Google not ‘grabbing’ media revenue, VP tells MPs

OTTAWA — Creating the oft-asked-for level playing field by making foreign digital services subject to Canadian sales tax would hurt smaller companies trying to break into the country’s market, a House of Commons committee heard Tuesday from a representative of Alphabet Inc.’s Google Canada. The standing committee on Canadian heritage needs to consider the implications of changing the rules to support the request the committee heard repeatedly during its ongoing study of the media and local communities, said Jason Kee, Google Canada’s counsel for public policy and government relations. Previous witnesses have called for equality in taxation, saying that foreign providers receive an advantage of up to 15 per cent over Canadians and called for foreign over-the-top (OTT) services like that offered by Netflix Inc. to be subject to sales tax. “Because it’s one thing for Google or Netflix or whatever, but if you think about the challenge you may be creating for every single small enterprise existing on the Internet that wants to serve the Canadian market to be required to register for GST and then to collect and remit GST, that’s going to be a challenge for them and may result in smaller services not being able to break into the market,” Kee said. “It actually hurts them more than it hurts us.” Google representatives also took the opportunity to refute the notion raised by other witnesses before the committee that the company is partly responsible for the loss in ad revenue seen by media companies. Earlier in Tuesday’s meeting, Phillip Crawley, publisher and CEO of the Globe and Mail, told the committee that as readership switches to a predominantly mobile platform, the paper will have to find better ways of generating advertising revenue, since mobile advertising is not as fruitful as digital ads on larger screens. “But as you know, the big global players soak up a lot of that digital revenue anyway,” Crawley said. “We’re playing for much smaller percentages of the pie.” Speaking via videoconference from Washington, D.C., Richard Gingras, Google’s vice-president of news, said the company is “grabbing nothing from no one.” Seventy per cent of digital ad revenue goes back to the publishers, he said. “Google was fortunate enough to put into place new kinds of advertising systems, highly scalable advertising systems,” Gingras said, adding that those systems are in use by two million publishers around the world. The company also said it wasn’t in favour of a recent suggestion by the Media Reform Coalition, which was raised by Liberal MP Seamus O’Regan. In a Sunday post to its website, the London, England-based coalition recommended a one per cent levy “on the operations of the largest digital intermediaries with the resulting funds redistributed to non-profit ventures with a mandate to produce original local or investigative news reporting.” “Our core view is that the way forward is more through innovation and technology and product development and developing new and sustainable business models and cross subsidization,” said Kee. “It’s a number of reasons, largely based on the fact that creating subsidies is not necessarily sustainable in the long run — it tends to build in dependence upon the subsidy and doesn’t necessarily spur the kind of innovation that you’re looking for.” — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Google not ‘grabbing’ media revenue, VP tells MPs

News | November 15, 2016

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Google not ‘grabbing’ media revenue, VP tells MPs

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