In summary
State lawmakers abandoned a bill that would have required technology companies to pay news organizations for their news, instead reaching a deal with Google for a program to support local news organizations and research artificial intelligence.
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California lawmakers have abandoned an ambitious proposal to make Google pay news publishers for their content, opting instead for a deal in which the tech giant would agree to pay $172 million to support local media and launch an artificial intelligence program.
The first-in-the-nation agreement announced today promises $175 million over the next five years for local journalism across California, but it represents a significant departure from a bill pushed by news publishers and media employee unions earlier this year.
Instead of forcing Google and Meta to negotiate fees directly with news publishers, Google will put $55 million over five years into a new fund managed by the University of California, Berkeley to be distributed to local news publishers, and the state will provide $70 million over five years. Google will also continue to pay existing grants of $10 million per year to news publishers.
The state legislature and governor must approve state funding annually, but the source of the money has not yet been disclosed.Google also plans to donate $12.5 million annually to an artificial intelligence “accelerator” program, raising fears among labor advocates about the threat of job losses.
Publishers, who initially pushed for a proposal to force Google to pay, still called the deal a win. The UC Berkeley fund will be managed by news industry groups, with the money distributed according to the number of journalists employed by each publisher, with some reserved for smaller and ethnic media outlets.
“This is our first step in what we hope will be a comprehensive program to sustain local news in the long term, and we will work to grow it in the coming years,” Julie Makinen, president of the California Newspaper Publishers Association, said in a statement.
Makinen said in an interview that the deal is “not what we initially expected, but it's a start and will start to provide some help to news organizations across the state.”
“Sometimes, political realities remain real,” she said, “and there are a lot of those realities in this state and in this election year.”
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Trade unions representing media workers accused news organisations and lawmakers of settling for terms that were too inadequate.
Senator Mike Maguire, a Democrat who was considering a bill in the Senate earlier this year that would “hold big tech companies accountable for the profits they make from links to news articles,” also expressed concerns, saying in a statement that the bill “inadequately funds newspapers and local media and does not adequately address the inequities facing our industry.”
The agreement replaces two bills that lawmakers have pushed for the past two years to set aside some of California's technology budget to shore up its struggling local news industry. Across the country, media companies have lost jobs over the past two decades as advertisers flee print media for the internet and technological advances change how readers consume news. The state has lost a third of its newspapers since 2005, a trend that experts say is exacerbating civic engagement, polarization and misinformation.
To retain readers, publications have increasingly relied on social media and online search, which Google controls in large part in a move that the Justice Department and one federal judge have said violates antitrust laws.
Proposals to charge Google for using news content in its search results have led to increased lobbying by tech companies: In the past 18 months, for example, Google has spent more than $2.1 million lobbying lawmakers against these and other bills, more than triple what it spent during the same period two years ago, according to a CalMatters investigation.
The first bill, introduced in February 2023 by Democratic Rep. Buffy Wicks of Oakland, would require platforms like Google and Meta to pay fees or negotiate with news publishers for the use of news content.
The bill was proposed by the Newspaper Publishers Association, whose members include major newspapers such as the San Francisco Chronicle and the Los Angeles Times (CalMatters is also a member). The bill passed the House last year, but Wicks suspended debate on it to bridge disagreements among media companies over how to distribute the money.
Australia and Canada have passed similar measures in recent years, but faced different political headwinds in states home to tech companies.
Google argues that the bill would unfairly force it to pay for sending free traffic to news sites, disadvantageing smaller sites. At a legislative hearing in June, the company's vice president of global news partnerships, Jafar Zaidi, called the proposal “highly unconstitutional and problematic” because it could force platforms to show content for which they would have no choice but to pay.
The second bill, introduced in February by Democratic Sen. Steve Glaser of Orinda, would impose a fee on big tech platforms to provide news organizations with tax credits for hiring local journalists.
In response to the Wix bill, Google temporarily removed links to California news sites from its search results, and in response to the Glaser bill, Google announced it might stop funding nonprofit newsrooms across the country, a threat Maguire called at the time an “abuse of power.”
Having failed to muster the necessary two-thirds majority, Governor Glaser shelved the bill in May and said he would focus on improving the Wicks bill.
Negotiations intensified over the summer.
Tech companies have stepped up threats to stop linking to California news sites if Wicks' bill passes, giving publishers an incentive to support a deal that would get them the money sooner. The Canadian government estimates that Google pays news organizations $73 million a year under the new Journalism Industry Act, but supporters of the California deal argue that the distribution of funds is delayed.
Another factor is that some advocates said Gov. Gavin Newsom, who has pledged not to raise taxes this year, is unlikely to sign Wicks' bill, which could be viewed as a tax on tech companies. Newsom praised the agreement in a press release today, but his spokesman, Alex Stack, denied Tuesday that the governor had been involved in or taken a position on the bill.
“This agreement represents a major step forward in leveraging the technology industry's significant resources, ensuring the survival of news organizations across California and strengthening local journalism without imposing new taxes on Californians,” Governor Newsom said in a statement.
Printed materials from various local newspapers. Photo: Bay Area News Group, Sugano Dai
By pledging money to a new fund at the University of California, Berkeley, the tech companies managed to kill a bill they opposed, while also appeasing both traditional print media and some digital-only news outlets with five years of support. The agreement is similar to a deal Google made in France more than a decade ago, creating a “Digital Publishing Innovation Fund” after publishers there sought regulation.
“This public-private partnership builds on our long history of working with home state journalism and the local news ecosystem,” Kent Walker, an executive at Google's parent company Alphabet, said in a press release announcing the agreement.
Wicks called it a “cross-sectoral effort to support a free and vibrant press.” Glaser, by contrast, said it was “completely inadequate and grossly short” of what Google pays in Canada and “severely undermines our efforts toward a long-term solution to save independent journalism.”
The Media Guild of the West, which represents Southern California journalists, slammed the deal, accusing publishers and lawmakers of caving to Google's threats.
“Google has won. The monopolies have won,” said Matt Pearce, the group's president. “This is dramatically worse than the impact in Australia or Canada. I don't know of any journalists who have asked for this.”
The union said it was particularly concerned that the contract includes programs to promote artificial intelligence technology that it believes are concessions to the tech industry and could lead to further loss of journalism jobs. The Pacific Media Workers Guild, which represents journalists in Northern California, also opposes the deal.
The AI program appears only partially related to journalism: Wicks' office said in a statement that the program will provide companies, nonprofits and researchers “with funding and other support for AI experimentation, supporting their work to address challenges such as environmental issues and racial inequality.” Former Congressman Bob Hertzberg, who helped negotiate the deal, said OpenAI would provide technical services, and supporters hope other tech companies will also participate.
The AI Accelerator will also create “new tools to help journalists access and analyze public information.” Makinen of the News Publishers Association said details of the program “should be made public as soon as possible,” and said he would like to see “more resources directed towards publishers.”
Others, including associations of mostly smaller digital news media, said the threat of tech platforms denying links to news articles would be devastating.
Chris Krewson, president of Local Independent Online News Publishers, gave the example of Canada, where Facebook stopped linking to Canadian media in response to the new law, which he said caused readership and advertising revenue for smaller news outlets to plummet.
The organisation's major donors include Google and Meta, and its director and CalMatters CEO Neil Chase last weekend called on member publications to support the deal.
“I don't know that the industry should be in a position to reject any help,” Krewson said, “and I don't think that makes us more or less dependent on[tech platforms]than we already are.”
CalMatters Data Reporter Jeremia Kimelman contributed to this article.
CalMatters CEO Neil Chase has been involved in the deal as a board member for Local Independent Online News Publishers. His views do not necessarily reflect those of the organization, its newsroom or its staff. CalMatters staff are represented by the Pacific Media Workers Union, which is separate from the Western Media Union, and the union said it was not involved.
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