Covered provider: goods and services: self-preferencing conduct.

Entirely new Chapter 2.6 (Sections 16850-16854) added to the Business and Professions Code, creating a 'Self-Preferencing Online Platforms' regulatory framework. The bill's scope expanded from a one-word technical fix to telephonic seller law to a comprehensive antitrust regime for large tech platforms.

The original nonsubstantive change to the telephonic seller definition in Section 17511.1 (changing 'wherein' to 'where') is retained but is now a minor component of a much larger bill. The legislative digest was rewritten to describe the new platform regulation as the primary purpose.

New definitions established: 'covered platform' requires 100 million+ monthly active US users AND ownership by an entity with $1 trillion+ market cap (or private valuation after Jan 1, 2030); 'covered provider' is the owner/operator of such a platform; 'business user,' 'consumer,' 'nonpublic business user data,' and 'artificial intelligence' are also defined.

Section 16851(a) prohibits seven categories of self-preferencing conduct including: manipulating search rankings to favor own products, exploiting third-party seller data for own product development, imposing unreasonable cost disadvantages, favoring companies based on profit margins returned to the platform, tying platform access to purchase of other products, requiring most-favored-nation clauses or margin guarantees, and providing conflicted third-party services.

Section 16851(b) prohibits restricting interoperability or data portability, including: blocking business users from accessing the same platform features available to the provider's own lines, preventing consumers or business users from obtaining portable copies of their data, restricting consumers from sharing data with third parties, and using AI (including generative AI summaries, recommendation engines, conversational agents, and shopping assistants) that systematically favors the platform's own products over third parties.

Section 16853 makes the new chapter enforceable by the same persons authorized under the Cartwright Act (Attorney General, district attorneys, city attorneys, and injured private parties) with the same penalties, damages, and fees as that antitrust law.

Section 16854 declares remedies cumulative with the Cartwright Act, Unfair Practices Act, and Unfair Competition Law, meaning a single violation could trigger multiple overlapping enforcement actions.

Section 16852 provides an affirmative defense if the defendant shows conduct was narrowly tailored, nonpretextual, reasonably necessary for a procompetitive purpose, and that procompetitive benefits clearly outweigh competitive harms. Also exempts display of objective information (mathematical calculations, time, unit conversions, public data feeds) if it does not displace a competitive market or apply differential treatment.

Section 2 provides that no state-mandated local program reimbursement is required because the act creates a new crime, which would shift enforcement costs to local agencies without state reimbursement.

The amendment to Section 17511.1 (telephonic seller registration) is entirely removed from the bill. The bill now only adds Chapter 2.6 on self-preferencing online platforms, dropping the unrelated telephonic seller definition change.

A new definition of 'Self-preferencing conduct' is added (Section 16850(h)), broadly covering practices that treat a covered provider's own products more favorably than comparable third-party products through ranking, display, algorithmic recommendation, technical access conditions, integration depth, default status, or any other means affecting visibility, accessibility, or prominence.

A new definition of 'Most Favored Nation Clause' is added (Section 16850(g)), defining it as a contract clause giving one party terms as good as or more favorable than those received by anyone else in a similar contract.

The definition of 'Business user' is expanded to include 'a person for whom a covered platform provides access to users or customers,' broadening who qualifies as a business user beyond just those using the platform to connect with consumers.

The definition of 'Covered platform' now requires that the platform allows business users or sellers to connect with consumers or other business users 'in the state,' adding a California-specific geographic nexus requirement that was not present in the prior version.

Section 16851(a) now prohibits a covered provider from engaging in 'self-preferencing conduct' (tied to the new definition) rather than simply stating it shall not preference its own products, making the statutory prohibition reference the broader defined term.

The fiscal committee and state-mandated local program designations both changed from 'no' to 'yes,' indicating the bill now triggers fiscal review and potentially imposes costs on local agencies or school districts.