California’s Battle for News Compensation
In response to proposed state legislation in California requiring major tech companies to compensate news outlets for their content, Google announced on Friday via a blog post that it will be removing links to California news websites.
The company clarified that this action, deemed as a “test,” will only affect a small portion of California users and aims to assess the impact of the legislation on its product experience.
The legislation, known as the California Journalism Preservation Act, introduced in March 2023 and pending a hearing by the state’s Senate Judiciary Committee, mandates digital platforms such as Google and Meta to pay a “journalism usage fee” to eligible news outlets when featuring their content alongside digital advertisements.
The bill emerges in response to the shifting landscape of news consumption, with more people turning to social and online platforms rather than traditional media. Concerns are raised about how these platforms’ aggregation practices may divert users from news websites, leading to worries about the platforms’ growing control over content.
On Friday evening, California State Senate President Pro-Tempore Mike McGuire, a co-author of the bill, condemned Google’s actions as coercive and an abuse of power. He emphasized the potential threat to public safety for Californians reliant on news for crucial information, labeling Google’s actions a breach of public trust.
Call for Fair Compensation: Advocates Push for Government Action
Advocates for the bill argue that tech giants profit from sharing content from smaller news publishers without providing them with equitable financial compensation.
“When the legislation debuted in March 2023, Assembly member Buffy Wicks, a co-author of the bill, underscored the disparity in compensation between dominant digital ad companies and the local news outlets whose content they profit from. Wicks emphasized the need for these companies to fairly remunerate news originators for the journalism they aggregate without cost.
Charles F. Champion, the president and CEO of the California News Publishers Association, accused Google of stifling California news. “On Friday, he shared on X that the ability of one company to manipulate access to online content for 90% of the public to serve its political and business agenda underscores the urgent need for policymakers to intervene immediately. He stressed that Google should not act as if it’s above the law.
Google’s Threat and Industry Response
Chris Argentieri, the president and chief operating officer of the Los Angeles Times, expressed outrage at Google’s threat to withhold vital information from Californians in response to proposed legislation. Argentieri stated to CNN on Saturday that Google’s actions further validate the necessity of the legislation and underscore the significance of the scrutiny it faces from the U.S. Department of Justice. He emphasized California’s history of resisting such bullying tactics and anticipated a similar outcome in this case.”
Google has long argued against what it calls a “link tax.” In Friday’s blog post, Jaffer Zaidi, Vice President of Global News Partnerships at Google, emphasized that the potential unlimited financial liability presented by CJPA would be impractical for any company to manage. He stated that if CJPA were to be implemented in its current state, it would introduce a level of business uncertainty that no company could tolerate.
Alphabet reported $307.4 billion in revenue in 2023. Google resisted a comparable bill enacted in Canada in June 2023, indicating that it would “eliminate links to Canadian news from our Search, News, and Discover products within Canada.” Subsequently, in November, the company provided an update stating that it was engaged in the exemption process with the Canadian government and pledged to continue Google assured that it would continue “redirecting valuable traffic to Canadian publishers” while negotiations advanced and details were settled.
Google’s Global Responses: Negotiations and Agreements
Google told in a statement Saturday that it was still working through the exemption process, but did not disclose the current status of talks with the Canadian government.
Similarly, the company responded strongly to a 2021 Australian law that proposed requiring platforms to compensate Australian news outlets for the use of their content. In January 2021, several months before the law was enacted, Google stated in an open letter that if the Code were to pass as is, they would be left with no choice but to cease offering Google Search in Australia.
Eventually, Google entered into “voluntary commercial agreements with a significant number of news media organizations,” as reported by the Australian Competition and Consumer Commission, the entity responsible for the legislation. Google announced its intention to compensate publishers through its Google News Showcase instead of remunerating them for links.
