Tru-Don’t: Canada Shows What Not To Do on Tech Policy

Adam Kovacevich
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When Canadian illustrator Chelsea O'Bryne told Politico that a recently passed piece of tech legislation was "going to make it virtually impossible for freelancers like me to continue finding new clients while residing in Canada," it would have been a fair assumption that she was criticizing protectionist American legislation preferencing U.S. industry over Canadians like her.

Instead, the call was coming from inside the house. O'Bryne was railing against a key part of Prime Minister Justin Trudeau’s technology policy agenda – a plan that is wreaking havoc on Canadians and the country's relationships with the rest of the world

The Online News Act (C-18) requires digital platforms to pay news outlets whenever a link or content is shared over their site. When a Canadian user shares a Toronto Star article with their friends on Facebook, the new law would require Facebook to pay the Toronto Star. That might sound good for news - but in reality, it’s a disaster for outlets and creators, as online platforms have begun cutting costly news content.

But the Online News Act is just one of several tech policy stumbles that Trudeau has made this year. The Prime Minister’s recently proposed Digital Service Tax (DST), a levy on certain digital services provided by multinational tech companies, is threatening to muck up a yearslong, international effort to fairly tax online platforms, potentially sparking a trade war that would lead to higher prices and even fewer choices for Canadians.

Canada's DST attempts to unilaterally tax international digital firms instead of working within a global procedure led by the OECD to fairly tax digital services across the world. As the U.S. Chamber of Commerce explained in a warning letter to the Canadian Department of Finance, the unmitigated double taxation of U.S. companies created by the DST would have real-world costs including "retaliatory measures" from the Biden Administration or even a trade war that would increase costs for American and Canadian goods of all kinds.

Well-respected Canadian policymakers have also highlighted the disastrous potential of Trudeau’s proposed DST. Canada’s former Minister of Foreign Affairs Perrin Beatty recently wrote that by threatening to impose a DST, “Ottawa appears intent on instigating a trade war with the United States.”

And if a trade war and blocked news links aren’t enough to undermine Canada’s digital economy, Trudeau has also championed Canada’s Online Streaming Act, which risks similarly dire consequences. While its goal is to force streaming platforms to back Canadian content and creators, the bill's narrow definitions of what it means to be a Canadian creator, and its requirement that platforms prioritize display of Canadian content, would actually end up downranking many undeniably Canadian artists who’ve built their careers on digital streaming.

As one example, Justin Bieber's hit song Despacito, made in collaboration with Puerto Rico's Luis Fonsi, would not qualify as Canadian content under the Online Streaming Act because the song was not written in its entirety by Bieber.

At a moment when many tech industry players are under intense scrutiny for developing products with a move-fast-and-break-things mentality, it appears that Trudeau has adopted the same reckless ethos when it comes to tech policy. American lawmakers should be more cautious when changing the rules of the U.S.'s $2.4 trillion digital economy.

While Canada’s ecosystem of online creators, apps, and consumers is smaller than its counterpart in the States, new streaming rules threaten to ruin the livelihoods of tens of thousands of Canadian creators who’ve made their careers online. Canada’s new link tax risks tanking web traffic for the dozens of local and niche news outlets that depend on social media sites to share stories. And the country’s proposed Digital Services Tax risks a trade standoff that would hurt Canada’s entire economy.

While Trudeau’s war on tech has targeted American digital platforms, its first victims will be Canadians themselves. As Canada’s legislature considers moving forward with Trudeau’s agenda, and as American lawmakers look on, we should watch for its impact not just on big tech, but on all of the Canadians who buy, sell, stream, search, work, relax, and connect online.