Explain It Like I'm Five: Digital advertising and the Online News Act

What is the Online News Act?

A law coming into effect in a few weeks that would see certain tech companies pay Canadian publishers in exchange for having news on their platforms. It is based on Australia’s News Bargaining Code, which mandates that tech platforms enter a negotiation process with outlets to determine that number.

How do the tech companies feel about it?

Meta pulled news from its services so it didn’t have to be bound by the Act’s terms. Google was prepared to do the same, but reached a deal with the government this week.

Do Meta and Google make money from news on their platforms?

Kind of? Facebook and Instagram don’t directly generate revenue from hosting news content, but some argue that if news is among the content audiences see when they are on the platform, publishers should be entitled to some of the ad revenue platforms get for those audiences.

For Google, they could make money from search ads appearing next to news stories among general search results, but ads typically don’t appear on the platform’s “News” tab.

So why did the government say the company had 80% of online ad revenue?

Because Meta and Google make money off of their social media and search platforms through their audience networks and market control in the programmatic advertising supply chain.

Their what?

Essentially, the little box an ad appears inside on your favourite newspaper’s website or app, plus the automated tech that finds, delivers and targets the ad. Because tech giants own so many pieces of that process, they can get a big portion of the revenue from ads on news websites themselves.

So why didn’t the Online News Act address that?

Because the government probably doesn’t have the power. Imposing a simple cap on how much revenue a company like Google can earn from an individual ad would be a more direct way to address the imbalance but would likely be considered overreach. The “Australia model” and its bargaining process is something of a workaround.

The other option would be breaking up Google and Meta’s ad businesses, but Canada’s regulators don’t have the power to do that (the EU, on the other hand…).