MPA filed challenge against mandated foreign streamer contribution to news
By Ahmad Hathout
Amazon and Apple have filed Wednesday separate challenges at the Federal Court of Appeal against the CRTC’s decision to impose a base contribution on foreign streamers, arguing among other issues that it isn’t equitable because it doesn’t require the same for online Canadian streamers that are part of large broadcasting groups and goes beyond Canadian contributions for audio services.
Amazon, which has a video and music streaming service, said the CRTC’s mandated five per cent of annual revenues is contrary to section four of cabinet’s policy direction to the regulator which states contributions “must be equitable given the size and nature of the undertaking and equitable as between foreign online undertakings and Canadian broadcasting undertakings.”
Amazon argues the CRTC’s decision to exempt Canadian online streamers owned by traditional broadcasting groups making $25 million or more because these groups have been making larger mandatory contributions every year runs afoul of the cabinet order.
“The CRTC lacks the authority to discriminate between online undertakings based on their corporate affiliation with Canadian broadcasting undertakings,” Amazon said in its Wednesday application. “The CRTC does not have – and does not identify – any authority to close any historical ‘gap’ in contributions between classes of undertakings by imposing new contribution requirements on only some undertakings.”
Amazon adds that the regulator did not address the contributions made by online streamers to the Canadian system, how those contributions compare to traditional Canadian broadcasters and, ultimately, how a five per cent levy is justified in light of these issues.
For example, it said its Prime Video business passes on much of the revenue it collects in Canada to the streaming services of traditional broadcasting groups, which are exempted under the CRTC’s order. It added it makes royalty payments to rightsholders, including the Canadian performance rights organization SOCAN.
The e-commerce giant also said the decision is arbitrary because it imposes the same five per cent on audio streamers even though they are distinct undertakings. It said the five per cent levy would be far higher than certain radio services, but the CRTC doesn’t address that discrepancy.
The company is also challenging the process by which it thrust the order upon its subjects. The CRTC made the order early last month and then asked the affected streamers to comment within 10 days on whether the order accurately reflects the determinations made by the commission in the decision.
This fact, Amazon argues, is not proper procedure because it is an expenditure order that affects a class of undertakings, not a “particular person,” citing subsection 11.1 of the Broadcasting Act. An order can be made for that class, it further leverages the subsection to argue, only when a regulation has been passed.
Otherwise, the CRTC should’ve given parties a minimum of 30 days to comment on the matter because this should have been a decision done by regulation, not a direct order, it said.
Apple, which also has a video and music streaming service, agreed in a separate complaint with Amazon’s overarching theme of unfairness with the base contribution decision and with its argument that the CRTC erred by applying a blanket expenditure order against a class of undertakings without first making a regulation.
But it went further.
In another major sticking point during the proceeding to implement the Online Streaming Act, the CRTC was faced with mounting calls to prioritize the definition of Canadian content, which is part of its roadmap to the law’s implementation. Indeed, even some Conservative members of Parliament have taken issue with the regulator not making that the first thing to define before imposing a contribution because the goal posts could shift when those parameters are finalized.
Apple is saying this order of priorities is contrary to section 19 of the policy direction from cabinet, which points to the need to prioritize determining “what constitutes Canadian programming.”
The CRTC, therefore, erred by “requiring the online undertakings to make informed submissions in relation to matters about which critical information was missing,” which is contrary to the policy direction, it said.
Dovetailing from that, Apple further argues that the CRTC failed to consider whether it was “appropriate” under section 3 of the Broadcasting Act to require the base contribution “without regard to the services’ profitability” and/or “without regard to contributions already being made to support Canadian and Indigenous content.”
It also agreed with Amazon that the CRTC failed to show how it was equitable, as also according to section 3, to require online audio streamers to pay a contribution that “is in excess of the contribution required of any other class of audio undertaking,” including Canadian-owned radio services such as Sirius XM, which is required to pay four per cent.
The challenges come one day after the Canadian affiliate of the Motion Picture Association filed a complaint in the same court alleging the CRTC had no basis for requiring that it contribute 1.5 per cent of its mandated five per cent of annual revenues toward local news from which it doesn’t benefit or create.
Apple similarly noted that the CRTC failed to show how it was equitable that online streamers must pay a base contribution “when online undertakings do not enjoy the same access to funds as is enjoyed by other undertakings or their affiliates that create programming.”
