SACRAMENTO, Calif. (AP) — Google will soon provide California with millions of dollars to help pay for local journalism jobs in a first-in-the-nation deal, but journalists and other media industry experts are calling it a disappointing agreement that primarily benefits the tech giant.
The agreement, which was developed in secret and announced this week, will redirect tens of millions of public and private dollars to support local news organizations. Critics argue it is a typical political maneuver by tech companies to escape a fee that could have resulted from potentially groundbreaking legislation. California lawmakers agreed to abandon a bill that would have required tech companies to support news outlets they profit from in exchange for Google’s financial commitment.
By shelving the bill, the state effectively relinquished a chance to mandate ongoing payments from Google and social media platforms to publishers for linking to news content, said Victor Pickard, a professor of media policy and political economy at the University of Pennsylvania. California also left behind a much larger sum of funding that the legislation could have secured, he noted.
“Google got off easy,” Pickard said.
Google stated that the deal will aid both journalism and the artificial intelligence sector in California.
“This public-private partnership builds on our long history of working with journalism and the local news ecosystem in our home state, while developing a national center of excellence on AI policy,” said Kent Walker, president of global affairs and chief legal officer for Google’s parent company Alphabet, in a statement.
State governments across the U.S. have been striving to assist struggling news organizations. The U.S. newspaper industry has been experiencing a prolonged decline, with traditional business models collapsing and advertising revenues diminishing in the digital age.
As news organizations transition from primarily print to mostly digital formats, they have increasingly depended on Google and Facebook to disseminate their content. While publishers have faced significant declines in advertising revenues over the last few decades, Google’s search engine has become the center of a digital advertisement empire generating more than $200 billion annually.
The owner of the Los Angeles Times cited losses of up to $40 million a year, which justified the layoffs of over 100 employees earlier this year.
According to a report from Northwestern University’s Medill School of Journalism, over 2,500 newspapers have shut down since 2005, with approximately 200 counties across the U.S. lacking any local news outlets.
California and New Mexico are funding local news fellowship programs. This year, New York became the first state to offer a tax credit program for news outlets to hire and retain journalists. Illinois is contemplating a bill similar to the one that failed in California.
What Does the Deal Entail?
The deal, amounting to $250 million, will finance two initiatives: funding for journalism projects and a new AI research program. The agreement guarantees funding for only five years.
Approximately $110 million will come from Google, while $70 million from the state budget will be used to bolster journalism jobs. This fund will be managed by UC Berkeley’s Graduate School of Journalism. Google will also contribute $70 million for the AI research program, which aims to develop tools to address “real-world problems,” according to Assemblymember Buffy Wicks, who facilitated the deal.
The deal does not constitute a tax, marking a significant departure from a proposed bill by Wicks that would have imposed a “link tax,” forcing companies like Google, Facebook, and Microsoft to pay a percentage of advertising revenue to media companies for linking to their content. This bill was modeled after a policy passed in Canada, requiring Google to pay around $74 million annually to support journalism.
Why Are Tech Companies Agreeing to This Now?
Tech companies had spent the past two years resisting Wicks’ bill, launching costly opposition campaigns and airing ads against the legislation. Google threatened in April to temporarily block certain news websites from some California users’ search results. Despite bipartisan support, the bill continued to advance until this week.
Wicks stated to The Associated Press on Thursday that she saw no viable path for her bill and that the funding secured through the deal “is better than zero.”
“This represents politics as the art of the possible,” she said.
Industry experts perceive the deal as a typical tactic that Google has employed globally to avoid regulations.
“Google cannot exit from news because they need it,” remarked Anya Schiffrin, a Columbia University professor investigating global media, who co-authors a working paper assessing how much Google and Meta owe to news publishers. “They are using various tactics to diminish bills that will require them to fairly compensate publishers.”
She estimates that Google owes $1.4 billion annually to California publishers.
Why Do Journalists and Labor Unions Oppose the Agreement?
The Media Guild of the West, a union representing journalists in Southern California, Arizona, and Texas, expressed discontent over journalists being excluded from discussions. The union championed Wicks’ bill but was not part of the negotiations with Google.
“The future of journalism should not be decided in backroom deals,” read a letter from the union sent to lawmakers. “The Legislature embarked on an effort to regulate monopolies and failed badly. Now we question whether the state has done more harm than good.”
The agreement results in significantly less funding compared to what Google allocates to newsrooms in Canada and undermines the goal of rebalancing Google’s dominance over local news organizations, according to a letter from the union to Wicks earlier this week.
Questions were also raised regarding the inclusion of funding for developing new AI tools, perceived as another method for tech companies to ultimately replace journalists. Wicks’ original bill did not feature AI provisions.
Some journalism groups, including the California News Publishers Association, Local Independent Online News Publishers, and California Black Media, support the deal.
What’s Next?
The agreement is set to take effect next year, commencing with $100 million to launch the initiatives.
Wicks mentioned that details of the agreement are still being finalized. California Gov. Gavin Newsom has pledged to include journalism funding in his January budget, but concerns from other Democratic leaders could complicate the plan.
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This story has been updated to correct that, as well as Southern California and Texas, the Media Guild of the West represents journalists in Arizona, not Nevada.
