On December 19, 2023, the Governor in Council issued the Online News Act Application and Exemption Regulations (Regulations), bringing the Online News Act (Act) into force. The Regulations introduce significant modifications compared to the draft Regulations Respecting the Application of the Online News Act, the Duty to Notify and the Request for Exemptions (Draft Regulations).
For an overview of the Draft Regulations, please consult our Blakes Bulletin: Government Releases Online News Act Draft Regulations for Public Consultation. For further background on the Act’s mandatory bargaining regime, see our Blakes Bulletin: The CRTC Publishes Its Online News Act Implementation Plan.
The Regulations provide clarity on which platforms are subject to the Act and prescribe the process to be applied in their negotiations with news businesses. Key aspects of the Regulations (compared to the Draft Regulations we had previously summarized) are as follows:
The Regulations narrow the threshold for determining whether a “significant bargaining power imbalance” between the platform (defined in the Act as an operator) and news businesses to the following two factors:
- The platform’s total global revenue from all sources in the previous calendar year must be greater than C$1-billion; and
The digital news intermediary is one of the following online communications platforms:
A search engine with at least 20-million unique visitors in Canada per month to the search engine, or
A social media service with at least 20-million active users in Canada per month to the social media service.
Compensation agreements must no longer be within 20% of the average “relative compensation” across all of the digital news intermediary’s agreements to be considered for an exemption order from the Canadian Radio-television and Telecommunications Commission (CRTC). Instead, agreements are considered fair “if they provide comparable compensation to news businesses of a similar size, with a similar business model and similar capabilities that provide a similar type of news content to comparable markets and communities.”
The Regulations increase the threshold for interpreting an “appropriate portion” of compensation that will be used for local, regional and national news content, to “a majority of compensation provided under the agreement.” The Draft Regulations permitted only “some or all” of the compensation to be directed at these sources.
The Regulations remove the Draft Regulations’ formula for determining the sustainability of the Canadian news marketplace, which was previously based on the digital news intermediary’s global revenues and Canada’s gross domestic product. Now, in order for compensation agreements to be eligible for an exemption order, the CRTC must consider the sufficiency of the total monetary compensation provided for in the agreements with regard to the digital news intermediary’s share of Canadian internet advertising revenues in the previous calendar year.
The Regulations provide an exception to the sustainability calculation for the “largest search engine,” which is defined as “the search engine with the greatest share of Canadian Internet advertising revenues among all search engines.”
The Regulations now permit platforms to enter into agreements with a group of news businesses, instead of individual agreements with each news outlet. In practice, this will lower the administrative burden imposed on platforms because they can enter into an agreement with an open collective that will disburse funds among its members.
Now that the Act has come into force, digital news intermediaries that meet the threshold criteria above are subject to its requirements and must register with the CRTC within 180 days of the Act applying to them. Any platforms currently subject to the Act will have to register by June 14, 2024.
The CRTC’s website indicates that it will modify its regulatory plan for the implementation of the Act in light of the new Regulations. The CRTC’s regulatory plan will likely include the following key steps:
The launch of consultations on key aspects of the regime, including in relation to the framework applicable to certain agreements, the bargaining and arbitration process, a code of conduct for fair negotiations, eligibility requirements for news organizations, and the rules surrounding undue preference complaints.
An announcement as to the date on which the CRTC will begin accepting applications from news businesses to be designated as eligible to receive compensation under the Act. A news business must be designated to trigger the bargaining process, and as a result, the bargaining regime likely will not be operative until that time.
The adoption of regulations related to exemption proceedings and hearing applications by digital news intermediaries for certain exemption orders under the Act.
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