Google and Canada strike deal to avert news ban under Online News Act
The search company has agreed to pay C$100m annually to support news organisations
Google has reached an agreement with the Canadian government to pay C$100 million (£58 million) annually to a fund supporting news organisations, putting an end to a contentious six-month stand-off.
The dispute arose following the enactment of Canada's Online News Act, also known as Bill C-18, which aimed to redirect a portion of the revenue generated by Google and Meta from online advertising to bolster the financial health of news organisations.
The conflict, reminiscent of the standoff between internet giants and the Australian government in 2021, had prompted Meta to restrict Canadian news content on Facebook and Instagram starting from 1st August.
Google had also threatened to take a similar step when the law was set to go into effect in mid-December unless the legislation's impact was diluted.
Google had strongly resisted the notion of being compelled to pay for news links, arguing that it could establish a precedent for other types of online links. The company maintained that its news links provided substantial traffic to news sites, estimating their value to be C$250 million annually for Canadian publishers.
The Online News Act, however, has been designed to address what it deems a lack of "fairness" in payment for online news, especially in light of the dominance of Google and Meta in the online advertising market.
Google has expressed concern over potential open-ended financial liability, as the law mandated negotiations with individual publishers and an arbitration process perceived as biased against the company.
In a compromise announced on Wednesday, Pascale St-Onge, the Minister of Canadian Heritage, stated that the agreement would benefit the news sector while allowing Google to continue playing a vital role in providing Canadians with access to reliable news content.
"Many doubted that we would be successful, but I was confident we would find a way to address Google's concerns," Pascale St-Onge said.
The minister described the agreement as a "historic development" that establishes a fairer commercial relationship.
Google's payments will be directed to a collective fund, eliminating the need for separate negotiations with each publisher.
While the government had initially estimated Google's compensation at approximately C$172 million, the tech giant valued it at C$100 million.
Under the newly agreed-upon regulations, Google will be allowed to negotiate with a single group representing all media, mitigating its arbitration risk.
"We are pleased that the Government of Canada has committed to addressing our core issues with Bill C-18," Kent Walker, Google's president of global affairs, said.
It remains unclear whether the final regulations, set to be released before the law takes effect on 19th December, would still involve Google paying for carrying links - a point the company vehemently opposed.
Interestingly, Meta indicated that the agreement between Google and the Canadian government would not alter its decision to block news links in Canada.
The government's talks with Meta currently remain at a standstill, with minister St-Onge stating that it's up to Meta to decide whether negotiations could be reopened.
Meta says its approach differs from search engines, as it does not proactively pull news from the internet for user feeds, making compliance with the Online News Act challenging without discontinuing news availability in Canada.