Google’s recent $250 million deal with the state of California to support newsrooms has been met with mixed reactions. While the deal provides much-needed funding for the struggling industry, critics argue that it falls short and is a cop-out. The deal allows Google to avoid legislation that would have required tech companies to pay news providers when running ads alongside news content on their platforms.
The Media Guild of the West (MGW), a journalism labor union, denounced the deal as a shakedown, stating that it fails to address the decline of local newsrooms and merely returns a fraction of the wealth Google has taken from the industry.
So, what exactly does the Google agreement entail, and is there any reason for optimism?
The deal establishes two programs: the News Transformation Fund and the National AI Innovation Accelerator. The News Transformation Fund, administered by UC Berkeley’s Graduate School of Journalism, will provide support to newsrooms in California over a five-year period. The fund will distribute funds based on the number of reporters employed by each news organization. The total funding for the News Transformation Fund is approximately $125 million, with $70 million contributed by taxpayers and at least $55 million pledged by Google.
A portion of the News Transformation Fund, around 12% or more, will be allocated to “locally focused” publishers and publications that target underrepresented groups. In the first year, Google will contribute $15 million to the fund, and in subsequent years, at least $10 million. Taxpayers will provide $30 million in the first year and $10 million annually for the following four years.
The National AI Innovation Accelerator, funded with $62.5 million from Google over five years, aims to provide financial resources and support to organizations across various industries to experiment with artificial intelligence. This program will collaborate with a private nonprofit to administer the funds.
It’s worth noting that the total financial commitments from Google amount to $117.5 million, with the remaining $132.5 million coming in the form of replenishments to existing journalism support programs.
The initiatives have received praise from California Governor Gavin Newsom and the California News Publishers Association (CNPA). Newsom believes the deal will support the hiring of new journalists and help rebuild a strong press corps in California. The CNPA sees it as a first step towards a comprehensive program to sustain local news in the long term.
However, not everyone is convinced. Senate President Pro Tempore Mike McGuire questioned the legislative support for California’s share of the deal, while Senator Steve Glazer called it “completely inadequate.” Glazer argues that Google is paying less than its fair share, and he has research to support his claims. Studies estimate that Google owes U.S. publishers 50% of the value added to their platforms by news, which amounts to billions of dollars annually.
The decline of the news sector has been a significant concern, with the industry projected to lose 10,000 jobs this year alone. California has been hit particularly hard, losing one-third of its publishers and 68% of its journalists since 2005. Factors contributing to the decline include slow-growing ad budgets, inflation, and changes in algorithms and AI-generated overviews implemented by Big Tech companies, which have reduced publisher traffic.
Tech companies, including Google, have historically been resistant to funding journalism through fees on their platforms. Google has previously threatened to block news websites from search results and shut down Google News in response to legislation in other countries. However, Google has since launched the Google News Showcase program, which pays selected outlets on its own terms and has committed over $1 billion to journalism since 2020.
While the Google deal provides some much-needed support to California’s news industry, critics argue that it falls short of what is necessary to address the decline of local newsrooms and the impact of Big Tech companies. The debate over the responsibility of tech giants to support journalism and the future of the news industry is likely to continue.