Canada introduces new regulations on streaming media: Netflix and Spotify are forced to "increase taxes", while spending on local content is significantly increased.

The Canadian government is officially targeting global media giants. According to the latest release of the "Online Streaming Media Law" implementation details, including Netflix (NFLX.US) and Spotify Technology (SPOT.US), among other streaming media giants, will be required to allocate 15% of their annual income in Canada for local content production. This move advances the related regulations that have been identified by the United States Trade Representative as a source of trade friction. The Canadian Radio-television and Telecommunications Commission (CRTC) officially released new regulations for the country's "Online Streaming Media Law," which will include global streaming platforms in the local broadcasting management framework, including requiring them to make contributions to support Canadian content. "Fair Contribution" The federal broadcasting regulator stated in a press release that the new regulations announced on Thursday aim to "ensure that traditional broadcasting companies and online broadcasting companies, according to their own scale and business models, collectively promote the creation of Canadian and Indigenous content in a fair manner." The regulator emphasized that this move is not simply about increasing the burden on platforms, but is intended to correct the "regulatory divide" between traditional television and streaming platforms - in the past, streaming platforms paid almost nothing for Canadian content, while local traditional broadcasting companies carried a heavy burden of local content obligations. The requirement for traditional broadcasting companies to contribute to local content will be reduced from the current 30-45% to 25% of domestic annual revenue. The contribution rate for online broadcasting companies - i.e. streaming platforms - will be increased from a 5% base to 15%. It is worth noting that more than half of the contributions required from streaming platforms can be completed through direct investment in Canadian content, while the remaining portion will need to be injected into a dedicated fund. In addition, CRTC has also established rules regarding the "discoverability of Canadian content on platforms," requiring algorithm recommendation systems not to deliberately marginalize local works. In a report last month, the U.S. Trade Representative's office once again listed Canada's online platform laws as trade barriers. Republican members of the U.S. Congress also proposed a bill in March of this year to launch a trade investigation into the "Online Streaming Media Law." Big players collectively remain silent, legal challenges continue The new regulations have sparked strong unease among global streaming giants. Streaming giants have consistently opposed the new law, in fact, companies such as Netflix, Walt Disney Company, and Amazon.com, Inc. successfully obtained a temporary suspension order from the Canadian Federal Court of Appeal in December 2024, postponing the implementation of the original 5% contribution requirement. The suspension order is still valid pending a final ruling from the court. A spokesperson for the Canadian Film Association representing Netflix, Walt Disney Company, and Amazon.com, Inc.'s streaming platforms stated that the organization is evaluating the decision and cannot comment immediately. At a media briefing, Scott Shortliffe, Deputy Chief of Broadcasting at CRTC, admitted that streaming giants would prefer not to pay for Canadian content at all, "let alone accepting the requirements proposed today." He said, "No one likes to be regulated, especially not to be asked to pay more costs for a system." For investors, the new regulations will directly impact the profitability of Netflix, Spotify, and others in the Canadian market. In the case of Netflix, which has over 7 million subscribers in Canada and expected annual revenue in the billions of Canadian dollars, a 15% expenditure on local content means hundreds of millions of additional costs each year. Spotify, as a leading audio streaming platform, faces similar pressures.