Implementation of Bill C-18 Framework in India

[By Ashutosh Chandra]

The author is a student at the Jindal Global Law School.

Introduction:

Recently the Canadian Parliament introduced the Bill C-18. The law aims to bring about fairness in the Canadian digital news ecosystem and make sure that the system can support itself. This is done by regulating commercial interactions between digital intermediaries and news outlets. If the bill is implemented, digital intermediaries will be forced to pay a certain amount for ‘making available’ news content produced by outlets on their platforms.

When the law is analyzed in the context of India, there is a pending case before the Competition Commission of India (“CCI”) against Google concerning its position of dominance in the news market by the Indian Newspapers Society (“INS”). It is contended that creators of news broadcasted in the digital space are not being provided fair value for their efforts and it is Google, the entity controlling the ad-tech value chain due to its dominant position. Noting the pending case and the Canadian law, the paper would try to understand what the law enacted by the Canadian Parliament would reap if a similar law were enacted in the Indian legislation. Additionally, the paper would also analyze if there were mechanisms that the CCI can use to frame guidelines for the operation of such law.

Bill C-18 and other similar laws – purpose and impact:

As per Section 2(a) of the Bill, news content or any portion of it is made available when it is reproduced. Even if access to the same is facilitated by “any means”, then the news content is made available. And if this is done in the space of a digital intermediary, then the intermediary must provide compensation to the producer of the news. Again, the purpose behind this is to increase “fairness” in the Canadian digital news market. However, at the stage of the pronouncement of the bill, it is unclear how this will be achieved. Even though “fairness” is proposed, it is firstly contended that compensation to the producer would not automatically guarantee fairness. If anything, the paper argues the same would lead to unfairness between the producers through the depletion of opportunities for the new news business and a decrease in net neutrality.

Quantum for Payments

It is to be noted that the quantum of payment to the news producers is very low. The intermediary does not even need to publish the news on its platform to provide compensation. Merely, providing access through the method of hyperlinking would do. The “any means” part of the bill ensures the same. Going by the consideration of the provision, intermediaries would need to remove complete access to not pay.

Before the implementation of the bill, the news producers produced and posted news through their handles on platforms operated by intermediaries. If the same is considered, the parliament’s purpose of payment for news content with consent serves no purpose. In any case, these news outlets provide their consent for their items to be hyperlinked on intermediary platforms like Facebook, as also denoted through the privacy policy of Facebook.

Basis for Compensation

Further, the blanket of compensation can be interpreted to extend toward all news producers as per the section. It has no qualitative or quantitative basis on which it is decided whether a news producer is to be paid or not. While there may be contracts that the intermediaries and news outlets enter, the problematic portion is that there are no supervising guidelines for the formation of these contracts. The only requirement is that compensation must be necessarily paid.

In such a case, the intermediaries may be forced to use their metrics and then decide the compensation amount as a general practice, provided that the intermediary decides to contract with multiple business outlets. This would open another set of problems – which includes the intermediaries to news outlets that do not generate revenue or serve no purpose, and only enter contractual relationships with news outlets. This would then lead to the elimination of those discarded outlets from mainstream social media. Therefore, the proposed bill is silent on these implications of the provisions and would thin out the competition in news in the online sector.

Standard of Journalism

The other implication is the standard of journalism. Due to compensation being provided regardless of the quality of news published, a news operator may not be motivated to provide high-quality content. This would result in an overall depletion standard of journalism in online news media.

Since online platforms are paramount for news outlets in this age and day, it only follows that newer outlets would not be able to find their footing in the industry, as the intermediaries are not motivated to pay everyone and use everyone’s sources. Therefore, there is a clear detriment to competition.

Advertising of News Platforms

Then there is the question of digital advertising on operators’ platforms. The model suggested would bring about an end to digital advertising on news, as now the operators will have to pay businesses instead for the news produced, as opposed to them taking money from news businesses to spread reach. This model is structured in such a manner that it would lead to a loss of profits for digital intermediaries. Even so, the news intermediaries have other sources for digital advertising. The model is not going to financially cripple the digital intermediaries, even though it may affect them negatively.

However, the larger problem also appears harmful to upcoming and less-known news platforms. Now, news outlets may not partake in the process of digital advertising, as now the intermediaries will have to pay for news. And digital intermediaries cannot be expected to advertise for a news business without getting compensation for it. Therefore, the source for them to grow their business through digital advertising and make people aware of the network no longer works for them.

Position in India:

In the case pending with the CCI, the relief asked is for a just payment system for news creators on digital media. This is asked due to the news operators allegedly heavily investing in producing content. Further, it was contended that the total amount of advertising revenue was not showcased, and the percentage of advertising revenue being transferred to media organizations is not made public.

As it happens, digital intermediaries generate revenue by showcasing advertisements on the sites of the news operators. This is different from news operators using the advertisement facility to boost traffic on their sites. Here, digital intermediaries use the sites of operators and hence are liable to pay some amount of money to the creators. Hence, the framework proposed by C-18 may not find strict application in the Indian context even if there are issues related to the payment to news creators on digital media in both jurisdictions.

Case against Google by INS:

Firstly, for analyzing the case under Abuse of Dominance, it is not disputed that Google occupies a dominant position in the Indian market. However, even so, for the commission of the offense, it needs to be showcased that there is an imposition of unfair and discriminatory conditions in the purchase or sale of goods or services, or price in purchasing or selling of goods or services, or any of the four conditions mentioned in Section 4(2) of the Indian Competition Act. In this case, the factor of money has been questioned through the petition. Therefore, it needs to be established from the side of INS that Google and the parent group has indeed indulged in the imposition of unfair and discriminatory practice in terms of condition or pricing for revenue generation through advertisements on those sites.

From a preliminary point of view, the fact that Google does not divulge information about its earnings and not sharing its earnings with operators would not automatically constitute unfair or discriminatory pricing or conditioning for the sale of service. For this purpose, the CCI first must ascertain what unfair and discriminatory pricing or conditioning would exactly constitute. As per the Schott Glass appeal, the COMPAT found that it needs to be showcased for unlawful price discrimination that there was dissimilar treatment in equivalent transactions and harm to competition or likely harm to the competition. Elaborating on the harm aspect, the COMPAT ruled that the same would constitute buyers suffering from a competitive disadvantage against each other. Further, both need to be established to prove unlawful price discrimination.  Here, the information not being provided does not affect the competitiveness of the newspaper agencies or lead to a dissimilar treatment.

Further, in the case of Anand Parkash Agarwal v. Dakshin Haryana Bijli Vitran Nigam and Ors., it was stated that discriminatory pricing may not amount to be problematic if there are ‘redeeming virtues’ or justifications that are objective for the pricing to different consumers. Again, here, the price breakdown to news agencies is not known to contend that there is in fact discriminatory pricing.

Possible Mechanisms to be used by CCI:

Going by the judgments mentioned, if the definition of unfair pricing is interpreted in a similar manner, then the customers are not being exploited. However, the CCI can investigate financial relations between news operators and digital intermediaries, and then provide a judgement on those facts. If a relief like Bill C-18 would be granted in the judgement, then there can be arguments made that it would impact digital journalism as is known as foreseen in the prior parts of the article. Hence, the bill should not be implemented in India in its current form.

This is not to say that CCI should not act at all. The best-case scenario here would be that the CCI inquiries into the finances of Google and check the ratio provided to digital intermediaries for using their sites. It would result in a situation where even Google is making a profit, and some amount would be borne by the digital intermediaries.

Conclusion:
In the background of the case, the C-18 framework is not for an Indian scenario, given the laws of the country accounting for unfair and discriminatory pricing. The CCI should ideally investigate the financials of the transactions occurring between the intermediaries and operators and based on the same provide a decision. If the ratio is in favor of Google, the CCI may choose to direct Google to provide financial benefit.

However, if the CCI chooses to implement a framework like Bill C-18 of Canada, the same would result in an unfavorable scenario overall for all stakeholders involved in the production of the news and those affected by it.

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