Google struck a first-in-the-nation deal worth as much as $250 million on Wednesday to fund newsrooms in California, a move that not only garnered praise from Governor Gavin Newsom but also pushback from unions representing journalists in the state.
In finalizing the deal, California lawmakers agreed to abandon proposed legislation that would have placed a financial burden on Google and other tech giants. One bill would have forced tech companies to pay a portion of their online advertising revenues to California newsrooms in exchange for using their news content, and the other would have levied a 7.25 percent tax on digital advertising revenue to create a tax credit for newsrooms. Both bills have effectively been tabled as a result of the deal.
“The deal not only provides funding to support hundreds of new journalists but helps rebuild a robust and dynamic California press corps for years to come, reinforcing the vital role of journalism in our democracy,” said Newsom, whose administration is committing $70 million from the state’s general fund to the deal.
The news industry has been struggling to adapt to the times as readers and advertising dollars move away from traditional outlets. Because of this, many publications have undergone staff cuts and others have closed business altogether.
California state representative Buffy Wicks (D.), who introduced the bill that would have forced tech giants to pay for the right to distribute news content, hailed the deal for “supporting a free and vibrant press” and “empowering local news outlets up and down the state to continue in their essential work.”
Google began removing links to California-based news outlets over the proposed legislation authored by Wicks in April, drawing backlash from said outlets. The News Media Alliance, a trade association representing over 2,000 news organizations in the U.S., sent letters to the Department of Justice, Federal Trade Commission, and California attorney general Rob Bonta to investigate whether Google broke any laws by limiting access to news sites active in the state.
The announcement has also been met with a fair share of criticism. Among its detractors were California state senator Steve Glazer (D.), who led the bill imposing a tax on digital ad revenue, California state senate president pro tempore Mike McGuire (D.), and several journalist unions.
Leaders of the Media Guild of the West, the NewsGuild-CWA, Pacific Media Workers Guild, and other unions denounced the deal as a “shakedown” in a joint statement.
“The future of journalism should not be decided in backroom deals,” they wrote. “The Legislature embarked on an effort to regulate monopolies and failed terribly. Now we question whether the state has done more harm than good. California’s journalists and news workers OPPOSE this disastrous deal with Google and condemn the news executives who consented to it in our names.”
Unlike the aforementioned unions, the California News Publishers Association supported the agreement, as did Google’s parent company and OpenAI.
Providing funding for California newsrooms, the five-year deal will establish the National AI Innovation Accelerator designed to provide financial resources to help newsrooms across the state experiment with AI to boost journalists’ work. Some journalist groups are wary of the AI stipulation, as the advanced technology could lead to a loss of jobs for journalists.
Under the agreement, a mix of funding would come from California taxpayers, Google, and possibly other private sources. About $62.5 million would be allocated toward the AI accelerator over a five-year period.
Moreover, a program called the News Transformation Fund will be administered by the Graduate School of Journalism at the University of California, Berkeley, which would distribute funding to state and local news organizations.