Bernhard: Canada must protect itself from big tech companies
Apr 2, 2018
In the wake of news that Donald Trump’s presidential campaign may have exploited the personal information of 50 million Facebook users without their consent, democratic governments around the globe are taking action to reign in American internet giants.
The U.S. Congress and the British and European parliaments have called on Facebook CEO Mark Zuckerberg to explain why his company’s rules permitted such a flagrant breach of trust.
The United Kingdom’s Culture Secretary, Matt Hancock, responded to the latest Facebook scandal by declaring that “the wild west for tech companies is over.”
Hancock is introducing new data privacy laws, regulation and taxation measures to end the free ride Facebook, Google and other tech giants have enjoyed. Germany, Australia and other industrialized nations are also acting to protect their democracies from Facebook’s parasitic business model.
What is the Canadian government doing to protect our democracy from these nefarious platforms? Sadly, not much.
In fact, the federal government’s tax policy subsidizes these information behemoths to the tune of $1.3 billion every year.
Since the 1960s, the Income Tax Act has provided incentives for Canadian companies to place ads with Canadian media outlets. These incentives protect our media from unfair foreign competition, while preserving Canadian jobs and voices.
But there’s a loophole: these incentives don’t apply to internet-delivered media. For example, companies trying to reach Canadians are rewarded for placing ads in a Canadian newspaper instead of the New York Times. But these rewards don’t apply when ads aimed at Canadians are placed on the Times’ website. Our rules are designed to reward advertisers for keeping their money in Canada, but when the advertising is digital, we don’t enforce the rules.
This internet advertising loophole allows $5.5 billion to leave Canada each year. Most of that money travels down a tax-free express lane to Google, Facebook, YouTube and others south of the border.
In effect, the government is giving up $1.3 billion in tax revenue each year to make Facebook and Google ads cheaper. The rest of the world is pushing back against these anti-competitive, tax-avoiding, democracy-flouting, privacy-invading corporations, but Ottawa is sitting back, taking little meaningful action.
Ottawa has actually partnered with Facebook to combat fake news, even though this platform is the primary vehicles by which fake news is spread.
The advantages Ottawa has bestowed on these American media giants are massive, and they’re sending Canadian media companies into a nose-dive toward oblivion.
Already, more than 10,000 Canadian journalists have been laid off and hundreds of media outlets have gone dark.
Google, Facebook and the other tech giants constitute the biggest threat to Canada’s independence and cultural sovereignty since Hollywood. Their stranglehold on information threatens our democracy and undermines our ability to tell our own stories. They are muzzling Canada’s voice.
Canadian media are vital to democracy and the sustenance of Canadian culture. Ever wonder why we don’t have mass shootings, perpetual war, Trump, or privatized health care? Because we have our own culture that keeps us safe from America’s shortfalls. Yet our culture is only as strong as its voice, and that voice can’t survive Ottawa’s inaction.
Once our media is gone, who will report our stories and produce programs about our country? CBS? Google? Facebook? Not likely.
Ottawa can stop the bleeding by ending its preferential tax treatment of the American web giants that are smothering the strong, independent journalism on which our democracy depends, and killing jobs in the print and broadcast media industries throughout Canada. Quebec took a first baby step to level the playing field in its budget this week, mandating Netflix to collect provincial sales tax.
The time has come for the Liberal government to ensure these foreign companies protect our privacy and respect our democratic values. They should be subject to effective competition laws and privacy regulation, and they should be held responsible when they publish blatant falsehoods.
But first and foremost, Ottawa must stop privileging American monopolists with tax-free status and other unfair advantages that silence Canada’s voice. A country without a voice cannot long survive. It’s time for Canadians to speak up, while we still can.
Daniel Bernhard is executive director and spokesperson of the watchdog group Friends of Canadian Broadcasting.