Economy

Google agrees to pay C$100m a year for news in Canada

Search engine giant agrees deal ending six-month stand-off

This illustration photograph shows figurines next to a screen displaying a logo of Google, a US multinational technology company. (Photo by SEBASTIEN BOZON / AFP) (Photo by SEBASTIEN BOZON/AFP via Getty Images)

Thu Nov 30 2023 - 07:42

Google has agreed to pay C$100 million a year into a fund to support news organisations in Canada as part of a deal with the government, ending a dispute that led it to threaten to cut links to news from its services.

The C$100 million (US$73.6 million) pact ends a six-month stand-off following the passage of an online news law designed to funnel some of the cash that Google and Meta, the parent of Facebook and Instagram, make from online advertising to bolster the finances of news organisations. The dispute blew up into the biggest conflict between the internet giants and a national government over news subsidies since Australia became the first country to pass a law on the issue in 2021.

Meta suspended links to news stories in Canada earlier this year in protest at the law, and Google threatened to follow suit when the law goes into effect in mid-December unless the government diluted the impact of the legislation.

The search giant dug its heels in against being forced to pay for news links in its services, which it feared would set a precedent that could be applied to other types of online links. Rather than hurting the news companies, the internet giants have always claimed that their links deliver valuable traffic to news sites, with Google claiming its news links are worth C$250 million a year to Canadian publishers.

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However, Canada’s Online News Act was explicitly aimed at bringing what it called greater “fairness” to payment for online news following a huge shift in the online advertising market to Google and Meta.

Google also objected that the Canadian law would leave it with open-ended financial liability, since it would be forced to negotiate with each publisher individually and would face an arbitration process the company believed would be stacked against it.

In a compromise announced on Wednesday, Pascale St-Onge, minister of Canadian heritage, said that the agreement would “benefit the news sector and allow Google to continue to play an important role in giving Canadians access to reliable news content”. Google’s payments would be made to a collective fund, she added, ending the need to negotiate with each publisher separately.

Canadian officials estimated earlier this year that the act would require Google to pay C$172 million to publishers. It was unclear on Wednesday whether the final regulations under the act, which are due to be released before it goes into force on December 19th, would still amount to Google paying for carrying links — something the company has strongly objected to.

Meta indicated that the deal with Google would make no difference to its decision to block news links in Canada. “Unlike search engines, we do not proactively pull news from the internet to place in our users’ feeds and we have long been clear that the only way we can reasonably comply with the Online News Act is by ending news availability for people in Canada,” it said.

Copyright The Financial Times Limited 2023

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