Google strikes deal to fund California newsrooms. Critics find plenty of faults with it

After days of political wrangling, Big Tech has struck a multimillion-dollar deal with California lawmakers to pay for journalism it uses on its platforms.

Under the arrangement, tech companies led by Google, along with California taxpayers, will spend nearly $250 million over five years in funding for California newsrooms as well as for an artificial intelligence accelerator project.

The agreement, which goes into effect next year, is believed to be the first of its kind in the country.

The deal means that Assembly Bill 886, which sought to force payments by the tech giants to California publishers, is dead, and there are plenty of critics of the agreement.

The office of Assemblywoman Buffy Wicks, D-Oakland, who authored AB 886, announced the deal Wednesday afternoon.

“As technology and innovation advance, it is critical that California continues to champion the vital role of journalism in our democracy,” Wicks said in a prepared statement. “This partnership represents a cross-sector commitment to supporting a free and vibrant press, empowering local news outlets up and down the state to continue in their essential work. This is just the beginning. I remain committed to finding even more ways to support journalism in our state for years to come.”

The goal is to front-load $100 million in the first year to kick-start the efforts, Wicks said. The total investment could increase over the next several years if additional funding from private or state sources becomes available.

Details on how much the state would contribute were not released. But a draft of the proposal that surfaced over the weekend indicated the state would kick in $30 million the first year, and an additional $10 million each year after that through year five.

Sen. Steve Glazer, D-Orinda, said in a Wednesday news conference that the money being promised has not yet been budgeted and would be subject to next year’s budget process.

The announcement of the deal did not specify what would happen to the state portion of the funding if California continues to experience large budget deficits.

AB 886 would have required companies like Google and Meta (the parent of Facebook and Instagram) to pay into a media fund for news articles that appear on their platforms. It was opposed by the tech industry, leading to the legislation first being extended into a two-year bill and then being stuck in the Senate Rules Committee for further deliberation.

The Media Guild of the West, which represents hundreds of journalists in Southern California, Arizona and Texas, came out against the deal, saying the figure was too small.

“This is not what we signed up for,” Media Guild President Matt Pearce said in a Wednesday press conference.

Pearce and several other speakers blasted the arrangement as a “backroom deal.”

“This is not democracy. This is not something that was worked out through hearings, through votes,” Pearce said.

Google already had begun experimenting with removing news links in California in response to AB 886, which would have required the tech giants to pay millions a year to publishers in perpetuity.

The tech industry hailed Wednesday’s agreement.

Kent Walker, an executive with Google’s parent company, Alphabet, said in a prepared statement that “California lawmakers have worked with the tech and news sectors to develop a collaborative framework to accelerate AI innovation and support local and national businesses and non-profit organizations.”

Jason Kwon, with the company OpenAI, said in a prepared statement, “This initiative builds on our longstanding work to help newsrooms and journalists around the world leverage AI to improve workflows, better connect users to quality content, and help news organizations shape the future of this emerging technology.”

Gov. Gavin Newsom praised the deal.

“This agreement represents a major breakthrough in ensuring the survival of newsrooms and bolstering local journalism across California — leveraging substantial tech industry resources without imposing new taxes on Californians,” Newsom said in a prepared statement. “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.”

According to Wicks’ office, the money will go into a “News Transformation Fund,” which will be administered by the University of California Berkeley School of Journalism. That fund will pay out to California-based state and local news organizations, “particularly those serving California local news deserts, under-served and underrepresented communities, and outlets that prioritize California coverage,” according to the lawmaker’s office.

Lee Hepner, senior counsel for the American Economic Liberties Project, said it wasn’t hyperbole to say that Google “has held the state Legislature hostage.”

He added that this is the wrong way to go about enacting AI policy.

The California News Publishers Association, which includes McClatchy and its California-based newspapers — The Sacramento Bee, The Fresno Bee, The Modesto Bee, San Luis Obispo Tribune and Merced Sun-Star — was a sponsor of AB 886. The organization released a statement Wednesday saying that the agreement was an initial step with more work remaining.

“A vibrant press is crucial for strong communities and a healthy democracy. This is a first step toward what we hope will become a comprehensive program to sustain local news in the long term, and we will push to see it grow in future years,” said CNPA CEO Chuck Champion and Board Chair Julie Makinen. “We will work with the state and tech companies to make the most of this initiative.“

Another media group that had championed AB 886 said the deal underscored the need for additional action.

“Google is a dominant monopoly that reaps significant revenue off scraping and repackaging quality news content, depriving publishers of the opportunity to monetize their content and reinvest in journalists,” said News/Media Alliance President & CEO Danielle Coffey in a prepared statement. “Today’s announcement reinforces the need for federal legislation and potential court remedies to address this broken marketplace.”

Alicia Ramirez, publisher of the Riverside Record, echoed Pearce and Hepner while speaking during Wednesday’s press conference.

“We cannot promise taxpayer dollars in closed backroom deals,” she said.

She added that she didn’t think the arrangement was a good deal for local news.

“Having this bill be done in complete darkness is antithetical to everything that I stand for,” she said.

This deal does not affect a similar bill, Senate Bill 1327, which would enact a journalism mitigation fee on Big Tech. That bill sits in the Assembly Revenue and Taxation Committee. Glazer, its author, said he has no control over whether, or if, the committee will take up the bill before the Legislature adjourns Aug. 31.