Google pulled out of political advertising in Canada because of a new law. The lesson is that governing online platforms is hard but necessary.
What happens when government tries to govern big tech? For Canada, the answer is that big tech packs up and leaves. Google recently announced it was going to ban political ads ahead of the next federal election because it could not comply with new legislation designed to bring greater scrutiny to online advertising by creating a political ad registry. Understanding who is advertising and how exactly they’re operating brings greater transparency and integrity to the electoral system, and might prevent the influence of malicious players.
This reaction by Google matters for Canada and for the rest of the world because online advertising is part of the numerous policy challenges involving big tech on the horizon.
Canada, like many countries, is trying to improve election advertising online by requiring better reporting and archiving. The Elections Modernization Act (Bill C-76) requires companies to create political ad registries. Ads must be added to the registry immediately, providing some real-time monitoring during elections. Hopefully, the registry enables journalists, researchers and government to understand what ads run during an election. Oversight ensures only legitimate actors are advertising and doing so within spending limits.
A registry also has the potential to expose platform-based micro-targeting, where candidates can run tens or hundreds of thousands of ads generated instantly using algorithms. The ads are custom-designed to appeal to specific voters and to manipulate their behaviour. While many are calling for this practice to be banned outright during elections, at the very least it should be made wholly transparent.
The law is not onerous. It requires all online platforms (defined as any website or app with 3 million monthly English users, 1 million French users, or 100,000 in another language) to keep a registry of election and partisan ads starting a year before the election and keeping them online for two years afterwards. The penalties are $2,000 for each inadvertent violation and $5,000 to $100,000 for each intentional violation or circumvention.
Bill C-76 is an important preliminary step in the direction of accountability and transparency in the horrendously opaque world of ad tech. It applies only to ads placed through a platform’s official channels – sidestepping paid amplification by bots, influencer marketing or paying staffers to build organic audience. Nor does it improve transparency around targeting or deceptive disclosure about who’s paying for the ads.
Google’s decision to pull political advertising tells us three things about the nascent space of platform governance.
Governing the Internet can work
Advertising companies, social-media platforms, civil society and governments largely want the Internet to help, not hinder, elections, and some collaboration toward this end is emerging. Bill C-76 was the product of public and stakeholder engagement designed to find a way forward. Months of evidence gathering, consultations (of which we were a part) and debate went into the bill, including inviting representatives from Google and other technology companies to offer their perspective. The result was a series of reforms to Canadian election laws and a package of initiatives to guard against digital threats to the integrity of elections.
Paradoxically, Google’s exit from political advertising shows the new law is working. It was put in place to address the total lack of information available to the public about online political ads. Whether a company complies with the law or pulls its services, the goal of the public policy is ultimately served. For example, to sell a granola bar in Canada, certain nutritional information has to show up on the label. If a company finds it too challenging to get an accurate calorie count, it does not have to sell its bars in Canada. In this case, the social harm that the government identified was mitigated. Google’s response shows that the threat of regulation can change behaviour.
Google’s exit might also have unintended benefits for the Canadian ad market. If Google can’t place political ads while maintaining sufficient transparency and accountability, someone else can step up to the plate. Google’s exit creates opportunities for other advertisers to take up its substantial share of advertising dollars. More compliant companies could enter the market and offer online political advertising that is less opaque, is more accountable and ultimately better aligned with Canada’s democracy. This could be alternative advertising companies or perhaps a return to news content being flanked by traditional elections advertising as journalism outlets work to scoop up advertising dollars.
Self-regulating is insufficient
No matter the upside, Google’s exit flags a substantial problem with the self-regulatory approach many platform companies have advocated for. One argument, for example, goes like this: Platforms are the ones that know best the technical structure of their tools and they should be allowed to ensure their tools are not harming people and their democracies.
Google might have picked the market exit strategy because it genuinely cannot technically come up with a compliant registry in time. We find that surprising. There is no doubt that the new Canadian law is imperfect, but Google is likely capable of building a world-class searchable registry of political ads. One would assume a search-engine giant would be capable. And the risks are low. The institution tasked with enforcing the law, Elections Canada, would likely be happy for Google to make any effort in greater transparency, even if there are flaws along the way.
Fixing advertising has vexed Google before. Google stopped running ads about the Irish referendum on abortion. In order to tackle potential cases of fraud and exploitation, it has also banned targeted advertising related to opioid rehab centers and to cryptocurrencies. Overall, it might simply be easier for Google to exit markets than admit that it has trouble coping with bad actors. In other words, Google might have created an advertising system that, by design, is not sufficiently transparent, accountable or good at sorting out quality information. These are attributes that are crucial for democratic systems.
Even if we accept Google’s argument that it would be too challenging to create the registry Canadian law requires, banning all Canadian political advertising from its platform seems equally difficult. In order to ban political advertising completely, Google needs to be able to identify the ads. If political ads show up on Google’s platform, which political actors of some sort will most certainly attempt, Google is still responsible for dealing with them. Either Google will have to take them down or change its mind about the ad registry in order to comply with the new laws. It is unclear how it plans to do this.
Governing platforms is going to be hard
Canada is a canary in the coal mine for the rest of the world trying to govern big tech. If Google leaves a market for an issue as small and relatively straightforward as a political advertising registry, how can we expect it to fix the even bigger challenges ahead? How will it react if governments regulate artificial intelligence, democratize smart cities, modernize their competition policies, tax the platform economy, or bring in new data privacy laws?
Google’s exit is also a warning about the limits of state power. For global platforms, it might be cheaper to exit the country than comply with its laws. This leaves Canada and other smaller markets with limited national solutions. The Canadian experience shows us it is indeed possible for governments to govern platforms, that we must move swiftly and definitively away from the notion of self-governance, and that countries, civil society and good-faith companies are going to need to find international solutions to the problems of technology and human rights.
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