A cost-effective investment in compliance

In response to the multi-faceted nature of online harms posed by these platforms, Canada is contemplating the potential enactment of a regulatory regime that would likely include the creation of an ombudsman for digital safety with responsibility for overseeing complaints against online platforms and compliance with an age verification mechanism to better protect children and youth from inappropriate exposure to social media platforms.

In a prior, expansive proposal for online regulation, the Parliamentary Budget Officer estimated this would require more than 300 staff equivalent positions at an annual cost of between $50 to 60 million.1 It is likely that any such regulatory body established today would cost substantially less, resulting from a narrower and less burdensome initial regulatory regime than the previous iteration of the Online Harms Act, and the fact that the current government has mandated a comprehensive expenditure review process in order to drive increased efficiency within government.

The United Kingdom's Ofcom, now enforcing the Online Safety Act's children's safety duties, operates an online safety budget of £71–92 million (approximately $132–171 million CAD) annually, funded through fees levied on platforms with global revenue above £250 million. Australia's eSafety Commissioner, the longest-standing dedicated online safety regulator among peer countries, receives base operational funding of $42.5 million AUD (approximately $42.1 million CAD) per year from government appropriation. The European Commission's Digital Services Act enforcement unit, covering only the largest global platforms, draws on industry supervisory fees totalling €58.2 million (approximately $93.6 million CAD) annually.

Against the scale of harm documented in this paper, the regulatory investment proposed for Canada is modest by any international standard — and, unlike the UK and EU models, does not presuppose cost recovery from industry.

Since these are future costs and would bring with it (hopefully) corresponding reductions in harms and costs as a result of increased compliance, these are excluded from counting in the paper's model, but are presented here for informational purposes.

A regulator costing $50–60 million represents about two to three percent of one year's low-end harm cost ($2.0 billion) falling on Canadian children and youth, and about four to nine percent of the federal share of that fiscal burden ($676 million to $1.2 billion).