Google recently announced that it is conducting a test in which it is removing links to California news sites for users located in the western US state. This decision comes as California legislators debate the implementation of the California Journalism Preservation Act (CJPA), which would establish a “link tax” for connecting users to news articles within the state.
Jaffer Zaidi, the vice president of Google Global News Partnerships, expressed concerns about the potential impact of CJPA on the tech giant. According to Zaidi, the uncapped financial exposure created by the proposed law would be unmanageable for Google. He argued that the enactment of CJPA in its current form would introduce a level of business uncertainty that no company could tolerate.
Google and Meta, the parent company of Facebook, have faced similar challenges in other jurisdictions. In Australia, Facebook temporarily blocked news articles on its platform in response to a comparable law passed in 2021. However, both Facebook and Google eventually reached agreements to compensate news publishers for their content. Similarly, in France, an accord was reached in 2022 to permit news content on Google’s platform.
In Canada, Google signed a $100 million per year agreement with media companies to offset lost advertising revenues. This deal demonstrates the ongoing tug-of-war between tech companies and news outlets over the monetization of news content. Supporters of link tax legislation argue that tech giants benefit from news stories and advertising revenue at the expense of struggling news organizations.
As part of its trial, Google is experimenting with the removal of links to news websites that could fall under the jurisdiction of CJPA. Zaidi revealed that only a small percentage of Google search queries are news-related, suggesting a shift in user behavior towards alternative news sources such as short-form videos, newsletters, podcasts, and social media. Google has also decided to pause investments in the California news ecosystem until the regulatory landscape becomes clearer.
Zaidi emphasized the importance of collaboration between the California government and private companies to sustain a healthy news industry in the state. He underscored the need for a balanced approach that considers the interests of both technology companies and news publishers. The outcome of the CJPA debate in California could have far-reaching implications for the future of news distribution and online content monetization.
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