The digital advertising world collectively exhaled when the Canadian government backtracked on its controversial online news law in December. Four months later, Canadian advertisers are still holding their breath—and their wallets.
Despite Ottawa’s retreat from Bill C-18 (the Online News Act), major tech platforms like Google and Meta continue charging Canadian businesses the same surcharges they implemented to offset the anticipated costs of the legislation. These fees—ranging from 3.5% to 5% on advertising spending—were framed as temporary measures to counter regulatory costs. Yet they’ve quietly transformed into seemingly permanent fixtures in Canada’s digital advertising landscape.
“It’s basically a tax that never went away,” says Malik Ahmad, director of a Toronto-based marketing agency that manages campaigns for mid-sized retailers. “We expected the surcharges to disappear when the government backed down on forcing platforms to pay news outlets. Instead, they’ve become normalized in our media budgets.”
The surcharges first appeared in summer 2023 when Meta and Google protested the Online News Act by threatening to block Canadian news content. Google announced a 4% fee on Canadian advertisers in June, while Meta implemented a similar charge shortly after. When the Canadian government suspended the act’s implementation in December, many businesses anticipated immediate relief.
That relief never materialized.
Data from Statistics Canada shows digital advertising expenditures reached $12.4 billion in 2023, with Google and Meta capturing roughly 80% of that market. A back-of-napkin calculation suggests these surcharges represent nearly $400 million in additional costs borne by Canadian businesses annually.
For small businesses operating on tight margins, these fees compound existing economic pressures. “We’re already dealing with higher borrowing costs and inflation eating into consumer spending,” explains Jaspreet Kaur, owner of an e-commerce business in Vancouver. “An extra 4% on our ad spend might not sound like much, but it adds up to thousands of dollars annually that we can’t invest elsewhere.”
The Canada Revenue Agency‘s recent clarification that these surcharges are subject to HST/GST creates a curious situation where businesses are effectively paying tax on a fee implemented to offset a tax that never fully materialized.
When contacted about the ongoing surcharges, Google Canada provided a statement that its “temporary regulatory fee remains in place as we continue to evaluate the implementation of the Online News Act.” Meta offered similar language about “monitoring the regulatory environment.” Neither company provided a timeline for when—or if—the fees might be removed.
Industry observers note the conspicuous lack of urgency to eliminate these charges. “There’s little competitive pressure to drop these fees when the dominant platforms move in lockstep,” says Dr. Vass Bednar, executive director of McMaster University’s Master of Public Policy in Digital Society Program. “It illustrates the market power problem at the heart of digital advertising.”
The persistence of these surcharges raises questions about whether they’ve evolved from temporary countermeasures into convenient revenue streams. With limited alternatives in the digital advertising ecosystem, most businesses have reluctantly absorbed the additional costs rather than abandon platforms that deliver their customers.
The Canadian Federation of Independent Business (CFIB) has raised concerns about the ongoing charges. “Small businesses are disproportionately impacted by these fees,” says Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “Many of our members can’t simply pass these costs on to consumers in the current economic climate.”
Some advertisers have explored alternative digital channels to reduce their exposure to the surcharges. “We’ve shifted more budget toward direct programmatic buys and email marketing,” notes Ahmad. “But realistically, you can’t avoid Google and Facebook entirely if you want to reach Canadian consumers efficiently.”
The situation highlights the complex relationship between digital platforms, advertisers, and regulatory frameworks. When Ottawa paused the Online News Act, it essentially blinked in a high-stakes game of chicken with tech giants. Yet consumers of digital advertising services continue paying the price for a confrontation that’s technically over.
Heritage Minister Pascale St-Onge’s office declined to comment specifically on the surcharges, stating only that the government “continues to work with digital platforms on implementing a path forward that supports Canadian journalism.”
For advertisers caught in the middle, the path forward seems to involve permanently higher costs. Many have simply resigned themselves to the new normal, adjusting their marketing strategies and expectations accordingly.
“We’ve built the surcharges into our 2024 forecasts,” admits Ahmad. “At this point, it would be a pleasant surprise if they disappeared, but we’re not counting on it.”
As Canada continues navigating the complex landscape of digital regulation, this episode serves as a reminder that even temporary measures in the tech ecosystem can develop surprising staying power—especially when they benefit the platforms that implement them.
For Canadian businesses, the surcharges have evolved from protest to profit center, leaving them wondering if relief will ever arrive or if this is simply the new cost of doing digital business in Canada.
