Nearly a year after it was announced that the Canadian government and Google had reached an agreement pertaining to Google’s financial contributions to Canadian news businesses under the Online News Act, the deal is now officially in effect by way of a formal exemption order. On October 28, 2024, the Canadian Radio-television and Telecommunications Commission (CRTC) released its first decision under the Online News Act Application and Exemption Regulations, approving Google’s application for an exemption from the mandatory bargaining framework established by the Online News Act.
As discussed in our previous Cassels Comment, the Online News Act established a mandatory bargaining process that will require “digital news intermediaries” (DNIs) — online platforms that make news content produced by other businesses available on their platform — to enter into commercial agreements with eligible Canadian news businesses. Pursuant to these contractual agreements, DNIs will be required to compensate Canadian news businesses for sharing their news content on the DNIs’ platforms.
Shortly after the Online News Act became law, the Canadian government announced that it had reached an agreement (subject to regulatory approval) with Google — the only DNI currently expected to be subject to the bargaining process after Meta blocked news access on its platforms in Canada — pursuant to which Google was eligible to be exempt from the Online News Act’s bargaining process in exchange for Google agreeing to contribute approximately $100 million per year (indexed for inflation) to eligible Canadian news businesses that serve as the source of the news content Google shares on its platform.
As a result of that agreement, Google then filed an application under the Online News Act Application and Exemption Regulations (the Regulations) seeking a formal exemption order from the mandatory bargaining requirements of the Online News Act. As part of the exemption application process, the CRTC hosted a public consultation earlier this year in which industry stakeholders and interested members of the public were afforded an opportunity to share their views on whether Google had met the criteria under the Regulations to be formally granted an exemption.
The public hearing process culminated in the CRTC’s release of Online News Decision CRTC 2024-262 on October 28, 2024. The CRTC’s decision formally grants Google a five-year exemption from the Online News Act, provided that Google upholds its obligation to contribute $100 million per year (indexed for inflation) to the Canadian Journalism Collective (CJC). The CJC will be responsible for distributing Google’s contributions to eligible Canadian news businesses. However, in granting the exemption, the CRTC imposed some additional conditions, including a requirement that:
- Google work with the CJC to establish a mechanism that will allow the CJC to annually admit additional eligible Canadian news businesses that did not respond to Google and the CJC’s initial open call to eligible businesses earlier this year;
- The CJC submit an annual report to the CRTC so that the CRTC may verify that the CJC is operating in a transparent manner; and
- Notwithstanding the recognition that indemnity clauses are fairly standard in commercial agreements, Google refrain from claiming or setting-off as an indemnity from its annual contribution to the CJC more than an amount equivalent to the 2% that the CJC is permitted to deduct for administrative expenses.
Although it was widely expected that Google would be granted a formal regulatory exemption after the announcement of its agreement with the Canadian government, the CRTC exemption order serves as a valuable blueprint as to how the CRTC may consider applications for future exemption orders sought by other DNIs. For example, if at some time Meta decides to resume negotiations with the Canadian government, it is likely that any agreement reached will be subject to regulatory exemption approval and that a subsequent exemption application by Meta will follow a similar process and be subject to a substantially similar CRTC exemption order. Similarly, should other online platforms enter Canada or grow large enough to be subject to DNI regulation as defined by the Online News Act, the process followed in the Google exemption application will likely guide whether and how those new DNIs will be entitled to an exemption order from the CRTC, should they choose to seek one.
The Cassels Entertainment & Sports Law Group will continue to monitor developments related to the implementation of the Online News Act. If you have any questions about the Online News Act and how it may impact your business, please reach out to any member of our team.