Canadian lawmakers are locked in a dispute with internet technology companies over a law that would compel them to pay news publishers for content, years after a similar regulatory saga played out in Australia.
Google spokesperson Zaitoon Murji told BNNBloomberg.ca in an email that the company made the “extremely difficult decision” to remove Canadian news links from its search, Google News and Google Discover platforms, calling its issues with the legislation “unworkable” and unlikely to be resolved through regulations.
“We’re disappointed it has come to this,” Murji said. “None of our suggestions for changes to C-18 were accepted.”
After Google’s move on Thursday, Heritage Minister Pablo Rodriguez sent a written statement calling the companies’ moves “deeply irresponsible and out of touch … especially when they make billions of dollars off of Canadian users” with advertising.
Australia’s regulatory experiment – the first of its kind in the world – also got off to a rocky start, but it has since seen tech companies, news publishers and the government reach a middle ground.
Canada can learn some lessons from Australia’s story, but experts who spoke with BNNBloomberg.ca cautioned that different economic, political and geographic realities could lead to a different outcome.
WHAT HAPPENED IN AUSTRALIA?
In both Australia and Canada, governments introduced legislation aimed at forcing online technology companies like Google and Facebook parent Meta into agreements to pay news producers for content shared on their platforms.
Tech companies opposed the laws in both cases.
Rob Nicholls, associate professor of regulation and governance at the University of New South Wales, explained in an email that in Australia, both Meta and Google threatened to leave the country if the law came into effect.
Google “did not change its local policies dramatically,” he said, but it does now follow a different product schedule from the U.S.
Facebook cut off access to news temporarily in 2021 in response to the legislation. Nicholls noted that it also blocked access to other pages such as health departments and charities, prompting threats from the Australian health department to pull advertising – an idea floated on Twitter by Canadian legislator Anthony Housefather in response to Meta’s latest moves here.
Meta has announced it is blocking news in Canada in response to the Online News Act. One way to respond is to have the Government of Canada, provincial & municipal governments & those that want to fight back stop advertising with Meta. Send a message using the free market.
After a week, both Facebook and Google entered in to negotiations with news businesses in Australia and since then, the law has never had to be enforced.
The Australian government has since declared its News Media Bargaining Code “a success to date” in a December 2022 review of its first year in effect, pointing to more than 30 commercial agreements between tech companies and news producers.
Nicholls said there has been an estimated A$150 million in annual revenue from the law – though that fell short of what those in the media businesses wanted. There have also been concerns raised that smaller outlets have been shut out from receiving funds.
WHAT’S CHANGED: GEOGRAPHY, FINANCES AND THE PASSAGE OF TIME
Nicholls said geography – the proximity between Canada and other markets – is one major difference from the Australian context.
“Australia is a long way from other Meta and Google operations – there is no land border to the South,” he said.
Gavin Adamson, an associate professor in digital journalism at Toronto Metropolitan University, also said Canada’s closeness to the U.S. “adds a complication,” because tech companies “wouldn’t want to be in the position to start negotiations to pay news agencies in a country with a vastly bigger media network.”
Michael Geist, Canada research chair in internet and e-commerce law at the University of Ottawa, said another factor that has changed from the Australian context is the financial situation tech companies now find themselves in. Meta has been focused on cutting costs in its “year of efficiency,” and it may be “less willing to cut big cheques that don’t give the company much value.” Google has also made job cuts this year in the face of similar tech industry headwinds.
There is also a slight difference between the two laws. In Australia, the government has more of a say in who the law would apply to, and in Canada the CRTC makes the final call, which has the companies concerned about the process, Geist added.
Regulations are the last option to find middle ground, Geist said, but Meta and Google have both said they don’t believe regulatory tweaks will be enough to halt their plans.
Google said it hasn’t received assurance from the government that its primary concerns – forced payment for links and “uncapped financial liability” – will be resolved.
GOVERNMENTS VS BIG TECH
Beyond the issue of supporting news producers, the situation also highlights the difficulty governments face when it comes to reigning in powerful big tech companies.
Heritage Minister Pablo Rodriguez invoked that dynamic in a statement to BNNBloomberg.ca on Thursday.
“The Online News Act levels the playing field by putting the power of big tech in check,” he said in an emailed statement.”
“Big tech would rather spend money to change their platforms to block Canadians from accessing good quality and local news instead of paying their fair share to news organizations.”
The companies and the Canadian government both have a lot on the line when it comes to the law, Geist said.
For Meta, it’s an opportunity to send a signal to other governments about regulations they will tolerate, and that’s one reason Geist does not think Meta will back down from its threats.
“They would really lose pretty much all credibility with other countries at this stage if they walked away,” he said.
Meta’s decision was predictable, Geist argued, as the company had long threatened to remove links in light of the pending law. But “the Google response was always more uncertain,” he wrote in a Thursday blog post, because “it values news in a way that Meta does not.”
“Meta pointed to data demonstrating that news contributed little to user news feeds and that was highly substitutable. By contrast, Google search results are its bread and butter and removing Canadian news results makes its flagship product undeniably worse,” Geist wrote.
“That surely presented an unwelcome choice either way: agree to flawed legislation that creates a dangerous precedent on paying for links or knowingly decrease the value of its own service.”
The federal Liberal government has “backed itself into a corner” with its positioning on the law, he noted in Monday’s interview, because they went ahead with their plan despite having other options to help the news sector. If tech giants pull news, news publishers would take a significant financial hit, he added.
“Both their policy measures and the government’s own credibility on this is at stake,” he said by phone.
Adamson pointed to mounting “bad PR” when it comes to the tech companies’ corporate citizenship, and said companies “have to see the benefits of a strong democracy and with that included a healthy media ecosystem.”
“That includes a bit of a financial hit, but it also boosts your financial outlook from a social governance perspective,” he told BNNBloomberg.ca in an email. “If I was the government, I would just keep underlining that point.”
WHAT HAPPENS NEXT?
Rodriguez told the media this week that the government will offer unspecified support for news producers should Meta and Google block local news. The government on Thursday said it was working with Google to get clarity on its next steps.
Google spokesperson Murji said the company is “concerned” about how the law could reduce access to news in Canada, and it plans to participate in the regulatory process.
“We hope that the Government will be able to outline a viable path forward,” Murji said.
Nicholls said the threats by both Meta and Google are “credible,” and both companies could feasibly follow through.
Adamson said he expects a “political stand-off” between the companies and the government for the next little while.
“I would still be surprised to see Alphabet and Meta back out of Canada altogether with respect to news content on their platforms but it’s hard to know,” he said.
Geist, meanwhile, said he disagrees with those who sees Meta’s repeated threats to pull news as a bluff.
“Part of their goal may now well be to make it clear it was not a bluff,” Geist said.
If news is pulled from online platforms in Canada, he said advocates may stop pushing the Australian model for making tech pay for news, and Canada could become a cautionary tale for what can go wrong.
“We may end up with others saying ‘Don’t be like Canada,’ where you find major social networks cutting off news within the country.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
