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The ongoing shift from the Trudeau Liberals’ attempts to regulate the Internet to the Carney government’s willingness to retreat from them became even more apparent last week, as Ottawa continued backing away from policies designed to tax some of the world’s largest technology companies. Mark Carney’s willingness to scrap some of Justin Trudeau’s most ambitious policies was obvious even during his candidacy for the party leadership last year, when he promised to cancel the carbon tax he once supported because it had become “too divisive.” That cannily neutralized the Conservative promise to “axe the tax,” which was a major plank in their platform, and helped Carney breeze to election victory in April. He followed through on the promise his first day in office, then a few months later ditched the three percent digital services tax which the Trudeau government had planned to impose on Internet businesses that profit off the personal data they gather on consumers. That removed a major trade irritant with the Trump administration, but it remains irritated by the rest of the Liberal agenda to tax and regulate the Internet because it targets mostly American companies. That includes the Online News Act, which applies only to the US digital giants Meta and Google, and the Online Streaming Act, both of which were passed in 2023. The latter has been snarled in court since then, however, by lawsuits from foreign streaming services, which the Canadian Radio-television and Telecommunications Commission initially ordered to contribute five percent of their revenues to Canadian content. When the CRTC upped that to 15 percent recently, the Carney government stepped in and called a time out.
In a bizarre development in the legal action, a letter filed in court revealed that the government plans to capitulate and “eliminate the base contribution requirement on streaming services and to provide government funding to replace those contributions.” Identity and Culture Minister Marc Miller’s office, however, insisted that streamers will still be required to “reinvest” an unspecified portion of their revenues. The Wire Report, which covers telecommunication issues, reported that a spokesman for Miller told it that the feds “will not repeal the Online Streaming Act” and will instead “develop a new policy direction that takes into account affordability for Canadians, while providing greater flexibility for those contributing to the broadcasting system.” The mention of affordability reflects the reality that streamers could simply raise their rates to cover any required contributions, and some critics have pointed out that they could even quit the country.
The change in policy was first reported in June by the Globe and Mail, which cited unnamed senior government sources saying Ottawa would drop the requirement for streamers to fund local news and niche broadcasters and would instead negotiate “a more reasonable rate” of contribution with them. The revelation came shortly after Miller announced federal funding of $600 million a year “to provide stability and immediate support to Canada’s audio and audiovisual sectors and to keep our culture accessible and affordable for all Canadians.” That startling amount is triple the $200 million a year that was expected to be raised from streamers under the act. Miller caused a furore in May with testimony to a Commons committee in which he estimated at a stunning $6 billion the cost of extending to broadcasters the Journalism Tax Credit that newspapers have received since 2019. He quickly walked that number back, however, stating that he had confused the planned initiative with film and video tax credits.
NDP Heritage Critic Heather McPherson called the move to release streamers from the CRTC’s funding requirements “nothing more than an act of appeasement to placate Donald Trump and his tech billionaire supporters.” The head of Unifor, which represents thousands of media workers and lobbied hard for the Online Streaming Act, called it a “crushing blow” to both local news and Canada’s cultural sovereignty. “The federal government is abandoning one of the most important measures designed to strengthen Canada’s broadcasting system and support Canadian media workers,” said Lana Payne. “The Online Streaming Act was about ensuring the world’s largest streaming companies contributed fairly to the Canadian broadcasting system they profit from.” Payne was even more pointed on social media, calling the move “devastating and wrong-headed.”
Taxing and regulating online streamers, which have increasingly taken viewers away from broadcast and cable television without paying taxes in Canada, first became an issue during the 2015 election. All three major political parties promised back then not to introduce a so-called “Netflix tax” if elected, and Netflix agreed two years later to spend $500 million on Canadian content over five years to stave off charging a sales tax on its Canadian subscriptions. With online streamers proliferating by the 2019 election and a global backlash against the web giants growing, however, all three parties reversed their position. The Online Streaming Act was first introduced in late 2020 as Bill C-10, but it died on the order paper when the 2021 election was called. Reintroduced in 2022 as Bill C-11, it was finally passed in the spring of 2023 and scoped in streamers under the Broadcasting Act. Implementing regulations under the act was delegated to the CRTC, which initially ordered steamers to contribute five percent of their Canadian revenues to various media funds, prompting lawsuits from the Motion Picture Association of Canada and the Digital Media Association. It also brought protest from American lawmakers, first in 2024 with a sharp letter from the powerful Ways and Means Committee of the House of Representatives, then earlier this year with introduction of the Protecting American Streaming and Innovation Act, which proposes imposing tariffs against Canada in retaliation.
The Online News Act has also come under fire from south of the border, and even here at home, where it has denied emerging digital media a valuable free distribution channel because Meta has blocked news in Canada on its Facebook and Instagram social networks for the past three years rather than pay for it. US Trade Representative Jamieson Greer highlighted the act as an irritant during recent free trade negotiations, and Meta reportedly made a proposal to Ottawa earlier this year to resolve the dispute. Google negotiated a $100 million annual contribution to Canadian newsrooms in late 2023 to be exempted from the act, which was modelled after similar legislation in Australia. Publishers lobbied hard for the Online News Act despite receiving a five-year $595 million bailout from the federal government in 2019, running blank front pages for a day in 2021 emblazoned with the message “Imagine if the news wasn’t there when we needed it.” Ottawa extended the newspaper bailout for another five years after Meta blocked news and even raised the tax credit on journalist salaries from 25 to 35 percent.
Canada’s largest newspaper chain Postmedia Network, whose CEO orchestrated lobbying for the 2019 bailout, has recently stepped up its campaign for even more subsidies. Postmedia, which publishes most of Canada’s largest dailies but is 98 percent owned by US hedge funds, recently ran a column in about two dozen of its newspapers by the head of the World Association of News Publishers lauding Canada as “a leader in smart media policy.” After word emerged that Meta had made a proposal earlier this year to restore news on its platforms, Postmedia newspapers ran a column by Rod Sims, who was the minister behind the Australian legislation, under the headline “Big Tech must pay for content.” Publishers are also hoping to cash in on payments from AI companies, claiming that their news reports are protected by copyright, a notion Sims pushed in a July column. Postmedia has been particularly shameless in running opinion articles by academics pushing for AI payments.
From the looks of it, taxpayers should expect to soon fork out even more money to our media, including broadcasters, despite the fact they are owned by some of the country’s most profitable companies.
Marc Edge is a Vancouver freelance writer and media critic. His books and articles can be found at www.marcedge.com.
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