On August 15th, the California State Assembly passed a bill requiring large tech platforms to pay digital news providers for the revenue generated from their content on the internet. However, before the bill can move forward to a full vote, it still needs to overcome another hurdle.
The bill, known as “California News Protection Act” or AB886, was put on hold in early August when the State Senate was evaluating its potential financial impact. On the 15th, the bill was approved by a vote of 4 to 2 in the Senate Appropriations Committee, with opposition coming from Republican members.
Introduced by Democratic Assemblywoman Buffy Wicks, the bill was first proposed last year. Wicks highlighted in her analysis of the bill in June that digital tech platforms exert “monopolistic” control over content produced by journalists.
She stated, “The issue is that as news has shifted to the internet, massive monopolistic tech platforms force newsrooms to share original content created by journalists, from which the platforms earn advertising revenue, yet provide minimal compensation in return.”
According to a study published by the Medill School of Journalism at Northwestern University in November of last year, nearly 2,900 newspapers in the United States had closed from 2005 to 2023, leading to over 43,000 newspaper journalists losing their jobs – mainly concentrated in metropolitan and regional newspapers.
Press Gazette, a London-based online magazine, analyzed that since 2023, there has been a significant ongoing reduction in job positions in the news media sector. In January of this year, the largest circulated newspaper in California, the Los Angeles Times, laid off at least 115 employees, accounting for about 20% of its newsroom staff, following a 13% reduction last summer.
The bill will affect large tech platforms in the United States – those with at least 50 million active users per month or annual net sales exceeding $550 billion. According to legislative analysis, these companies will be required to pay a certain percentage of revenue to digital news providers in exchange for the news content displayed on their platforms. The specific amount is yet to be determined, but the legislation suggests that tech platforms should make payments annually or through an arbitration process to news providers.
The legislation defines online tech platforms as websites, mobile apps, digital assistants, or online services that provide news articles, journalistic work, or other content for access.
According to the latest legal analysis, the bill will require news media that accept funding from tech platforms to allocate at least 70% of the funds to their journalists and support staff.
In June, Meta (Facebook’s parent company) released a statement indicating that they would be forced to remove California news from their social media platforms, including Instagram.
Moreover, in the spring of this year, Google announced that they had begun removing California news websites from search results in anticipation of potentially having to pay substantial content usage fees to media companies.
The Technology Industry Coalition Chamber of Progress, which opposes the bill, stated in a parliamentary analysis report, “While the purpose of this bill is to support the news industry, publishers actually benefit from the website traffic brought by platforms. Disrupting this mutually beneficial relationship does not achieve the core goal of the bill.”
Meta also shared a similar viewpoint earlier this summer, expressing that the challenges facing traditional news industry existed even before the rise of social media.
In a statement to Epoch Times in June, Meta remarked, “This bill fails to recognize that publishers and broadcasters themselves choose to put their content on our platform, and the consolidation in the California local news industry happened 15 years ago.”
In addition to AB886, State Senate President pro Tempore Mike McGuire believes another related bill, SB1327, is equally significant.
Co-sponsored by McGuire, the bill aims to impose a 7.25% tax on tech platforms that collect user data. Legislators estimate that the implementation of this bill could generate $2.5 billion in revenue annually. This money would be placed into a fund and later distributed to California news outlets through tax offsets or news subsidies. ◇