The Letter That Ended the Levy
In a letter dated July 17, 2026, Department of Justice senior general counsel Michael Morris told the Federal Court of Appeal that "the government's intention is to eliminate the base contribution requirement on streaming services and to provide government funding to replace those contributions." That single sentence, filed in the middle of an active judicial review, unwinds the CRTC's two central rulings under the Online Streaming Act: the original 5% base contribution order of June 2024 and the escalated 15% order the Commission issued this past spring. Both are now headed for the shredder, to be replaced by direct government spending.
The reversal is not a courtroom loss. The government is not conceding the CRTC acted unlawfully; it is pre-empting the litigation by promising to rewrite the policy direction before the court has to rule. According to reporting on the filing, Ottawa plans to publish an updated policy direction in the Canada Gazette "in the coming weeks," after which the minister must consult the CRTC, table the direction in Parliament, and hold at least a 30-day comment period — a process that, based on the timeline of the original 2023 direction, could stretch for months before the CRTC even begins drafting replacement rules.
What the CRTC Actually Ordered
The Online Streaming Act (Bill C-11), which received royal assent on April 27, 2023, amended the Broadcasting Act to bring foreign streaming services inside Canada's cultural-funding system for the first time. The CRTC used that authority to order, in Broadcasting Regulatory Policy 2024-121, that streaming services with more than $25 million in Canadian revenue contribute 5% of that revenue to funds supporting Canadian and Indigenous content, projecting roughly $200 million a year in new money. Netflix, Amazon, Apple, Spotify, and the Motion Picture Association–Canada (representing Netflix, Disney, Sony, Paramount, Universal, and Warner Bros. Discovery) challenged the order, and the Federal Court of Appeal granted them leave to appeal in December 2024, with arguments heard in Toronto in June 2025.
Rather than wait for that ruling, the CRTC raised the stakes: in a decision this May, it lifted the rate to 15% of Canadian revenue for large streamers, projecting a stabilized funding pool of more than $2 billion a year, while trimming traditional broadcasters' obligations from the 30–45% range down to 25%. That order — three times the original rate, imposed while the original rate was still under judicial review — is the one that appears to have forced Ottawa's hand.
The Case the CRTC Was Making
The steelman for the contribution framework is not frivolous. Canadian broadcasters have carried CanCon obligations for decades while streaming platforms captured an increasing share of viewing and advertising revenue without contributing to the same funding pools — a genuine competitive asymmetry. Local news, in particular, has lost revenue to platforms that host but don't produce it, and the Independent Local News Fund that the 2024 order fed was aimed squarely at that gap. A regulator asked by Parliament to bring streamers into a decades-old funding system was never going to find a rate that satisfied both the incumbents and the newcomers, and 5% was, on its face, a modest ask relative to the 25–45% traditional broadcasters already faced.
Why Tripling the Rate Mid-Litigation Was the Wrong Move
But the CRTC's decision to escalate from 5% to 15% while the original order was still before the Federal Court of Appeal was a serious misjudgment, and Ottawa's climbdown is the correct — if belated — correction. Regulatory credibility depends on rate stability during judicial review; tripling a contested levy before a court has even ruled on its legality signals a regulator racing to entrench facts on the ground rather than defending the reasonableness of its original order. That approach also collided with an active trade irritant: U.S. Trade Representative officials, including Jamieson Greer, had already flagged the streamer contribution rules as friction in bilateral trade talks, and a 15% levy on largely American platforms handed Washington a concrete grievance at a moment Canada could ill afford one.
The substitution of taxpayer funding is not a free lunch, either. Replacing a streamer levy with a $600 million annual government commitment — announced by Canadian Heritage Minister Marc Miller in June — converts a sector-specific cost recovery into a general budget line, meaning the public now subsidizes a policy goal that regulators couldn't design a durable, litigation-proof mechanism to fund from the platforms that benefit from the Canadian market. That is a worse outcome for taxpayers than a stable, modest, and legally sound contribution rate would have been — which is the argument for getting the next policy direction right rather than treating this reset as a vindication of doing without one.
What Comes Next
The CRTC must now formally unwind its own decisions and launch fresh proceedings once Ottawa's new policy direction is finalized — a process participants expect to take months, with implementation further out given the likelihood of renewed legal challenges from whichever side feels shortchanged by the next iteration. For an Act that was sold as bringing streaming platforms into Canada's broadcasting system on stable, predictable terms, two years of escalating, litigated, ultimately abandoned rate-setting is a poor advertisement for how the framework is meant to work.