California bill to make Big Tech pay for news advances again

A California bill that would make Big Tech pay for the news articles that help drive its profits has advanced out of a second legislative committee with bipartisan backing as industry critics ramp up opposition.

Assembly Bill 886, the California Journalism Preservation Act by Assemblywoman Buffy Wicks, an Oakland Democrat, passed out of the Assembly Judiciary Committee unanimously on Tuesday with Riverside Republican Assemblyman Bill Essayli added as a co-author along with Los Angeles Democrat Josh Lowenthal.

“I don’t believe in corporate welfare, I don’t believe in transferring wealth,” Essayli said at Tuesday’s Judiciary Committee hearing. “But I also don’t believe in unjust enrichment. And I do think Big Tech is being unjustly enriched off the backs of journalists.”

The bill proceeds next to an Assembly floor vote, which hasn’t yet been scheduled but must occur by June 2.

Wicks’ bill follows the December collapse in Congress of a federal bill with similar goals, the Journalism Competition and Preservation Act, carried by U.S. Sens. Amy Klobuchar, a Minnesota Democrat, and John Kennedy, a Louisiana Republican.

Sponsored by the California News Publishers Association, to which the Southern California News Group and its peers at the Bay Area News Group belong, AB 886 would require internet platforms to use binding arbitration to determine the percentage of advertising revenue to compensate news organizations for their content. Australia and Canada have passed similar laws.

The bill is backed by a number of print and broadcast news organizations. But in addition to its chief targets — Alphabet’s Google and Meta’s Facebook — it is opposed by the ACLU of California, the California Chamber of Commerce, California Taxpayers Association, the Electronic Frontier Foundation and some online news organizations, including CalMatters.

Matt Schruers, president of the Computer and Communications Industry Association, whose members include Meta, Google, Twitter and Yahoo!, told the committee that tech companies’ use of news content is consistent with U.S. copyright law.

“The question here today is whether a healthy news sector is best achieved by chaining its fate to subsidies from a handful of firms that are rooted in an unprecedented mandatory arbitration scheme that turns on hyperlinks, the building block of the internet,” Schruers said. “Taxes and fees on links would upend the basic architecture of our connected economy and open the door to other tolls and fees and taxes on the free and open internet.”

Schruers added that similar laws overseas haven’t worked as intended.

Chamber of Progress, a politically progressive tech industry advocacy group whose corporate partners include Google and Meta, said it conducted a study showing that Fox News and “disinformation outlets” would profit most from such a “link tax.”

Hal Singer, a University of Utah economics professor and expert in antitrust and consumer protection matters, spoke in support of the bill, saying the proposal isn’t a “link tax” and its arbitration provisions aren’t that unusual. He noted it differs from the proposed federal law by requiring 70% of proceeds to support newsroom journalists.

“The proposed intervention in this bill is modest,” Singer told the committee. “News publishers are simply asking for a neutral arbitrator operating under auspices of the state to hear their assessment of the annual value being appropriated by the platforms.”

Essayli said that while he supports the bill, it will have to find a way to distinguish between companies like Google, which connects users with websites featuring topics they’re searching for, and Facebook, which ranks photos, videos and articles in a user’s news feed based on who their friends are and whom they’re following. Wicks agreed and thanked Essayli for his co-authorship.

“How you put that into the statute is the question, but I’m committed to figuring that out,” Wicks said. “We are going to continue to meet with opposition, there are going to be amendments to this bill, but I really want this conversation to keep moving forward because I think it’s imperative for our democracy that it does.”