Tech Giants

California Proposes Law to Require Tech Giants to Compensate News Publishers

A proposed law in California requiring internet tech giants to pay for news stories has made progress, despite Facebook owner Meta threatening to remove news from its platform if the law is enacted. The legislation, known as the California Journalism Preservation Act (CJPA), successfully passed the state assembly and is currently under review by the state senate. If enacted, the law would establish a requirement for large online platforms to pay a monthly “journalism usage fee” to news providers whose content is featured on their services.

The bill’s primary objective is to support local news organizations, which have suffered significant financial setbacks in recent years due to the migration of advertising revenue to dominant players like Google and Facebook. These tech giants have become major forces in the advertising industry, causing severe financial strain on traditional news outlets. The proposed law aims to address this issue by ensuring that news publishers are fairly compensated for their work by the platforms that utilize their content.

Meta spokesman Andy Stone on Friday claimed that if the bill becomes law, Meta “will be forced to remove news from Facebook and Instagram rather than pay into a slush fund that primarily benefits big, out-of-state media companies.

Concerns and Criticisms of the CJPA

The fate of the bill now rests on its journey through the state senate and eventual approval by Governor Gavin Newsom. Similar legislative efforts are being seen around the world, with the CJPA following the footsteps of other pending laws. In Australia, Facebook temporarily blocked news articles in 2021 in response to a comparable law, while Google threatened to remove its search engine from the country. Eventually, agreements were reached, and both platforms agreed to compensate several media groups.

California Proposes Law to Require Tech Giants to Compensate News Publishers
Credits: Tech Explore

In the European Union, tech giants can be required to pay publishers a copyright fee for links shared in search results or feeds.

Critics of the CJPA, such as Adam Kovacevich, the CEO of the Chamber of Progress, argue that the bill has significant flaws, particularly its provision of funding primarily to national media outlets that may propagate misinformation. Kovacevich expressed disappointment that the Assembly has passed the responsibility to the Senate without addressing the issues present in the bill.

The Chamber of Progress, a trade group with partners including Amazon, Apple, Google, and Meta, has raised concerns about the California law. According to a study released by the chamber, they argue that the bill would primarily benefit “disinformation outlets,” including Fox News.

Concerns about Revenue Allocation and Tech Giants Threats

Under the proposed legislation, online platforms would be defined as those with at least 50 million monthly active users in the United States, a billion monthly users worldwide, or a valuation exceeding $550 billion based on their stock price. The fees paid by these platforms would be determined based on the number of views, and news providers would be required to allocate the funds towards journalism and supporting staff.

However, critics have pointed out that the bill’s wording does not explicitly require the revenue to be spent on reporters covering news. This has raised concerns about the actual impact on journalism.

The bill has been sent to a senate committee responsible for scheduling debates and voting on legislation. The timing of a vote has not yet been indicated on the California state assembly website.

Trade group News Media Alliance has criticized Meta’s threat to remove news, considering it undemocratic and familiar behavior from the company. Similar actions were observed in Canada when Meta executives announced the blocking of news for Canadian Facebook and Instagram users in response to a proposed law. The Canadian law builds upon Australia’s New Media Bargaining Code, which aimed to make Google and Meta pay for news content on their platforms.