OTTAWA — Major streaming companies, including Apple, Amazon, and Spotify, are set to contest a recent order from the Canadian Radio-television and Telecommunications Commission (CRTC) that mandates they contribute a portion of their revenues to the production of Canadian content and local news. This legal battle, which consolidates several appeals, will unfold in the Federal Court of Appeal in Toronto.
The CRTC's 2024 directive requires these companies to donate five percent of their annual Canadian revenues—an estimated minimum of $1.25 million per company—toward funds supporting Canadian programming. This move has been met with strong opposition from various streaming giants, which argue that the financial obligation is unwarranted.
In December of the previous year, the court temporarily suspended the payment requirement, with the streaming services arguing that if they complied and later won the appeal, they would not be able to reclaim the financial contributions. In their court filings, these companies have articulated numerous objections rooted in legal interpretations of the CRTC’s authority under the Broadcasting Act.
Spotify's argument centers around the notion that the contribution acts as a form of tax, which the CRTC has no power to impose without a clear and established framework for what constitutes Canadian content. Similarly, Amazon claims that the federal cabinet’s specifications mandate equitable treatment, arguing that the requirement is "inequitable" as it only targets foreign online platforms earning over $25 million annually from Canadian broadcasts.
Apple suggests that the CRTC acted prematurely and failed to fully examine the "equitable" nature of the order. They highlighted a disparity where Apple would pay five percent while traditional radio stations are subjected to only a 0.5 percent requirement, adding that the streaming companies do not similarly benefit from the funds into which they contribute.
The CRTC enforces distinct regulations on traditional media, necessitating large English-language broadcasters to allocate 30 percent of their revenues to Canadian programming. In contrast, the Motion Picture Association-Canada is challenging only the segment of the CRTC's order requiring a 1.5 percent contribution to local news production specifically for independent television stations, contending that none of the streamers are linked to news production and thus should not be compelled to fund it.
In a response to these arguments, the Canadian Association of Broadcasters asserts that the CRTC possesses extensive authority under the Broadcasting Act and argues that streamers have exacerbated the financial struggles faced by local news outlets. The association points to a shifting landscape where traditional media is in decline as Canadians increasingly turn to online streaming services, which have yet to contribute to the financial health of Canadian content.
Furthermore, submissions from the federal government back the CRTC, affirming that the regulator's orders are a legitimate exercise of its regulatory powers aimed at addressing the imbalances created by online streaming platforms profiting from Canadian audiences without contributing to the local industry to the same extent as domestic broadcasters.
The court proceedings occur amidst increasing trade tensions between the U.S. and Canada, which may complicate the CRTC’s efforts to impose regulations on international streaming platforms. The Canadian government has expressed concerns that maintaining the current status quo would unduly burden domestic broadcasters, pressing for contributions from foreign entities that have long operated without similar obligations.
This legal dispute signifies the ongoing clash between traditional broadcasting frameworks and the evolving landscape of digital streaming, reflecting a broader conversation about content production and media funding in the digital age. As the situation develops, it will be interesting to observe how these tensions will affect both domestic content creators and international streaming companies operating in Canada.
