Alphabet-owned Google (NASDAQ:GOOGL, GOOG) plans to remove Canadian news from search results and other products on its platform due to a new Canadian law that requires the company to make payments to local news publishers. Google joins Meta Platforms (NASDAQ:META), the owner of Facebook and Instagram, which made a similar announcement last week to indicate its opposition to the new legislation.
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Google Opposes Online News Act
The new legislation, called the Online News Act, is expected to be effective in about six months. The new law aims to help struggling Canadian media outlets get better compensation from tech giants. Several domestic publishers have been under pressure due to the shift in advertising revenue to digital platforms.
In a statement, Kent Walker, the president of global affairs at Google and Alphabet, called the Online News Act “unworkable” and thinks that it would not address the structural issues with the legislation. The company has been contending for a while that this Act is a wrong approach to support Canadian journalism. Google thinks that the Act will make it “untenable” for the company to continue offering its Google News Showcase product in the country.
“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,” said Kent.
Kent further explained that Google already supports Canadian journalism through its programs and partnerships. He highlighted that the platform linked Canadian news publications over 3.6 billion times for free in 2022 alone, which enabled publishers to generate money through ads and new subscriptions. He estimates that such referral traffic from links has been valued at Canadian Dollars 250 million per year.
Expressing disappointment, Kent said that none of the company’s suggestions to make changes to the C-18 bill, before it was passed into law, were accepted. It is interesting to note that Google and Facebook were able to strike deals with some Australian media companies in 2021 after similar legislation was amended. However, the Canadian government currently doesn’t seem to be interested in negotiations, with Prime Minister Justin Trudeau accusing Google parent Alphabet and Meta of using “bullying tactics.”
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