By Paul Lekas and Morten Skroejer
The AI revolution has led countries around the world to grapple with what the future of technology will entail and how best to protect the progress that has been made and ensure a free and open internet. Although the world has seen meaningful strides in this fight, it has also seen questionable actions by some nations, including restricting access to online information, censoring the internet, and enacting surveillance measures in the name of protecting minors.
Recently, certain measures by the Canadian government and Prime Minister Justin Trudeau have shown a dramatic shift away from policies that protect a free and open internet for Canadians.
One of the country’s most headline-grabbing actions to date was C-18, Canada’s Online News Act. While intended to establish a framework that allows digital news intermediary operators and news businesses to enter into agreements on news content, it is widely seen as part of a crusade against Big Tech and an effort for U.S. tech companies to subsidize smaller Canadian publishers, many of which rely on social media to generate traffic. Indeed, earlier this year, Mr. Trudeau claimed Canada is under “attack” and likened it to World War II.
The effect, however, has been felt by Canadians. Earlier this year, both Google and Meta announced they would not make news content available in the country because of concerns with the bills which included placing unprecedented financial liability on companies simply for providing access to the news. Indeed, smaller Canadian media outlets are now likely to be harmed by this legislation, including greatly diminished traffic and potential loss of jobs that was intended to protect them.
The Online Streaming Act (C-11) is another example of Canada prioritizing a legislative vendetta at the expense of Canadians’ access to information. Designed to expand Canada’s current Broadcasting Act, the bill risks putting Canada’s creative industry at risk and sets a dangerous precedent. The rules being written by the CRTC could impose sweeping new taxes on streaming services like Netflix and Disney+–some have proposed as much as 20%–potentially crushing the multibillion dollar market for films, TV shows, and music produced in Canada. While a new and restrictive tax regime would benefit incumbent Canadian cable companies, it will not help Canadian customers who are simply looking to be entertained.
But C-11 is not the only tax on digital services being considered. In August, Canada released a draft of its newest proposed legislation, the Digital Service Tax Act. The bill would impose a 3% tax on revenue from specific businesses that meet a threshold of gross revenues of at least €750 million and in-scope Canadian revenues of at least 20 million Canadian dollars.
Despite revisions, the act still discriminates only against US companies and violates Canada’s concord in the Canada-US-Mexico and the World Trade Association agreements. The Act’s unilateral approach is also likely to undermine the OECD and G20 Inclusive Framework. Rather than working collaboratively with the global community, the Trudeau government seems intent on imposing yet another tax on non-Canadian companies who provide services that Canadians value.
This disconnect leads us to question who Canada has in mind as they consider these changes. What is it the government is trying to accomplish? Why are these laws largely targeting American tech companies? Has Mr. Trudeau fully considered the significant economic impact of these laws on his citizens and how Canada appears to be trending away from open information and leadership in shaping a democratic approach to technology?
It was only last year that Canada endorsed the Declaration for the Future of the Internet, calling for a “shared vision for an open, trusted and secure Internet for all.” If the government has endorsed the belief that the internet is indeed the backbone of the global economy, then surely it is the key to Canada’s prosperity as well.
Yet that vision is in stark contrast to the Trudeau government’s new digital policies. Mr. Trudeau needs to fully consider what is most beneficial for Canadians everywhere. Rather than taxing online news and streaming companies for providing the content Canadians use daily, and enacting a digital sales tax that will significantly hinder the OECD process and countless trade agreements, he must seek opportunities and policies that will solidify the country’s position of serving as a model for technology and digital policy rooted in democratic values.
Paul Lekas is the Head of Global Public Policy for the Software & Information Industry Association (SIIA), the principal trade association for the software and digital content industry. Morten Skroejer is the Senior Director for Technology Competition Policy for SIIA.
