Government Releases Online News Act Draft Regulations for Public Consultation

On September 2, 2023, the federal government published its highly anticipated draft Regulations Respecting the Application of the Online News Act, the Duty to Notify and the Request for Exemptions (Draft Regulations) implementing the Online News Act (Act) for public consultation. For an overview of the Online News Act’s mandatory bargaining regime and the CRTC’s implementation plan, see our previous Blakes Bulletin: The CRTC Publishes Its Online News Act Implementation Plan.

The Draft Regulations are available for public comment until October 2, 2023. The government indicated it anticipates the Draft Regulations will be in place before the Act comes into force on December 19, 2023.

The Draft Regulations are meant to provide clarity on two elements of the Act: i) the threshold for application, and ii) the criteria for granting an exemption order. The substantive requirements and process outlined in the Draft Regulations are complex and we have highlighted the salient points below.

Threshold for Application of the Act

The Draft Regulations establish a three-part threshold for determining whether there exists a “significant bargaining power imbalance” between the platform (defined in the Act as an “operator”) and news businesses, as contemplated by section 6 of the Act:

1. The platform’s total revenue from all sources in the previous calendar year must be greater than C$1-billion.

2. The digital news intermediary offers one of the following online news communications platforms that makes news content available to persons in Canada:

   • A search engine that aggregates and provides pathways to news content from news outlets in response to search queries made by visitors, or

   • A social media service that facilitates interactions between users and news content through a social network

3. The digital news intermediary had, during the previous calendar year, an average of:

   • At least 20-million unique visitors in Canada per month to the search engine, or

   • At least 20-million active users in Canada per month to the social media service

If a digital news intermediary meets all three of the threshold criteria above, they fall within the scope of the Act, and are required to register with the CRTC within 30 days. Once the Act comes into force on December 19, 2023, any platforms that meet the above criteria would, therefore, have an obligation to register before January 18, 2024.

Criteria for Exemption Orders

Section 11 of the Act provides that digital news intermediaries that fall within the scope of the Act can independently negotiate agreements with news businesses and present this package of agreements to the CRTC to receive an exemption from the mandatory bargaining regime. The Draft Regulations provide some structure to the negotiation process, and further specify the public interest criteria for exemption set out in section 11 of the Act.

First, the Draft Regulations add a new exemption criterion not previously enumerated in the Act. To be eligible for an exemption order, a digital news intermediary must issue a public call stating its intention to negotiate with news outlets on its online communications platforms for at least 60 days and request that the CRTC make this notice available on the CRTC’s website.

Second, the Draft Regulations provide some additional detail on how the public interest criteria in s.11(1)(a) of the Act would be met, as follows:

• The Act requires that agreements provide fair compensation to news businesses to qualify for exemption. The Draft Regulations specify that agreements will provide fair compensation if each agreement falls within 20% of the average “relative compensation” across all of the digital news intermediary’s agreements. Relative compensation is defined in the Draft Regulation as the ratio of compensation relative to the number of that news outlet’s paid full-time equivalent journalists. It is calculated by dividing the total amount of compensation provided for in the agreement by the number of journalists employed by the news business.

• The Act provides that agreements must ensure news businesses will use an “appropriate portion” of compensation to support local, regional and national news content. The Draft Regulations instruct that the CRTC must consider this appropriate portion threshold to be met if the agreements include a commitment from news businesses “to use some, or all of the compensation provided under the agreement for the production of local, regional and national news content.”

• The Act requires that agreements must not permit corporate influence to undermine freedom of expression or journalistic independence. If the agreements include a commitment from the digital news intermediary not to undermine freedom of expression of journalistic independence, this criterion will be met. Furthermore, at a minimum, the Draft Regulations require that all agreements explicitly prohibit the following:

  • Taking retaliatory action in response to an editorial decision of a news business

  • Restricting actions a news business may take to protect journalistic independence

  • Intervening in a news business’s editorial process

• The Act states that agreements must contribute to the sustainability of the Canadian news marketplace. Total compensation for all the agreements will be considered to have met this criterion if the compensation amount is equal to the outcome of the following formula established in section 9 of the Draft Regulations: A x B x 4%.

  • “A” represents the digital news intermediary's annual global revenues.

  • "B" is Canada’s gross domestic product, in current U.S. dollars, divided by the world’s gross domestic product, in current U.S. dollars as established by the World Bank.

• The Act requires that agreements provide fair compensation to news businesses to qualify for exemption. The Draft Regulations specify that agreements will provide fair compensation if each agreement falls within 20% of the average “relative compensation” across all of the digital news intermediary’s agreements. Relative compensation is defined in the Draft Regulation as the ratio of compensation relative to the number of that news outlet’s paid full-time equivalent journalists. It is calculated by dividing the total amount of compensation provided for in the agreement by the number of journalists employed by the news business.

• The Act provides that agreements must ensure news businesses will use an “appropriate portion” of compensation to support local, regional and national news content. The Draft Regulations instruct that the CRTC must consider this appropriate portion threshold to be met if the agreements include a commitment from news businesses “to use some, or all of the compensation provided under the agreement for the production of local, regional and national news content.”

• The Act requires that agreements must not permit corporate influence to undermine freedom of expression or journalistic independence. If the agreements include a commitment from the digital news intermediary not to undermine freedom of expression of journalistic independence, this criterion will be met. Furthermore, at a minimum, the Draft Regulations require that all agreements explicitly prohibit the following:

  • Taking retaliatory action in response to an editorial decision of a news business

  • Restricting actions a news business may take to protect journalistic independence

  • Intervening in a news business’s editorial process

• The Act states that agreements must contribute to the sustainability of the Canadian news marketplace. Total compensation for all the agreements will be considered to have met this criterion if the compensation amount is equal to the outcome of the following formula established in section 9 of the Draft Regulations:

• The Act requires that a significant portion of independent local news businesses, Indigenous news outlets, and official language minority community news outlets benefit from the agreements. The Draft Regulations provide that this criterion is met for local news businesses and official language minority community news outlets if no group of 10 or more of these businesses are excluded from the agreements. Similarly, if no group of five or more Indigenous news outlets is excluded, the agreement package will be considered as having a “significant portion” of these outlets captured. Only news businesses that responded to the digital news intermediary’s 60-day public call, who were not included in the package of agreements for exemption can de considered “excluded.”

• The only public interest criterion on which the Draft Regulations do not provide any further clarity is section 11(1)(vi) of the Act, which specifies that a range of news outlets, in both the non-profit and for-profit sector, that reflect a number of different communities must be captured by agreements.

If you have any questions about the Online News Act, please do not hesitate to reach out to the authors:

or any other member of the Communications group.