Foreign investment screening in interactive digital media
01 Mar 2024
On 1 March 2024, the Government of Canada issued a Policy Statement clarifying how the Investment Canada Act providing for FDI screening shall be applicable to investments in Canadian businesses and entities from the Interactive Digital Media (IDM) sector. The statement takes note of hostile State-sponsored or influenced actors, whose investments may lead to propagating disinformation or manipulating information causing a risk for national security. Thus, the Policy explains that such risks justify an enhanced scrutiny of foreign investments in the sector under the existing framework. It also spells out factors to be particularly considered to determine whether trunsactions are injurious to national security. Those include:
1) reach and audience;
2) whether the products have online elements;
3) nature and extent of the investor's ties to a foreign government;
4) likelihood of being used as a vehicle by a foreign state to propagate disinformation or censor information;
5) composition of the board of directors of the Canadian business;
6) degree of control or influence the investor would likely exert on the Canadian business, including its products' content.
For the purpose of the Statement, IDM includes digital content and/or an environment in which users can actively participate, information or education delivered via the Internet, mobile networks, gaming consoles or media storage devices, video gaming, e-commerce (including some mobile apps, virtual and/or extended reality devices).
Additionally, on 15 March 2024, the Government also announced the Policy Statement on the net benefit reviews of Foreign Investments in Cultural Businesses in the Interactive Digital Media Sector. Under the Investment Canada Act, the Minister of Canadian Heritage is entitled to review proposed acquisitions of control by foreign investors pertaining to Canada’s cultural heritage or national identity. The Policy stresses that foreign investments in in cultural businesses in Canada’s IDM sector are subject to FDI screening and lists factors taken into account in the process.
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Type:
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Entry and establishment (Ownership and control, Approval and admission)
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Industry:
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Services (Publishing, audiovisual and broadcasting activities, Telecommunications, Computer programming, consultancy and related activities, Education, Arts, entertainment and recreation, Other service activities)
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Sources:
