Meta says California bill would benefit out-of-state publishers over local media

Meta’s stand mirrors its responses to a wave of regulatory proposals around the world that aim to bolster the struggling news industry by requiring social media platforms to negotiate deals with news outlets for content shared on their platforms. Over the years, traditional news publishers have lost key revenue sources while tech companies such as Facebook and Google became the predominant beneficiaries of the digital advertising market.

In response, media advocates have been pushing a string of bills that would force the Silicon Valley giants to share more of their revenue with publishers, arguing the companies are benefiting from the content that news outlets pay to produce. Tech companies oppose such proposals, saying they fail to take into account the value their platforms provide to the news outlets by distributing their content.

In recent years, Meta has threatened to pull news from its platforms in protest of similar proposals in Australia and Canada. The law eventually passed in Australia and has been credited with directing an estimated $130 million annually to news outlets from Meta and Google.The Canadian proposal is still under consideration.

Lawmakers in Washington D.C. dropped a measure last year that would have created a temporary carve-out in antitrust law to allow publishers to band together to negotiate with the tech giants over the distribution of their content after Meta said it would “consider removing news from our platform” if it passed.

California measure would force tech giants to pay news outlets

The California bill calls for large tech companies to pay a “journalism usage fee” whenever they run ads next to news content. The bill also would require publishers to spend the majority of the money they receive through the law to hire and retain journalists.

Meta spokesman Andy Stone in a Tweet said the bill would primarily benefit out-of-state media companies “under the guise of aiding California publishers.”

“The bill fails to recognize that publishers and broadcasters put their content on our platform themselves and that substantial consolidation in California’s local news industry came over 15 years ago, well before Facebook was widely used,” Stone wrote.

The bill is sponsored by Assembly member Buffy Wicks (D-Oakland), who has proposed a number of bills targeting the tech giants, including a bill signed into law last year that requires tech companies to vet their products for potential harms to children before rolling them out. NetChoice, a trade group that counts Meta, Amazon and other tech companies as members, is suing to block the measure, arguing it is unconstitutional. (Amazon founder Jeff Bezos owns The Washington Post.)

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“This threat from Meta is a scare tactic that they’ve tried to deploy, unsuccessfully, in every country that’s attempted this,” Wicks said in a statement. “It’s egregious that one of the wealthiest companies in the world would rather silence journalists than face regulation.”

The bill has cleared two key state committee votes, and a vote on the measure in the Assembly is expected Thursday, Wicks’s office said.

“The bigger picture here is that a ban on publisher content would be a lose-lose situation for Facebook and for publishers,” said Jasmine Enberg, an analyst who covers social media for analytics firm Insider Intelligence. “ Despite what Meta says, news does generate a ton of engagement for Facebook in particular, which brings in ad dollars.”

Meta’s threat arrives at a moment of economic vulnerability for both internet platforms and media outlets that are reliant on advertising dollars. Rising inflation, new privacy rules from Apple and slowing demand for e-commerce goods have hurt the digital marketing industry in recent months.

Meta, which is facing intensifying competition in the social media market, has slashed more than 20,000 jobs, and CEO Mark Zuckerberg has warned that the company may face tough economic challenges for years. Last month, BuzzFeed News announced it was shutting down, citing declining advertising and “a tech recession.” Other outlets such as NPR and CNN have also laid off workers.

If California enacts the law and Meta follows through on its threat, it would mark the first time the company has blocked news content in the U.S.

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