Opinion: Google and Facebook act tough in Bill C-18 standoff because they are desperate

Dylan Freeman-Grist is a freelance writer based in Toronto covering art, design and technology.

Justin Trudeau’s Liberals – particularly in recent times – have gained a reputation for bending over backward whenever foreign corporations have a temper tantrum in our backyard. One only needs to look to the pearl-clutching of Dutch automaker Stellantis and the subsequent billion-dollar subsidy forked over by Canadians for a recent example.

However, in the case of Google’s and Facebook’s standoff over Bill C-18, the federal government should recognize that it holds all the leverage, and act accordingly.

That is because both companies’ plans to block news in Canada, in response to legislation that forces them to pay media organizations, would be nothing short of self-sabotage and, as a result, are not to be taken seriously. Posturing from Meta and Google parent Alphabet shows desperation, not strength.

The companies’ valuations are up, yes, but they are bloated by the artificial-intelligence mania. Frothy share prices – current price-to-earnings ratios of 26 and 36 for Alphabet and Meta, respectively – simply show there is value in an emerging technology saturating the market.

The recent share performance of these two companies is best read as a fleeting veil for their own mounting troubles, all while other governments are planning legislation akin to Bill C-18. Both companies know that buckling to Canada’s demands risks setting off a flood.

Not all bloated valuations are the same. Microsoft’s Bing, fresh off its partnership with OpenAI, is looking less these days like the butt of a joke and more like the cutting-edge option when compared with the slow and sluggish advertising brochure that Google’s main product offering has become in the past few years.

As far as Meta goes, it should surprise no one with a teenager that most of them will tell you Facebook is dead and Instagram is dying. Instead, they are using rivals like TikTok as their primary social network and search engine – preferring their favorite influencers’ opinions to suffocating flashing ads. Google’s own data confirms that 40 per cent of Gen Z opt for TikTok and Instagram as their only search engine. We can expect that proportion to increase substantially if Instagram opts to follow Google off the diving board.

Both companies are very aware of all this, which is why if we take the tack of our Australian counterparts, who refused to budge on their own version of C-18 in 2021 under similar duress from the tech giants, the result would be the same – an agreement to pay a small fee for the content that has been a key reason they became multibillion-dollar companies.

It would also encourage democracies all over the world to pursue a similar, common-sense solution and give their vital news industries a boost amid a sea of media consolidations and closings. Which, of course, is the real reason Google and Meta are rolling out the publicity stunts and melodrama.

To demonstrate their level of seriousness, both companies have begun to roll out comically Orwellian censorship beta tests to segments of Canada’s news-reading public. One such recipient was the CBC’s editor-in-chief, Brodie Fenlon, who was blocked from viewing the broadcaster’s own Instagram account. Mr. Fenlon was met with a statement from Meta announcing that owing to unforeseen laws passed in Canada, it simply could not let him view the network’s newsfeed.

The actual context of why they are blocking content – that they are unwilling to share relative pennies with the organizations that give the platform any value at all – was left out of the statement.

For its part, Ottawa has responded with its own symbolic gestures, pulling all federal advertising from Google and Meta. What’s worrisome is that the move seems more like a strategy to avoid an awkward soundbite in Question Period as opposed to an attempt to put real pressure on the tech giants to back down. (Sympathy for the Poilievre staffer who had to toss out that draft.)

Canadian Heritage’s “Next Steps” for the bill, put out last week, is more troublesome, suggesting that the government is feeling the heat and is open to watering down the law to appease our Silicon Valley benefactors.

As we are a small market, Big Tech is gambling that Canadians will be apathetic to their antics, with our relative size giving the companies the runway to continue their tantrum for some time before they start paying any real price for it.

But a good poker player knows how to read a bluff, particularly when the tell is so glaring. This is why, with Canadians and the world watching on, Ottawa would be wise to double down, not fold.