Bill that would require big tech to pay Oregon newsrooms advances despite industry opposition

An Oregon bill that would require big tech companies including Google and Meta to pay money to local newsrooms and journalists is steadily advancing despite protests from tech industry groups.

The latest version of Senate Bill 686 would require companies of Google’s magnitude to pay at least $104 million annually to Oregon newsrooms and journalism programs. Companies of Meta’s scope would pay at least $18 million. Alternatively, companies could choose to undergo an arbitration process to determine a different payment amount.

Lawmakers from both parties and numerous Oregon publishers have said the bill would be a financial lifeline for newsrooms across the state while requiring tech companies to compensate publishers for profiting off of their locally generated content.

Tech companies, particularly Meta, have fiercely opposed the bill. They and their advocates have said the proposal would prompt those massive companies to restrict access to Oregon-generated news content on their platforms to avoid incurring the payments, thus hurting Oregon news sites that benefit from the tech giants’ amplified reach.

The bill has 15 sponsors and appears likely to advance this legislative session. On Monday, the Senate Rules Committee voted 3-2 along party lines to advance the proposal to a full chamber vote. Democrats on the committee voted yes, and Gov. Tina Kotek has also indicated her support for the bill.

The proposal moved forward despite tech companies and Senate Republican Leader Daniel Bonham of The Dalles saying the bill is rife with potential legal challenges. Bonham, a member of the rules committee, cited an opinion from the nonpartisan Legislative Counsel Office stating that certain aspects of the bill could be subject to a potentially successful legal challenge.

“It absolutely violates the constitution, in my opinion,” Bonham said.

But Democrats on the committee said any potential legal challenges have not dissuaded them from supporting the bill, which they say addresses a major inequality between tech companies and news organizations that generate unique Oregon content.

“I think my response (to concerns) would be: That’s why we have the courts system,” said Senate Majority Leader Kayse Jama of Portland, who chairs the rules committee. “If it will be challenged in the court system, let’s let the court system decide.”

The combined figure of $122 million that tech companies would pay under the proposal was calculated by Haaris Mateen, a University of Houston finance professor who conducted a market study on the balance between tech companies and news outlets. He said that is the amount that Meta and Google would pay to Oregon outlets if they were adequately compensated for the value they bring to those platforms.

The majority of the money they would have to pay, 90%, would be distributed to outlets that produce news content for an Oregon audience and would be allocated based on the number of journalists each employ. News outlets would be required to spend at least 70% of the funding on journalists’ salaries.

The other 10% of revenue would go to a newly-established consortium hosted at the University of Oregon that would fund grants to local publishers and news startups, particularly in rural areas. The consortium would also support new journalism jobs and fund media training programs.

An array of Oregon online news publishers, professional journalism organizations and local media experts have thrown their support behind the bill. They contend that Google and Meta benefit significantly from accessing news content and should compensate media organizations for it.

Meta and Google, the primary targets of the bill, use or benefit from news content in different ways. For example, Google sifts through online news content to curate A.I. summaries posted at the top of Google searches. Google users no longer have to click through to news sites to see the information that Oregon reporters find and verify.

Proponents of the bill say Meta benefits significantly from the value that news content posted by its users brings to its platform, driving up its advertising revenue.

Those two corporations make different arguments to fight the bill. Meta has argued that it should not have to pay for journalism because it does not benefit significantly from news content. It says that publishers, not its platforms, voluntarily post the majority of news content found there. Google has argued that the bill would benefit large corporations that own Oregon news outlets and say the proposal is likely to face legal challenges.

Meta has recently ramped up its lobbying efforts, both in public and to lawmakers privately. In a statement following the committee vote, the corporation said it would be “forced to … end news availability” on its platforms in Oregon if the bill passes.

And multiple lawmakers have reported recent visits from Meta or tech industry lobbyists.

“My office was visited by Meta and a few others, and they came in threatening” to retaliate against Oregon publishers in response to the bill, said Sen. James Manning, a Eugene Democrat on the rules committee who voted to advance the bill. “I don’t like to be threatened.”

Last week, tech industry group Chamber of Progress, which includes Google among its members, published a report stating that the bill could lose Oregon publishers at least 672,000 annual visitors to their news sites.

“The resulting loss in ad revenue might surpass any financial gains the bill is intended to provide,” wrote Kaitlyn Harger, the report’s author.

Tech corporations have made the same threats in response to similar policies or proposed policies in California, Canada and Australia. But their efforts and success have varied widely. Last August, for example, Google executives privately negotiated with California lawmakers and ultimately agreed to pay millions to support the state’s newsrooms in response to proposed legislation that would have required significantly higher payments from the company.

And in Canada, Meta responded to similar legislation by blocking Canadian news content on Facebook and Instagram, which has led to the proliferation of hyperpartisan and misleading content. But Google agreed to pay Canadian publishers $73 million annually to use their content, and their payouts began rolling out to news outlets last week, according to the Canadian Journalism Collective, the group created to distribute the funds.

Sen. Khanh Pham, a Democrat from Portland and chief sponsor of the bill, told lawmakers during a public hearing in April that her office revised the proposal in response to some of the legal concerns that tech groups and Bonham have raised.

On Monday, Bonham suggested that the bill would violate the takings clause of the U.S. Constitution, which essentially prohibits the government from taking private property and making it publicly accessible without appropriately compensating its owner.

Chris Allnatt, an attorney with the Legislative Counsel Office, told lawmakers last month that, although some of the specific provisions in the bill could face legitimate legal challenges, the general proposal appears to be lawful.

“I do believe the broader underlying legislative concept of the bill is a constitutional exercise of the state’s preliminary power to regulate the economic relationship between different entities,” Allnatt said.

The bill now moves to the full Senate for a vote. Senate President Rob Wagner, a Democrat from Lake Oswego, told reporters Monday he supports the bill but said the potential legal challenges could slow the bill’s momentum.

“I think that might change a little bit of the conversation,” Wagner said of the legal concerns. “I’ve never been in a position, generally, to think that we are going to be using the Legislature to pass policy that’s going to just test the court.”

Editor’s note: John Maher, president and publisher of The Oregonian/OregonLive, testified in support of Senate Bill 686. The Oregonian/OregonLive is a member of the Oregon Newspaper Publishers Association, which supports the bill.

— Carlos Fuentes covers state politics and government. Reach him at 503-221-5386 or cfuentes@oregonian.com.

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