Seven key priorities to protect consumers in the digital wild west
Canada is far behind other countries coming to grips with the power of corporate digital giants
The dangers posed by the American Wild West digital frontier where mega-corporations operate mostly above the law beyond borders are clear enough — have been for some time, well before the latest scandal of the misuse of the profiles of up to 87 million Facebook users.
But Justin Trudeau and his colleagues, Heritage Minister Mélanie Joly and Democratic Institutions Minister Karina Gould, remain infatuated with Facebook, Google, YouTube, Netflix and other digital giants. They’ve wasted the last two years settling for crumbs from them, rather than regulating them. In so doing, they have been remiss in their responsibility to Canadians, Canadian companies and Canadian sovereignty.
They urgently need to come up with a comprehensive digital policy. It would:
1. Protect the privacy of social media users. Make data gatherers obtain consumer consent, and be transparent on how they store data and who they sell it to or share with.
The European Union has already passed such a law. The U.S. Federal Trade Commission announced Monday it will investigate Facebook over the misuse of private data.
2. Change antitrust and competition laws, especially to curb the duopoly of Facebook and Google, as suggested by Carolyn Wilkins, deputy governor of the Bank of Canada.
Facebook has 2.1 billion users a month. It also owns WhatsApp — 1.2 billion users; Messenger — 1.2 billion users; and Instagram — 700 million users. That’s a total of 5.2 billion monthly users. In Canada, Facebook is estimated to have 20 million users.
Google, used for an estimated 3.5 billion searches a day, also owns YouTube, which has 1.5 billion users a month. Nearly 70 per cent of Canadians 18 and over watch YouTube at least monthly.
Last year the European Commission laid several charges against Google and fined it $2.7 billion (U.S.) for abusing its market dominance, and manipulating its search engine in favour of its own businesses over those of competitors. Competition regulators have also fined Apple and Amazon.
Australia’s Competition and Consumer Commission is probing whether Facebook is “exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers.”
Missouri is investigating whether Google has broken the state consumer protection and antitrust laws.
Yet Canada’s Competition Bureau last year dropped an investigation
into Google, saying that the company did not use its market position to disadvantage competitors. Ironically, it did so on the same day as the EU levied its fines on Google.
3. Start taxing data/platform companies and make them levy sales taxes on their transactions.
While most jurisdictions are struggling to make the transition from tax regimes based on goods and services to a digital economy, Canada is behind others.
Australia has found ways to make Google and Facebook pay taxes.
The European Commission has just issued new taxation rules, suggesting that big technology firms pay a 3-per-cent tax on turnover for various online services — to the tune of 5 billion euros.
The finances of Google, Facebook, Netflix and others in Canada are murky. They have few employees, little infrastructure and contribute little to our economy. Ottawa should make them disclose the number of their users and subscribers, and the revenues they generate in Canada.
Ottawa should disallow tax deductions for ad expenditures on Facebook and all other foreign internet sites. Such deductions were meant only for ads placed with Canadian newspapers, radio and television, not foreign-owned media.
These companies should also be charging HST on their products and services. It’s absurd that you get taxed HST when you place an ad in, say, the Globe and Mail, but not when you place it with Google, Facebook or other digital companies.
4. Explore ways to make these hightech giants pay users for the use of their information.
The big attraction for social media consumers has been that it’s free. In fact, it is they who are providing free content to Facebook, YouTube, WhatsApp, Messenger, Instagram, and others. Users are spending an estimated 39,759 years on Facebook every day. That’s nearly 15 million years of free labour for Facebook. We’ve become serfs in its kingdom, supplying it not only free content but also letting it monetize our habits.
5. Make Netflix play by the same rules as other broadcasters. Have the CRTC regulate it.
Netflix has surpassed five million subscribers in Canada and revenues of $775 million.
Not subject to CRTC regulations, Netflix is not obligated to contribute to the creation of Canadian content. Joly has settled for a Netflix promise of spending $100 million a year for five years and building a production facility here. But if Netflix were regulated, it would probably be spending more — and would have to prove to be doing so, rather than merely extending a promise that Joly may or may not be able to enforce.
Her deal with Netflix caused an uproar, especially in her home province. Quebec is worried that Netflix may not spend enough on French programming. The National Assembly has unanimously asked Ottawa to make Netflix pay a sales tax.
That’s precisely what a parliamentary committee headed by Liberal MP Hedy Fry recommended last year. But the Liberal government chose to continue a Stephen Harper policy. It was he who, as an election goody, had decided to forgo HST on Netflix users — a loss of an estimated $100 million a year to Ottawa.
6. Get guarantees against fake news, on pain of huge fines.
Congress is probing the role of Facebook, Google and Twitter in Russian meddling in the 2016 American election.
British Parliament is investigating whether Facebook and Twitter were complicit in the 2016 referendum on Brexit.
Contrast this with Canada’s privacy commissioner, Daniel Therrien. Last week, when news broke of the privacy breach of millions of Facebook users, he said, gingerly and deferentially, that his office would be “reaching out to Facebook to seek information.” And he spoke of making political parties subject to privacy laws. As important as that may be, it pales into insignificance compared to the sins of the big companies.
7. Control hate, as does Germany. The idea that hate and offensive material is hard to define is a cop-out. Under pressure, Facebook and others are suddenly discovering that they can indeed draw lines, and are promising to do so.
The track record of Google, Facebook, Netflix and others is that they don’t do anything substantial until forced to. Gould has said so herself: “Social media companies only responded when regulation came down from government.”
So, where are those regulations? Unless Ottawa gets its act together, warns Jim Balsillie, ex-CEO of Research In Motion, “Canada risks becoming not just a cheap tech branch plant economy for engineers and computer scientists but also a client state” of American high-tech data and platform corporations.