Promoting Innovation Worldwide October 28, 2022 Information Technology Industry Council (ITI) Submission to the Senate Regarding Bill C-11, the Online Streaming Act Dear Senators: As you are in the final stages of considering the Online Streaming Act, C-11, the Information Technology Industry Council (ITI) appreciates your robust hearing process and would like to contribute some suggestions on behalf of our members. Introduction ITI is the premier global advocate for technology, representing the world’s most innovative companies.

Founded in 1916, ITI is an international trade association with a team of professionals on four continents. We promote public policies and industry standards that advance competition and innovation worldwide. Our diverse membership and expert staff provide policymakers the broadest perspective and thought leadership from technology, hardware, software, services, and related industries.

ITI respectfully requests that the Canadian Senate make changes to the Online Streaming Act: • Global online undertakings have created new opportunities for Canadian creators to reach global audiences via both online streaming platforms and user generated content. The regulatory framework for C-11 should build off of this success by acknowledging the existing contributions and investments made by online undertakings. • ITI also requests that the Canadian Senate amend Bill C-11 to exclude user generated content (UGC) and UGC platforms.

This would better reflect the stated intentions of the government and the key differences between traditional broadcasters and innovative online services.

Imposing a system that does not consider the nuances of the digital era may inadvertently chill innovation and affect consumer choice. • The legislation must also make explicit the government’s intent not to engage in algorithmic manipulation, for example by precluding the CRTC from making orders or regulations - including under Sections 9 or 10 of the Broadcasting Act - that require the use of a specific algorithm or source code, changes to any algorithm or source code, or changes to the output of any algorithm or source code. • We also believe the legislation would benefit from providing more specific direction and guardrails to scope the discretion afforded to the CRTC in developing and implementing regulations.

2 We have included recommendations in the Appendix to amend several provisions of the Online Streaming Act so that it is more fit for purpose, promotes innovation, and bolsters consumer choice. We welcome the opportunity to engage with you further. Legislative Guardrails Without unambiguous legislative direction, the CRTC’s regulatory oversight will likely extend to levying fees and taxes and penalizing content that generates revenues directly or indirectly and/or assigned a unique identifier.

The CRTC could require any undertaking to provide information that the CRTC considers necessary for the administration of the Act, which includes discoverability and interference in algorithms. There also remains a risk that the implementation of C-11 may result in an out-of-date approach that implements rigid content quotas and expenditure requirements originally intended for traditional domestic broadcasters. It is important that the CRTC sets regulations in a way that acknowledges key differences between domestic and global business models.

To ensure C-11’s implementation does not have unintended consequences for Canadian customers, the CRTC should assess any regulatory measures through a lens of innovation and customer choice. Canada has incredible stories to tell, and our members value the role they play in Canada’s creative sector. That is why ITI stands by the government’s intent to support Canada’s creator economy. We believe this can be done through a modern and flexible regulatory framework that recognizes the unique value global online services bring to Canada, while also promoting innovation and customer choice.

We respectfully request that the Canadian Senate ensure legislation promotes a modern, flexible definition of Canadian programs in order to expand opportunities for Canadian creators to reach global audiences. Given the evolving nature of storytelling in Canada, it’s important that the CRTC consider a variety of factors and cultural benefits when defining Canadian content (10.1.1), and not prioritize any one factor in their decision-making process.

Of further concern is how this affects Canada’s obligations under the Canada-United States-Mexico Agreement (CUSMA): The agreement includes a cultural exemption, any party (i.e., the US) may take a measure of equivalent commercial effect in response to an action by another party (such as Canada) that would have been inconsistent with CUSMA, but for the exemption. We understand trade concerns have been raised but they have not been addressed in the amendment process. Online Undertakings Online undertakings and traditional broadcasters are very different in their delivery of content.

The legislation should recognize these important distinctions rather than attempt to apply outdated regulations to streaming services and user generated content. Unlike traditional broadcasters, online undertakings do not rely on public airwaves or funding and complement traditional broadcaster offerings by creating new Canadian content to serve customer needs locally, while also attracting new audiences to Canadian stories and their storytellers, alongside other offerings. The confusion over exactly which content is covered by the bill stems from a conflicting

section of C-11 that outlines when the CRTC can regulate content uploaded to social media.

Section 4.1 does exclude content uploaded to social media, while

Section 4.2 grants the CRTC the authority to regulate much of that content.

3 The government has said it does not intend to regulate user generated content.1 Unfortunately, this is not expressly stated in the bill. CRTC Chair Ian Scott conceded this point in a hearing by stating: “As constructed, there is a provision that would allow us to [regulate user generated contact] as required.”2 While Chair Scott said the regulator has “never interfered” with such content and plans to follow legislative intentions, the currently drafted legislation does not stop a future CRTC from applying these requirements to user generated content without parliamentary oversight.

An amendment to fully exempt user generated content would significantly reduce confusion and give the current and future CRTC more explicit direction. To reflect the government’s stated intent, legislators should consider adjusting the definition of “online undertaking” in

Section 2 of the Online Streaming Act to the following: “online undertaking means an undertaking for the transmission or retransmission of programs over the Internet for reception by the public by means of broadcasting receiving apparatus but does not include an undertaking that primarily provides a social media service.” Furthermore, if user generated content is not excluded as proposed in the Appendix, we recommend limiting regulation to programs that generate direct revenue - as opposed to indirect revenue - and clearly defining direct revenue.

For example, direct revenue means revenue from the sale or rental of the program to the consumer, from any subscription or sign-up fee required for users of the service to access the program, or from advertising that appears in the audio-visual program immediately before, during, during breaks from, or immediately after the program.. Algorithms Heritage Minister Pablo Rodriguez and others have said that the bill precludes the CRTC from interfering with algorithms. However, the current draft does not adequately protect against such interference. CRTC Chair Scott said “I don’t want to manipulate your algorithm.

I want you to manipulate it to produce a particular outcome. And then we will have hearings to decide what are the best ways and explore it”. This is manipulation of the algorithm. The CRTC may not tell the platform specifically how to adjust the algorithm, but clearly it can issue regulations that portend specific outcomes and would affect the user’s experience. The process of promoting Canadian content for streaming services and user generated content would require invasive practices that jeopardize the privacy of Canadian users and creators and the ability of Canadian creators to reach global audiences.

These directives and what items the CRTC requires algorithms to surface, would directly undermine the ways in which consumers discover and select content of their choosing on popular platforms.

An expansive CRTC review would infringe on specific algorithmic rights such as exposing intellectual property and trade secrets. 1 For example, MP Chris Bittle said, “[the] government’s been clear about its objective that between both the bill and the subsequent policy directive, digital-first creators and their user-generated content are scoped out.” Raisa Patel, Could the federal government regulate your cat videos on YouTube?

Maybe, former CRTC vice-chair warns, Toronto Star (May 24, 2022); Heritage Minister Pablo Rodriguez told the House that “Bill C-11 clearly outlines that the regulator would have no power to regulate the everyday use of social media by Canadians.” Canadian House of Commons, House of Commons Debates (Feb. 16, 2022), available at https://www.ourcommons.ca/DocumentViewer/en/44-1/house/sitting-32/hansard.

4 We strongly recommend that C-11 make clear that the CRTC may not issue orders or regulations - including under Sections 9 or 10 of the Broadcasting Act - that require the use of a specific algorithm or source code, changes to any algorithm or source code, or changes to the output of any algorithm or source code Conclusion Thank you for your consideration of our perspectives as you review the Online Streaming Act. Sincerely, Katie McAuliffe Senior Director, Telecommuncations Information Technology Industry Council (ITI) kmcauliffe@iti.org

5 Appendix Proposed amendments for the Online Streaming Act

Section Draft Law Suggested Amendments Amend the definition of “online undertaking” in

Section 2(1) to appropriately exclude social media services 2(1) online undertaking means an undertaking for the transmission or retransmission of programs over the Internet for reception by the public by means of broadcasting receiving apparatus, but does not include an undertaking that primarily provides a social media service; (entreprise en ligne) Recognition of differences between global online undertakings and Canadian broadcasters 3.1(f.1) Maintain the language in 3(1)(f.1) that is necessary to foster equitable requirements for global online undertakings. s.5(2) Amendments to the regulatory policy in

section 5 to ensure that the CRTC will encourage competition, innovation and promote choice and affordability for Canadian consumers. An amendment to

section 10 to ensure that “no one factor is determinative” as the regulator considers the full range of policy objectives in establishing a new approach to defining the scope of Canadian programs. Protect Canadian creators by ensuring no algorithmic manipulation 9.1(8) Restriction — computer algorithm or source code

(8) The Commission shall not make an order under paragraph (1)(

e) that would require (

a) the use of a specific computer algorithm or source code; or (

b) changes to any online undertaking’s algorithms or source code; or, (

c) changes to the output of any computer algorithm or source code. 10(1) Restriction — computer algorithm or source code

(1.3) The Commission shall not make regulations under paragraph (1) that would require (

a) the use of a specific computer algorithm or source code; or (

b) changes to any online undertaking’s algorithms or source code; or (

c) changes to the output of any computer algorithm or source code. If social media services are not categorically excluded, clearly scope regulations to programs that generate direct revenue, recognizing that indirect revenue cannot reasonably be measured, and define direct revenue 4.1 Non-application — certain online undertakings and programs on social media service

6 4.1

(1) This Act does not apply in respect of a program that is uploaded to an online undertaking that provides a social media service by a user of the service for transmission over the Internet and reception by other users of the service. Application — certain programs

(2) Despite subsection (1), this Act applies in respect of a program that is uploaded as described in that subsection if the program (

a) is uploaded to the social media service by the provider of the service or the provider’s affiliate, or by the agent or mandatary of either of them and over which provider has programming control; or (

b) is prescribed by regulations made under

section 4.2. Non-application — social media service

(3) This Act does not apply in respect of online undertakings whose broadcasting consists only primarily of programs in respect of which this Act does not apply under this section. For greater certainty

(4) For greater certainty, this

section does not exclude the application of this Act in respect of a program that is transmitted or retransmitted by a broadcasting undertaking, in a manner that is outside of the scope of subsection (1) and/or subsection (3), except for the fact that it is not uploaded as described in subsection (1), is the same as a program in respect of which this Act does not apply under this section. 4.2 Regulations — programs to which this Act applies 4.2

(1) For the purposes of paragraph 4.1(2)(b), the Commission may make regulations prescribing programs in respect of which this Act applies, in a manner that is consistent with freedom of expression. Matters

(2) In making rRegulations under subsection (1), the Commission shall apply only if consider the following matters (

a) the extent to which a program, uploaded to an online undertaking that provides a social media service (

a) directly or indirectly generates revenues; and (

b) has been assigned a unique identifier under an international standards system.

(3) For programs to which the Act may apply pursuant to 4.2(2), the Commission shall consider the fact that such a program has been broadcast, in whole or in part, by a broadcasting undertaking that (ai) is required to be carried on under a license; or (bii) is required to be registered with the Commission but does not provide a social media service; and (

c) the fact that such a program has been assigned a unique identifier under an international standards system. 2(1) direct revenue means revenue from the sale or rental of the program to the consumer, from any subscription or sign-up fee required for users of the service to access the program, or from third-party advertising that appears in the audio-visual program

7 immediately before, during, during breaks from, or immediately after the program; (revenues directs)