By pulling ads from Facebook, Meta can force its hand on news deals – as support grows

Pull ads from Facebook could push Meta into making deals with news outlets, though more momentum would be needed to push it over the edge, experts say.

The tactics adopted this week by several governments and companies in Canada could force the hand of the social media giant if other countries and companies follow suit in larger markets, said Sam Andrey, general manager of the Dais at Toronto Metropolitan University.

“I found it interesting how quickly a number of organizations and governments followed suit, and I’m sure more will follow,” he said.

“The Government of Canada as an advertiser in itself is not a huge material loss to them in the context of their total Canadian advertising. But if it sparks a movement, you could see them rethinking.”

The federal government – quickly followed by the province of Quebec, the city of Montreal and the media companies Quebecor Inc. and Cogeco Inc. — said Wednesday they would suspend ads on Facebook and Instagram as tensions rise with tech titans over the Online News Act.

Bill C-18, passed in June but not going into effect until late December, forces digital giants to pay media outlets for content they share or reuse on their platforms.

In response, Meta and Google announced last month that they would remove news from Canadian journalistic media from their sites before the law takes effect. The removal of ads by governments and big business marks the latest tit-for-tat move in a game of gradual abyss.

Kent Walker, president of global affairs for Google and its parent company Alphabet, said in an interview last week that the law is unworkable because it puts a price on the left, resulting in unlimited financial liability “that no company could accept.”

A spokesperson for Meta said the regulatory process won’t be able to address the changes the company wants to see, which is why it plans to remove news from its platforms.

“Unfortunately, the regulatory process is not equipped to make changes to the fundamental features of the legislation that have always been problematic, and so we intend to comply by ending the availability of news in Canada in the coming weeks,” said the California-based company on Wednesday.

The $10 million a year that Canada’s heritage minister says he spends on ads on Facebook and Instagram is a fraction of Meta’s $113 billion in ad revenue last year.

Nevertheless, media viewers say Meta may need to reconsider its strategy if other governments enacting similar legislation — including the United States, United Kingdom and Brazil — follow Canada’s lead.

“Other democratic countries such as the United States, Mexico and the EU could all take similar steps of principle,” said Courtney Radsch, director of Center for Journalism and Liberty, a Washington, D.C.-based think tank.

A parallel reaction in the corporate world may equally carry weight – for reasons of self-interest and perception as well as for reasons of principle.

“I think brands recognize the value that news brings to them. And there are studies that show that consumers have a better perception of brands that advertise through news,” said Radsch.

The six-month window before the bill goes into effect gives Ottawa time to decide how to move forward with the regulations.

The Canadian approach identifies companies through a regulatory process by the Canadian Radio-Television and Telecommunications Commission, an independent regulator, based on their size, strategic advantage, and whether they hold “prominent market position.”

Meta may be using Canada as a cautionary tale for other countries, Andrey suggested.

“They are concerned about it spreading from Australia – and now Canada – to much larger jurisdictions,” he said.

“We’re just in the unfortunate position of being a test case for them. If they can hurt it here, won’t others follow? It’s bullying.’

Meta has said Pull news links simply put it in line with the law.

Besides dollars and cents, reputations are also at stake.

“There is already concern about the spread of disinformation and conspiracy theories. If you remove authoritative news sources, are you feeding the perception that the information on these platforms is not credible?” Andrew asked.

Whether or not social media users care is another matter. The dissapearing of ads of a handful of Canadian governments and telecom companies may not grab the attention of teens on Instagram. But if bigger, hipper retail brands or celebrities got involved, and especially if the user experience changed, the tide could start to turn.

CBC News editor-in-chief Brodie Fenlon released an article this week describing how he was unable to see posts on his Instagram page, noting that the content had been blocked “in response to Canadian government legislation.”

“Once those roll out, people will care about that because it adds friction to their internet experience,” Andrey said.

The timing is tricky for Meta, which launched Threads on Thursday, a text-based app intended to compete with Twitter, as that platform faces turbulence following its October acquisition of Elon Musk.

“For years, Twitter was the place to discuss news and current affairs. Meta leans into this space,” Andrey said. “But if the users in Canada can’t link to news, then it’s a different type of platform.

“I think it poses real risks to Meta,” he said.