Canada to stop ads on Facebook, but sees path to settle dispute

The Canadian government will stop buying ads on Facebook and Instagram amid a dispute over a new law on paying online news publishers that the Meta-owned platforms have opposed, Heritage Minister Pablo Rodriguez said on Wednesday.

The Online News Act, or Bill C-18, was passed into law last month, triggering Meta and Alphabet's Google to say they would end news access on their platforms in Canada.

The government is finalizing rules that require the platforms to share some advertising revenue when the law is implemented by the end of this year.

"Canada is going to continue to stand firm and ensure that if social media platforms and internet giants want to use media, that they actually ensure that they're paying their fair share for it," Prime Minister Justin Trudeau said in Montérégie, Quebec.

The government still sees a path forward to resolving the quarrel and is open to discussions with the platforms, Rodriguez, who introduced the legislation, told reporters in Ottawa.

The legislation was drafted after calls from Canada's media industry for tighter regulation of internet giants to allow news businesses to recoup financial losses suffered in the years that Facebook and Google gained a greater share of the online advertising market.

Rodriguez said that 80% of all ad revenue in Canada, or almost C$10 billion ($7.5 billion) in 2022, went to Google and Facebook, and the Liberal government wants the two platforms to contribute to domestic journalism.

The decision to suspend government ads will cost Facebook and Instagram about C$10 million per year, he said.

Facebook "refused to discuss and they did not want to compensate the media accordingly and so we've decided to suspend advertising," Rodriguez added, speaking alongside two of three Canadian opposition parties which also support the legislation.

Meta has previously said that news does not hold economic value for the company and that news organizations benefit from sharing their reports on Facebook.

"Unfortunately, the regulatory process is not equipped to make changes to the fundamental features of the legislation that have always been problematic," a Meta spokesman said, adding that the company plans to end news availability in Canada "in the coming weeks."

Rodriguez sounded more optimistic about reaching a compromise with Google, saying the government was convinced that "what Google is asking at this moment can be done."

Google, which had proposed amendments to the act that were rejected, said last week that the government's regulatory process was unlikely to resolve "structural issues with the legislation." The company did not comment on Wednesday.

The outcome of the Canada's tussle with internet giants can set the tone for other governments trying to regulate internet companies. If the companies fail to secure exemptions or get the rules changed in Canada, they may face a similar fate in the United States.

Democratic US Senator Elizabeth Warren, a leading progressive voice, on Wednesday expressed support for Canada, saying that "leaders are right to stand firm against these tactics & push back against Big Tech's freeloading off local news."

Earlier on Wednesday, Canadian telecoms operator Quebecor and Cogeco, which runs radio stations in Quebec, also said they would stop advertising on Facebook and Instagram because of Meta's opposition to the new law.

($1 = 1.3285 Canadian dollars)