Editorial: California Legislature must act to support local news

It may seem overly dramatic to say that democracy hangs in the balance, but it does.

The local news business has been struggling for well over a decade as online search engines and social media have siphoned audience and revenue away from traditional publishers. The tech companies redistribute the content of local publishers and sell their own advertising against that content.

That’s not fair, and it’s definitely not fair use.

But somehow it’s still permitted as lawmakers continue debating how to stop the practice.

To that end, the state Senate Judiciary Committee is holding a hearing today on the California Journalism Preservation Act, a bill that would require companies such as Google and Facebook to reimburse news publishers for use of their content.

To some, it may sound outlandish to suggest that search sites and social media companies should be expected to pay for the content they distribute. Google and Facebook and their parent companies Alphabet and Meta certainly think so, and they’ve deployed legions of lobbyists and lawyers to make that case.

But it’s not outlandish.

Spectrum, Frontier and DirecTV don’t get to distribute premium TV for free. Why should Google and Facebook be allowed to pirate local news?

Google and Facebook contend they are platforms, not publishers, and that they send traffic to publishers. They describe demands that they should pay for news content as “link taxes.”

But that’s balderdash.

Research shows, for example, that in 2020 nearly 65% of Google searches ended without a click. That number is on the rise, and anyone who uses Google can see how that’s true as Google increasingly loads the top of a search page with summaries and other possible searches that are obviously intended to keep users in Google’s house, where Google reaps the revenue from their attention.

But don’t take our word for it.

A recent study conducted by the Brattle Group — a research and consulting firm that studies economic, financial and regulatory issues — found that Google and Meta owe local news publishers between $12 billion and $14 billion a year for the news content they deliver on their respective sites.

Two of the authors of the Brattle study summarized its findings neatly:

“Unsurprisingly, by keeping the cost of goods sold (news) down, Google and Meta have grown rich off the advertising revenue they reap from attracting the world’s eyeballs to their sites. Meanwhile, news deserts have become a global problem as outlets struggle with the loss of revenue.”

Other countries not only know this but have already acted upon it.

In Australia, new legislation requires Google and Facebook to bargain with news media providers and stipulates that if there is an impasse, both sides must make a proposal and an arbitrator will make the final decision. This legislation has resulted in Google and Facebook paying nearly $140 million to Australian news publishers, including small publishers.

Lawmakers in Canada passed their own legislation, and just last week Google agreed to pay Canadian publishers more than $70 million a year.

The precedent is clearly established.

So what does this have to do with democracy?

Credible news — a shared set of facts, commonly accepted truths — is the cornerstone of a well-informed citizenry, the foundation upon which our republic was founded. More important, a free press ensures that government is accountable to the people it serves.

Google and Facebook are not the free press.

They are exploiting the free press.

It’s shameful that the United States, the global champion of democracy, should allow it to be so fundamentally undermined.

In California, the state Assembly did the right thing in June when it passed, by an overwhelming 55-6 bipartisan vote, legislation to address this drastic power imbalance. But the Senate Judiciary Committee, chaired by Tom Umberg, D-Santa Ana, postponed consideration of the bill until next year and promised to hold a hearing to examine the issues this fall. That hearing is today in Southern California.

Here is an opportunity for California to lead the way.