Canada’s New C-18 “Link Tax” Law Tackles the Wrong Problem. The Real Solution Would Enhance Privacy.
In June, Canada passed the Online News Act, commonly known as C-18. It’s framed as a law that’s designed to help Canadian news publishers financially, as it forces large tech companies to pay when they link to news stories.
What Is C-18?
The Canadian government describes the key element of the new law as follows:
[C-18] introduces a new bargaining framework intended to support news businesses to secure fair compensation when their news content is made available by dominant digital news intermediaries and generates economic gain. It seeks to support balanced negotiations between the businesses that operate dominant digital news intermediaries and the businesses responsible for the news outlets that produce this news content.
In reality, there are only two “dominant digital news intermediaries” – Google and Meta. This means the the new law is really about forcing the two US digital giants to reach an agreement with the Canadian news publishing industry when they promote or share any news stories. This includes links: under the new law, providing a link to a news story requires payment, despite the fact that it drives traffic to those news sites free of charge.
What Are Meta and Google Doing about It?
In response to the new law, Google wrote: “The unprecedented decision to put a price on links (a so-called “link tax”) creates uncertainty for our products and exposes us to uncapped financial liability simply for facilitating Canadians’ access to news from Canadian publishers.” Consequently, Google says:
We have now informed the Government that when the law takes effect, we unfortunately will have to remove links to Canadian news from our Search, News and Discover products in Canada, and that C-18 will also make it untenable for us to continue offering our Google News Showcase product in Canada.
Meta’s response was even stronger:
In order to comply with the Online News Act, we have begun the process of ending news availability in Canada. These changes start today, and will be implemented for all people accessing Facebook and Instagram in Canada over the course of the next few weeks.
Canadian academic Professor Michael Geist emphasizes that Meta is blocking all news sites, not just Canadian ones. That’s because the law covers any news site whose links are accessed in Canada. This approach based on access location also means that it is straightforward to bypass blocks using a VPN.
Do Link Taxes Work?
Making companies pay news publishers to display links that drive traffic to their sites goes against the way the web and hypertext works. While this might look like a one-off aberration by lawmakers who don’t understand the internet, it’s actually the latest in a series of laws around the world that have sought to make companies like Google and Meta pay to display links.
Germany brought in an ancillary copyright for press publishers – a link tax – in 2013. When Google removed news articles from its search results – just as it’s doing now in Canada – German news publishers saw an almost 40% drop in traffic to their sites. This confirmed the importance of such links, and publishers agreed to license their articles to Google for free.
In 2014, Spain brought in a similar law, and Google took a similar action, shutting down its Google News service in the country. Once again, publishers saw a noticeable fall in traffic to their sites from search engines. The drop in traffic was more than 6% on average, and up to 14% for smaller, less well-known publications, which were more dependent on search engines to bring visitors to their sites. Despite these failures to force Google to pay for linking to news stories, the European Union introduced a similar link tax scheme as part of its 2019 Directive on Copyright in the Single Market. It’s not yet clear what the practical effects of the EU law will be. The same is true of Australia’s attempts to make Google and Meta pay news publishers.
Problems with Link Taxes
Removing links to news stories from major online services like Google and Meta has a serious impact on freedom of speech, and on people’s right to access information. People are likely to miss important stories that would normally be accessible on and highlighted by the two big internet companies. In the absence of links to news stories from reliable and trusted news organizations, fake news and misinformation sites will gain wider readership.
Michael Geist points out another problem in the shape of news items produced by generative AI systems:
C-18 covers both reproduction of news content and “facilitating access” to news content, which includes linking, indexing or aggregating news content. None of these activities describe the generative-AI process, which does not reproduce original text, need not link to original sources and does not index content in the same manner as a conventional search engine.
Sites may start to replace traditional news stories with pieces generated using AI, without links to original sources (which would incur a charge under the C-18 law). As a result, the reliability of online news in Canada will decrease. This is the opposite of a key aim of the new law, “promoting the search for truth through the open exchange of ideas.”
Removing Big Companies’ Ad Revenue Could Improve Privacy
The link tax laws passed around the world have typically been justified on the grounds that companies such as Google and Meta are are using links drive traffic to news sites, but keeping any profits from advertising in the process. In other words, online advertising means Google and Meta have taken control of the online advertising that used to be the mainstay of news publishers.
As a previous PIA article explained, today’s advertising system is based on constant surveillance of site visitors, but Google and Meta retain most of the revenue. In other words, if C-18 aims to fix the publishing industry’s financial challenges, the solution isn’t introducing link taxes that don’t address the real problem. Instead, news publishers could move to context-based advertising, which respects the privacy of visitors, and doesn’t hand most of the ad revenue to intermediaries like Google and Meta.
OpenMedia is a nonprofit organization that works to keep the internet open, affordable, and surveillance-free. It’s currently campaigning against the Online News Act and calling on the Canadian government to reverse the news blockade. You can find out more and sign a petition directed to the Senate of Canada via their website.
Featured image by Sergey Pesterev.