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By Paul Vieira

OTTAWA--Canada said Tuesday it would pull its advertising on Facebook and Instagram in response to their owner Meta Platforms' threat to ban access to news reports on its platform for Canadian users.

This marks the latest salvo in a row pitting Canada's Liberal government and the big digital platforms, most notably Meta and Google, which is owned by Alphabet. Canada's parliament approved legislation about two weeks ago to compel digital platforms to compensate domestic media outlets for links to their articles.

Meta said at the outset it would block news content to users in Canada, and last week Google said it would remove links to news articles on its search function for Canadian users, once the new law takes effect, in roughly six months.

Canada's Heritage Minister Pablo Rodriguez said Tuesday he's confident the government can resolve Google's concerns through regulations, which officials are currently working on to guide implementation. Rodriguez, however, said Canada would cease advertising on Facebook and Instagram. Last year, Canada spent 11.4 million Canadian dollars, or the equivalent of US$8.6 million, on advertising with Facebook and Instagram.

Rodriguez added he wants Meta and Google to work with the government through the regulatory process and find a compromise.

"Meta has to change its approach," Canadian Prime Minister Justin Trudeau said, in remarks after Rodriguez unveiled the advertising decision. "The federal government could not in good conscience continue to spend taxpayer dollars buying services from a company that has demonstrated that it doesn't respect Canadian democracy and the pillars of democracy."

A spokeswoman for Meta said Canada's new law is flawed because it ignores how Facebook and Instagram work and user preferences, and fails to account for value the platforms provide news publishers. The spokeswoman added Meta plans to comply with the law "by ending news availability in Canada in the coming weeks."

Kent Walker, president of global affairs at Google, said last week Canada's approach "creates an untenable level of product uncertainty, financial uncertainty that we don't think any business would be in a position to accept."

News Media Canada, a lobby group for news publishers, applauded Canada's decision regarding advertising on Facebook and Instagram. "We expect this will encourage corporate advertisers, who value a free and plural press, to put their money where their mouth is," said Paul Deegan, the group's chief executive.

The law aims to provide media outlets with a financial lifeline to offset the loss of advertising revenue that has migrated to the digital sphere. If negotiations fail, the law calls for the two sides to enter binding arbitration to determine appropriate compensation.

Meta and Google have argued the law would put a price on free links to webpages, which contravenes copyright legislation and upends the concept of an open internet where users can search and connect to material without restrictions.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

July 05, 2023 15:59 ET (19:59 GMT)

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