California bill advances that would make Google, Facebook pay news companies whose stories appear on their platforms

Researchers in a paper in November estimated Google gets about $21 billion a year, and Facebook about $4 billion a year, from news on their platforms.

A bipartisan bill to make Google and Facebook pay news companies whose stories appear on their platforms to help the struggling media industry faced its first test in the state Senate Tuesday evening when it passed 9-2 out of the Judiciary Committee.

If approved by the Senate and signed into law, Google and Facebook either would have to agree to pay negotiated annual, lump-sum fees into a fund for news outlets, or be forced into mediation or arbitration to negotiate paying a share of their digital-ads revenue.

“News outlets have downsized and closed at alarming rates,” Assemblywoman Buffy Wicks, an Oakland Democrat who introduced the California Journalism Preservation Act, said at Tuesday’s hearing.  As news moved online and major internet platforms gained broad reach, publishers were required by circumstance to allow their content onto the platforms, with “little to no compensation,” she said.

The bill, AB 886, co-authored by assembly members Bill Essayli, a Riverside Republican, and Josh Lowenthal, a Long Beach Democrat, passed the state Assembly in June 2023.

Supporters include a number of news publishers and organizations including the California Broadcasters Association and the California News Publishers Association, to which the Bay Area News Group belongs.

“This is critical for the future of our industry and our democracy,” said Brittney Barsotti, a lawyer for the California News Publishers Association. “There’s so much misinformation and polarization out there that having quality journalism is necessary.”

In addition to Google and Facebook, opponents include the ACLU of California, the California Taxpayers Association, the Electronic Frontier Foundation and some online news organizations, including CalMatters.

Google’s vice-president of global news partnerships Jaffer Zaidi argued to the committee that the bill rested on a “flawed premise” that internet platforms grab news for profit without compensation. Google Search sends “billions of visits” daily to websites of news publishers of all sizes, giving them “valuable free traffic,” Zaidi said.

Jeff Jarvis, a retired journalism professor who wrote a report on the bill for one of its chief critics, the California Chamber of Commerce, told the committee Tuesday he feared it would benefit national media conglomerates, newspaper-owning hedge funds, and “extremist and propaganda media.” The bill is probably unconstitutional, he said, calling it “a tax on reading.”

Chamber of Progress, a group backed by Google, Facebook and other large technology companies, cited Canada as an example of potential fallout from the bill, after many publishers north of the border lost traffic when Meta, faced with such a law, stopped carrying news on Canadian Facebook. Small outlets have been hit hardest, according to the group.

Meta, which earned $135 billion in revenue last year, on Tuesday repeated an earlier threat that it would “be forced to make the business decision of ending the availability of news in California” if the bill passed. “The vast majority of people don’t come to Facebook and Instagram for news and political content,” Meta said in a statement, describing the news on its platforms as “something that does not generate significant value for our users or our business.”

Google, which earned parent company Alphabet $273 billion in revenue last year, also threatened to block news in Canada, but later agreed to pay publishers $73 million a year, with payments yet to take place. In April, Google responded to AB 886 by removing news links for some consumers.

Researchers at Columbia University and the University of Houston released a paper in November that estimated Google’s revenue linked to news media search results amounted to $21 billion a year. Meta gathers nearly $4 billion a year from news on U.S. Facebook feeds, the researchers said.

Bill supporters argue that platforms take advantage of publishers’ need to be in search results and news feeds “and refuse to negotiate a fair division of advertising revenue to which both parties contribute,” a legislative analysis said.

Damage to local outlets from “strip mining” by companies like Google parent Alphabet, worth $2.3 trillion in the stock market, and Facebook parent Meta, worth $1.3 trillion, hits traditional news companies, smaller non-profit outlets, and innovative digital-media startups, said Matt Pearce, president of the Media Guild of the West.

Martha Diaz Aszkenazy, publisher of the San Fernando Valley Sun, testified that outlets like hers will go under if the state legislature does not act.

“These tech giants exploit local publishers by using our content and providing it to their own users,” Aszkenazy said. “It’s directly responsible for the death of local news across the state and country.”

Supporters of the bill argue that recent amendments including basing payments on the number of employed journalists instead of online clicks, plus dedicated funding and greater spending flexibility for smaller publishers will help ensure the broadest benefits.

The bill, described by Wicks as a “work in progress,” goes next to the state Senate’s Appropriations Committee. If it passes out of that committee, and survives a Senate vote, it must go back to the Assembly for a “concurrence” vote because of substantial revisions, before heading to the desk of Gov. Gavin Newsom. The governor’s office on Tuesday did not respond to questions from this news organization about his views on the bill.