun set over a lake in northern Ontario while I sit in a Muskoka chair at my dock sipping on a cool drink, listening to the haunting cry of the loon”. I chose the least worst one.  You can enjoy this now-copyright registered work here. And I have a nicely designed Copyright Certificate of Registration no. 1201819, dated April 11, 2023, produced on parchment paper, that I can use to adorn my office wall. (Or I could sell it on eBay).

It seems we have a situation that I could call, “A Tale of Two Copyrights” where the US Copyright Office goes to inordinate length to determine if AI generated content is included in a work submitted for registration, and denies registration for those parts of the work that are based on AI, yet the Canadian Intellectual Property Office is perfectly happy to issue a registration certificate for a work that by its own admission meets neither the requirement of originality nor human creation. The fact that no copy of the work is either submitted or retained also undermines the utility of the process as I discussed in a blog over a copyright dispute regarding who owned the name to the Okanagan Lake cryptid, the Ogogopo. Even though the Copyright Office had issued a certificate in 1953 for “an unpublished artistic and literary work entitled Ogopogo”, nobody living had a clue as to what it purported to protect. It does make one wonder what the point is of copyright registration in Canada if no effort is made to examine the bona fides of the work or to keep a copy on file.

What is the Utility of a Canadian Copyright Certificate?

It has been put to me that I shouldn’t be stirring up this pot lest the CIPO suddenly bestir itself and start taking copyright seriously by actually examining requests. That could push up the $50 fee and make it a bit more complicated to get a certificate. I would note, however, that the fee for filing a copyright request with the US Copyright Office is only US$45 for online filing for a “Single Application (single author, same claimant, one work, not for hire)”.  If you want a paper filing, it will cost more. With CIPO, online filing is the only option. There is no question that filing a Canadian copyright application is simpler, but is it worth the expensive paper that it is printed on?

But what if we look at it from another angle. Under the Berne Convention to which both Canada and the US are parties, copyright protection is reciprocal and based on national treatment. Works originating in one of the Contracting States (that is, works the author of which is a national of such a State or works first published in such a State) must be given the same protection in each of the other Contracting States as the latter grants to the works of its own nationals (principle of “national treatment”). Should Stephen Thaler and Jason Allen have first published and registered their works in Canada, and then sought reciprocal treatment in the US? I guarantee they would have received a bona fide copyright registration certificate from CIPO. Unfortunately, under the principle of national treatment, the US is obliged only to provide them with the same level of copyright protection as they would have received had they registered, or attempted to register, in the United States.

Whether the protection in Canada actually covers AI generated works is still an open question, despite my copyright certificate No. 1201819. In the US clarity reigns; in Canada, confusion and ambiguity.

© Hugh Stephens 2023. All Rights Reserved.

This post has been updated to correct the reference initially made to the national treatment provision of the Berne Convention.

[i]  Under the Copyright, Designs and Patents Act, 1988, there is a provision (Section 178) that states computer generated works are works “generated by computer in circumstances such that there is no human author of the work”. These works are currently provided with a more limited term of copyright protection (50 years from the date of creation) as opposed to the standard life plus 70 years provided to works made solely by human authors or authors assisted by AI. (The rights-holder for a fully computer-generated work is “the person by whom the arrangements necessary for the creation of the work are undertaken” even though that person played no creative role.)

UK Parliamentary Committee Shoots Down Copyright Exemption for AI Developers–But is it Really Dead?

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The all-party Culture, Media and Sport Committee of the British House of Commons has just (August 30) issued a welcome report condemning plans announced by Britain’s Intellectual Property Office (IPO) in June of 2022 to create a limitless copyright exemption to enable tech companies to develop artificial intelligence (AI) applications without having to obtain permission from rights holders or to acquire a licence. I commented on the IPO’s recommendations in a blog post back in November (“Britain’s Proposed Approach to Text and Data Mining (TDM) for AI: How Not to do It (A Lesson for Canada and Others”), calling it “nothing short of outrageous”. The UKIPO’s proposal meant throwing the British cultural community under the bus in a misguided attempt to make Britain more attractive than the EU for AI developers by making the British Text and Data Mining (TDM) exception broader and less restrictive than the one that exists currently in EU law (which allows TDM only for non-commercial research purposes).  All this supposedly in the name of promoting innovation. To me this reeked of one more desperate attempt to show that Brexit was not the colossal mistake that it clearly was. The IPO claimed (at para. 60) “These changes make the most of the greater flexibilities following Brexit. They will help make the UK more competitive as a location for firms doing data mining.”

It would be an understatement to say that the IPO’s announcement that the government had “decided” to introduce a new copyright and database right exception to allow permissionless TDM for any purpose set off a furor. It was vigorously attacked by various British cultural industries, from publishing to music to film-making. The CEO of UK Music, Jamie Njoku-Goodwin, called the IPO’s proposals “a green light for music laundering”. While boosters of Britain as an innovation hub played up all the “jobs of the future” that would (maybe) be created, they seem to have forgotten that cultural industries contributed £115 billion in 2021 to the British economy, employing over 2 million people while being a significant source of exports as well as “softpower”. In the face of the furious reaction from many quarters (which, frankly, the government should have anticipated), earlier this year it was finally announced that the proposal had been shelved.  The IPO’s ill-conceived proposal was attacked not just by cultural industry groups and creators, but also by Parliamentarians. The first to take aim was the House of Lords Communications and Digital Committee, now followed by the Culture, Media and Sport (CMS) Committee of the House.

The main findings of the CMS Committee were pointed and scathing; 

The Committee is pleased that the Government has been listening to stakeholders on text and data mining intellectual property for commercial benefit and is encouraged that Ministers are looking again at this…

The Government must work to regain the trust of the creative industries following its abortive attempt to introduce a broad text and data mining exemption. The Government should consider how creatives can ensure transparency and, if necessary, recourse and redress if they suspect that AI developers are wrongfully using their works in AI development…

The Government’s initial handing of the text and data mining exemption to copyright for AI development, though eventually correct, shows a clear lack of understanding of the needs of the UK’s creative industries. All branches of Government need to better understand the impact of AI, and technology more broadly, on the creative industries and be able to defend their interests consistently.

Apart from criticizing the earlier approach, the Committee strongly supported the status quo with regard to TDM,

“…the current framework, which provides an exemption for text and data mining for non-commercial research purposes and otherwise allows creators to licence their work for any further purpose, provides an appropriate balance between innovation and creator rights”. (emphasis added)

It also made other concrete recommendations such as addressing skills and personnel shortages in both the hi-tech and creative sectors, improving digital skills, and strengthening protection for creators to prevent misuse of their likenesses and performances by emerging technologies. (These are some of the same concerns currently at issue with the Hollywood writers and actors strike).

This is all good stuff, but will it stick? Don’t count out the power of Silicon Valley and the tech lobby in Britain. While the Culture, Media and Sport Committee has done good work through its research and hearings, and has made sensible recommendations, remember that it is just one all-party Parliamentary Committee among many. While chaired by a Conservative MP, the government is under no obligation to take its recommendations on board. True, for the moment, the British government has backed away from the “decision” announced by the IPO, but various proposals are still under study. Not insignificant is the fact that Prime Minister Rishi Sunak is planning on holding the world’s first AI summit before the end of this year, at Bletchley Park, of Enigma fame. (I remember well my visit to Bletchley a couple of years ago. It helped bring all the books I’ve read about the “codebreakers”, of which there are many—books that is–to life). The focus will be on AI safety, but it is part of Sunak’s agenda (remember, he has a high-tech business background) to make Britain a leader in AI. If copyright is seen to get in the way of this ambition, the fight will not be over. That is probably why UK publishers have lobbied Sunak to make it clear that IP rights must be respected when any content is ingested by AI systems by adding this topic to the agenda of the AI summit.

It may also be telling that in the middle of all the debate about whether AI developers should be given the keys to the copyright kingdom, at no charge, the former Department of Digital, Culture, Media and Sport (DCMS) had the digital file taken away from it and conferred on a newly created department, the Department for Science, Innovation and Technology (DSIT). And let’s not forget that the Intellectual Property Office (responsible for the Copyright Act, among others) does not report to the minister responsible for the Department of Culture, Media and Sport, nor to its predecessor DCMS, but falls under the ministerial responsibilities of DSIT. This is reminiscent of Canada where statutory authority for the Copyright Act, and for the Canadian Intellectual Property Office which administers the Act, falls under the Department of Industry, currently labelled Innovation, Science and Economic Development (ISED). While the “culture” ministry, Canadian Heritage, plays an important role in shaping copyright, the lead rests with ISED where, in my opinion, it gets short shrift. Given that the UKIPO, responsible for copyright, was the author of the unprecedented copyright exemption proposal, one cannot help but wonder when and how Silicon Valley’s acolytes will strike back.

The report of the Culture, Media and Sport Committee is important and welcome, but don’t expect this issue of “free” access to copyrighted content, wrapped up in the garb of “innovation” (in the US the operative phrase would be “transformation”), to go away. Creators must remain alert while working to find ways to make it possible for AI developers to access the copyrighted content they need to produce credible outputs. Already discussions are underway between rights-holders such as media companies and image/photostock management companies such as Shutterstock, and AI companies, to provide access to valuable, curated content. AI developers can scrape unlimited garbage off the internet, and they do, but if AI generated works are to have credibility and contribute to learning, they need to ingest reputable content and respect the rights of those who have created it. Furthermore, the outputs have to be legal. What is, and is not, legal at the moment is very much open to question. Ingestion of licensed content would help make the case for legality (non-infringement) of AI generated content.

Giving AI developers a blanket free pass, as the UKIPO originally suggested, is clearly not the way to go. The Culture, Media and Sport Committee report has helped redress the balance. But “it ain’t over ‘till its over”. Creators in Britain and elsewhere need to stay alert, speak up and fight to protect their intellectual property or the hi-tech industry will take another free ride.

© Hugh Stephens 2023. All Rights Reserved.

India Government Adopts New Tool to Tackle Film Piracy and Modernizes Content Classification

On August 4, 2023, India’s Cinematograph (Amendment) Bill, 2023, received Presidential assent and became the law of the land. Enactment marked the culmination of a decades-long process to update the country’s anti-piracy laws by cracking down on camcording in theatres and imposing significant penalties for distribution of illegally recorded films. This legislation marks a real breakthrough in upgrading the governance of India’s theatrical industry in terms of anti-piracy measures and modernization of the certification system. In addition to imposing deterrent punishments for piracy, the legislation has brought the film rating system into alignment with internationally recognized best practices and standards, removed the federal government’s power to review a film’s certification after the Central Board of Film Certification (CBFC) has certified a film and replaced the ten-year validity of censorship certificates with perpetual validation.   

The new legislation was hailed by both India’s film industry as well as the government. The Producers Guild of India welcomed the increased penalties for piracy, which stipulate a jail term of up to three years and a fine that can total as much as up to five per cent of a film’s production cost. This is a significant financial penalty that begins to reflect more accurately the impact of lost revenues for producers. The sanctions are not just for illegal camcording, but also for distribution of an infringing copy to the public for profit, both offline in physical premises and online. Through the imposition of significant financial penalties, the new legislation punishes not just the perpetrator of the camcording, who may be a low-level operative hired to take the risk of making the infringing copy, but also goes after the distributors behind the piracy. In other words, it “follows the money”. It is estimated by the Indian government that piracy costs the Indian film industry up to US$2.4 billion annually. The Indian courts and authorities have since 2018 done an excellent job of promoting online content protection via site blocking orders related to “rogue” piracy websites, and the new, focused provisions will give rightsholders and law enforcement an additional strong tool to tackle film piracy at the source.

The government of India, the Minister of Information and Broadcasting, and indeed senior officials within the Ministry all deserve credit for pushing the initiative through. This significantly more robust stance against piracy, which has been the scourge of the industry for years, reflects the greater emphasis placed by the Indian Government on establishing and reinforcing India’s role as a source of innovation and creativity. As Information and Broadcasting minister Anurag Thakur stated so aptly, “India is known as a country of story tellers which shows our rich culture, heritage, legacy and diversity”. That storytelling tradition as expressed through film was under threat. Not only does the industry contribute to the country’s cultural richness and diversity, but it also provides employment for hundreds of thousands of workers, from film stars to caterers, designers, hairdressers, directors, choreographers, film technicians, musicians; indeed the full panoply of talents and occupations that make up the film industry. And that is not to mention the contribution of the film industry to the country’s GDP. A study commissioned by the Motion Picture Association in 2019 concluded that the film and television industry directly and indirectly generated employment of 26.6 lakhs (2.6 million) and contributed over INR 415,000 crore (US$50 billion at current exchange rates) in economic output. 

While the anti-camcording and anti-piracy elements of the legislation constitute a major breakthrough, the other elements of the legislation are also important. Updating the age-related categories for “U/A” films, by creating new categories of classification in the U/A category that fills the gap between Unrestricted and Adult, has modernized the film rating system, allowing parents to determine with much greater accuracy what sorts of films their children can watch. The new categories of U/A 7+, U/A 13+, and U/A16+ will allow for content differentiation, expand viewing options for young people and allow parents to make the call as to what films are suitable for various ages. The previous “all or nothing” approach was not serving the needs of the viewing public and led to uncertainty as to the suitability of general U/A films for particular age categories. The regulation’s adoption of revised television ratings is another improvement on a previously informal process.

One of the more politically delicate elements in the legislation was the decision to delete any provisions that would empower the federal government to overrule the censorship authority (Central Board of Film Certification, CBFC) by revoking a film’s certification. Such reserve authority not only undermines the effective working of the CBFC but opens the film censorship and rating process to political interference. Given the judgment in the Union of India v Shankarappa case, doing away with the revocation of the certificate clause is a wonderful change. It provides greater autonomy to the CBFC and builds predictability and certainty for a film’s producer.

Last but not least, an additional welcome feature is replacing the previous ten-year validity of a film certificate with one that is valid perpetually. If a film clears censorship and is released, why would its certificate need to be reviewed in ten years’ time? If there is no good reason to do, the renewal simply becomes a bureaucratic exercise that unnecessarily burdens film producers.

To manage the vicissitudes of the parliamentary process, where bills can fall hostage to unrelated political issues and die on the order paper, the government introduced it first into the upper house, the Rajya Sabha, thereby ensuring it would not be expunged each time a parliamentary session ended. This was an astute move. It passed the Rajya Sabha on July 27, 2023, and the Lok Sabha, by voice vote, on July 31, 2023. That is an amazing feat after more than 40 years of delay since the legislation was last amended in 1982.

The film industry is truly one of India’s cultural gems, along with its great art, literature and religions. Indian films are a dynamic cultural and economic force domestically and globally. Now the investment that goes into producing them will be better protected and there will be much greater certainty regarding the sanctity of cleared and rated content. The industry will continue to grow and flourish through the creativity and artistry of Indian talent. But the Government of India has played an important role helping to secure this future. Shabash!

© Hugh Stephens 2023.

Canada’s Online News Act: Will New Regulations Clarifying Revenue Expectations from Dominant Platforms Bring an End to Their News Blocking Tactics?

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(Since the majority of my readership is outside Canada, I have gone into somewhat more background detail in this post than is probably necessary for Canadian readers, who may wish to skip the parts covering some well-rehearsed details of the legislation).

As Canada’s disastrous wildfires continued their destructive path, with 2/3 of the population of the North West Territories (which is roughly the size of France, Spain and England combined) under evacuation orders and with large scale wildfires in British Columbia, with lives and property at risk and with limited access to critical, possibly life-saving information in remote areas served by limited transportation arteries, Meta (which through its Facebook platform is a major site where Canadians access and share news reports), remained unmoved despite pleas from both provincial premiers and federal ministers requesting that it suspend the blockage of news sources that it imposed on Canadian users in early August. This was the company’s response to Bill C-18, which was enacted in June as the Online News Act (ONA). The Act, although passed, will not come into effect until proclaimed on a date no later than 180 days after passage, or December 19, 2023. In the meantime, and even beyond the date of proclamation, the Canadian Radio-television and Telecommunications Commission (the CRTC-the telecoms and broadcast regulator) will be developing implementing regulations, based on public input.

For readers outside Canada, recall that the ONA is based largely on similar Australian legislation (The Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Act 2021) which required dominant internet platforms (Google and Facebook) to reach agreements with Australian media outlets to compensate them fairly for use of news content on the platforms. After threatening to block news or pull out of Australia, the two platforms in the end managed to reach agreement with a sufficient number of Australian media enterprises to avoid designation under the Bargaining Code. Australia declared victory.

Canada took a similar approach, with some modifications,  including requirements for greater transparency. Instead of having the minister “designate” platforms subject to the legislation, the Canadian legislation requires the platforms to self-designate if they meet certain criteria. Those criteria have now been clearly established, in draft regulations issued by the government on September 1. The law will apply to a “digital news intermediary” (defined as a search engine that aggregates news content and pathways to the content of news outlets corresponding to search queries made by visitors; or a social media service that facilitates interactions between users and news content through a social network) that has total revenue from all sources in the previous calendar year exceeding $1 billion and which has had, during the previous calendar year, an average of at least 20 million unique visitors in Canada per month to the search engine, or at least 20 million active users in Canada per month to the social media service. The definition fits Google and Facebook (but not Instagram), and no others at this point, although it is possible in future that a search engine like Microsoft’s Bing might qualify if it increased its number of users.  

The definition of digital news intermediary is thus dependent on three primary factors; amount of global revenue, penetration of the Canadian market and whether it uses Canadian news content. The terms “aggregation” and “facilitation” in the regulations include not only repurposing or excerpting the content, but also linking to it. While some critics of the ONA have claimed inclusion of links is unprecedented (while trotting out the usual red herring that this will undermine and “break” the internet) and that setting value on content accessed through links constitutes a “links tax” (this a favourite phrase of C-18 critic Michael Geist of the University of Ottawa), this is not correct. First, it is not unprecedented. The Australian legislation also covered links, as media blogger Howard Law has clearly demonstrated. Second, the internet works just fine in Australia. In the end, the platforms were able to accommodate the Australian legislation.

In Canada, however, to date this has proven impossible. Meta has chosen to “comply” with C-18 by blocking news rather than enter negotiations with news content providers. This is presumably part of its ploy to avoid self-designation (which it must do within 30 days of the Act coming into force if it falls under the Act), even though it meets the other criteria. The legislation, unfortunately, was drafted in such a way as to provide this explicit escape hatch to the platforms. Both Google and Facebook opposed the legislation and warned that they might block news, so this is not a complete surprise although the process is not yet over, especially when it comes to Google.

One of the complaints of the platforms was the “uncapped financial liability” C-18 would present. The legislation imposes final offer arbitration if news content providers and digital news intermediaries cannot reach agreement. Under this system an arbitrator selects one of the two final offers presented by the contesting sides. In theory this could expose the platforms to an uncertain degree of financial risk, making planning difficult if their offer was considered too low and the arbitration process ended up favouring the news content providers. To address this concern, the September 1 draft regulations clarify the expectations for revenue contribution by the platforms.

The formula consists of the intermediary’s global revenue times Canada’s share of global GDP times four percent. Thus the intermediary’s contribution to Canadian journalism is expected to be around 4% of its Canadian revenues, while being subject to some other criteria such as fair agreements being within 20% of average relative compensation, committing to the production of news content, protecting journalistic independence and including independent local, Indigenous and official language minority community news businesses. While technically the new regulations set only the minimum contributions required, in fact they amount to a de facto cap on contributions because once the minimum is met, the platforms can request, and will be granted, an exemption from the application of the Act and will not be subject to the arbitration process. Based on the 4% figure, the estimated contributions from the process were identified as $172 million a year from Google and $62 million (Canadian dollars) a year from Facebook. This provides a degree of certainty, as requested by the platforms, but will this end the impasse?

As the blog MediaPolicy.ca noted, “Canada gives Big Tech what they asked for on C-18”, although Michael Geist expressed the contrary view, declaring that the draft regulations just increased the chances of no news on Meta and Google in Canada. According to him, the global implications could run into the billions for Google alone, and “no country in the world has come close to setting this standard”. I am not so sure about that. The Australian government reported that its legislation had resulted in payments of US$140 million (AUD$200 million) to Australian news organizations in its first year. CAD$234 million, the supposed price tag for the two platforms in Canada totals US$170 million. Given that the Canadian economy is about 25% larger than that of Australia in terms of total GDP, and its population is 50% larger, the 15% increase in expected financial contribution would seem, in fact, to be very much in line (in fact smaller proportionally) with the contribution made by the platforms Down Under. The question is, however, whether Google and Facebook are prepared to replicate the Australian experience in Canada (and elsewhere), or are having second thoughts about the implications of the deal they struck. Maybe being “second mover” is not such an advantage for Canada after all.

Now the argument has been removed that the ONA’s financial obligations for the platforms are unlimited, the real issue stands in the open, bereft of its camouflage. Are the platforms willing to pay a small share of the revenues they generate in Canada (and elsewhere) to support journalism in order to be able to continue to display news? The essence of the argument requiring payment is that curated, professional news content has value (in terms of attracting and retaining viewers, which can be monetized through online ad sales, which is where Google and Facebook dominate, controlling 80% of digital advertising). That content is expensive to produce, and the ad revenues that once provided much of the financial support for journalism have migrated to the online intermediaries. A viable Fourth Estate is essential for the effective functioning of democracy so, as the argument goes, those who have benefited from this content and who have reached a quasi-monopolistic dominance, should be expected to make a financial contribution toward its maintenance.

The logic is compelling; even the platforms seem to agree with this proposition since both have instituted various grant programs to provide support to journalism. The key question, though, is what form should the financial support take and who gets to decide how much it should be? The platforms want to be in the driver’s seat and make those decisions. They don’t like governments telling them what to do. Should the support be on terms set by the platforms, where they negotiate ad seriatim with various news content providers, on their terms while keeping those terms secret, or should there be a transparent framework where the media providers can negotiate as an entity (if they wish), backed up in extremis by the stick of possible arbitration? That is what Australia did, and what Canada is trying to do.

But will it work? It depends on who holds the most leverage-a sovereign government or two giant hi-tech internet companies. Normally, in the final analysis, a government in a modern country like Canada would prevail, but it is a high stakes game. For the platforms, who may be regretting the deal they struck in Australia, now may be the time to dig in. For Meta, that seems to be the case. Their objection seems as much ideological as financial, although the financial concerns cannot be ignored given the development of legislation similar to C-18 in the US (the Journalism Competition and Preservation Act, and parallel legislation in California) , the UK, New Zealand and no doubt soon in other countries.

Facebook insists it derives little or no value from hosting news content, and instead provides a benefit to news organizations by giving them exposure. It is an unfortunate fact that many consumers in Canada and other countries access and share news primarily through the Facebook platform. According to the Canadian government, 69% of Canadian consumers access news online. That does not mean they all use Facebook; they can just as easily go directly to various news sites operated by the media, but there is no question that Facebook is a convenient way to share news, by posting links or snippets. Facebook has made it that way, and there is not much real competition. That is the unfortunate reality as over the years, Meta has bought out any viable competition, giving it a virtual monopoly. It may be that Meta has decided it can get away with thumbing its nose at Canada, and that, in Canada and potentially elsewhere, it will purge its platform of news, betting that people will still come to it for social interactions. Maybe their gamble will be right. And maybe it will be a good thing if consumers start going directly to news sources instead of mindlessly logging onto Facebook for all their needs. Possibly, (and hopefully, from my perspective) there will be a lessening of dependence on this one platform, and consumers will spend more of their online time elsewhere. If Facebook’s revenues suffer, it is what they asked for and what they deserve.

Google’s situation is different. It has competition, it needs to maintain a viable search engine in Canada, and Google Search will lose effectiveness if it cuts off the population of a country the size of Canada from contributing algorithmically to its search results for news. Google has also been less categoric about whether it will block news search in Canada, although it has threatened to do so. It has also played hardball with the Canadian media by beginning to terminate some of the revenue-sharing arrangements it had already reached (arrangements that the ONA would specifically recognize as part of Google’s contribution). At the same time, Google is looking over its shoulder at Microsoft which is not (yet) covered by the ONA because it does not have sufficient penetration. In Australia, Microsoft made a point of endorsing the legislation and the Bargaining Code; in Canada it has said that if it were to “qualify” for designation under the ONA it would comply with the legislation as it applies to its products, (presumably not by opting out, as Google is threatening to do).

The domestic political situation in Canada is also different from that which existed in Australia, where there was broad all-party support for bringing the platforms to heel. Unfortunately, that same solidarity does not exist in Canada, and the platforms will not hesitate to exploit these political divisions. The opposition Conservatives under a previous leader were onside with making big tech pay its share, but under current Conservative leader Pierre Polievre, C-18 has become one more stick with which to beat the government. There is no question that the Trudeau government’s management of the file could have been handled better, but Polievre has distorted the C-18 debate to become one of government intervention versus free expression. He has also enlisted the legislation in his crusade against the publicly funded CBC (which would benefit significantly from C-18 because of its extensive news operations). Defunding the CBC—seen by many on the right as a left leaning media organization—is one of Polievre’s favourite talking points. At present, the Conservatives are up in the polls and the platforms may be wagering that if they can wait out the Trudeau Liberals (an election must be held by the fall of 2025 at the latest), a new government might reverse C-18. They are eager for a chance to push back on what seems like a growing international tide of jurisdictions willing to take on Big Tech.

Back to the question posed in the title of this blog posting. How likely is it that the new regulations clarifying the revenue expectations of the platforms will bring about an end to the news blocking? The new measures give Google what they were asking for and given where Google stands on this issue (with Microsoft breathing down its neck), it has every reason to find a response that will satisfy the intent of the ONA. However, nothing, it seems, will satisfy Meta short of the complete withdrawal or gutting of the Act, and that is not going to happen. It is politically untenable for the Trudeau government to back down. My conclusion, therefore, is that the new regulations have helped move things forward with the biggest player, Google, but with respect to Facebook, probably nothing will lead Mark Zuckerberg to change his mind (although one never knows for sure).

The stakes are high for Canada and for the Trudeau government. They are also high for other countries contemplating similar moves to require the big internet platforms to make a financial contribution to the sustenance of professional journalism. The end result may be a welcome infusion of some financial resources to the stressed journalism sector from Google, along with a change of behaviour for Canadian consumers who may no longer be able to find or share news sources on Facebook. Although Facebook  has made itself seem indispensable to many as a vehicle of information exchange, by shooting itself in the foot through its blockage of news, it may just be starting a trend of encouraging consumers to look elsewhere for their information needs.  If that helps bring people back to direct news sources, and provides some competition for Facebook, that won’t be a bad outcome. And that may be an outcome replicated in other countries as they come to grips with the same issues and the same players.

© Hugh Stephens, 2023. All Rights Reserved.