Google agrees to first-in-the-nation deal to fund California newsrooms, but journalists are calling it a disaster

By Liam Reilly, CNN

New York (CNN) — Google struck a first-in-the-nation deal with California lawmakers on Wednesday to fund newsrooms in the state and end proposed legislation that would have forced technology giants to pay for the right to distribute news content. But the agreement was immediately met with fierce criticism from journalist unions, who called the deal “disastrous.”

The plan calls for a $250 million commitment over five years from Google and the state, a majority of which would fund California newsrooms, and launch an artificial intelligence “accelerator” designed to support journalists’ work.

Under the proposed partnership, Google will contribute up to $15 million into a journalism fund in the first year, while the state of California will invest $30 million. During the four subsequent years, California’s contribution will drop to $10 million per year, while Google’s will contribute a minimum of $20 million to the fund and existing journalism programs.

The deal shelves a high-profile bill, dubbed the California Journalism Preservation Act, that would have forced technology companies, including Google (GOOGL) and Meta (META), to pay news companies to distribute their content online. The bill, sponsored by state assemblymember Buffy Wicks, was modeled after similar laws implemented in Australia and Canada, providing funding to local news organizations that have seen their business models collapse amid the rise of big tech platforms.

“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 statement announcing the deal with Google. “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.”

California Gov. Gavin Newsom, who had not publicly weighed in on the bill, also hailed the deal, calling it “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.”

News publishers have struggled mightily in recent years, shedding thousands of jobs and prompting the closure of some outlets altogether as advertising dollars and audiences have rapidly shifted away from traditional publications.

Ironically, the deal announced Wednesday also championed a so-called “National AI Innovation Accelerator,” adding funding for developing artificial intelligence, which some journalist groups have warned pose a danger to the future of their industry and threatens to further stir distrust in news reporting.

The agreement was supported by the California News Publishers Association, which represents hundreds of news outlets, Google’s parent company and OpenAI. But it was sharply criticized by unions representing the state’s journalists, which had supported Wicks’ bill to fund newsrooms but were not involved with the deal.

“The future of journalism should not be decided in backroom deals,” the Media Guild of the West, The NewsGuild-CWA and others said in a joint statement. “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.”

The deal also faced blowback from other Democrats in the California legislature, including state Sen. Steve Glazer, who had proposed a bill of his own to provide tax credits to news outlets employing full-time journalists.

“Despite the good intentions of the parties involved, this proposal does not provide sufficient resources to bring independent news gathering in California out of its death spiral,” Glazer said Wednesday during a press conference. “Google’s offer is completely inadequate and massively short of matching their settlement agreement in Canada in supporting on-the-ground local news reporting.”

California State Senate President Pro Tempore Mike McGuire also criticized the deal, saying in a statement, “Newsrooms have been hollowed out across this state while tech platforms have seen multi-billion dollar profits. We have concerns that this proposal lacks sufficient funding for newspapers and local media, and doesn’t fully address the inequities facing the industry.”

The deal comes months after Google elected to block news content in California over the proposed law from Wicks, drawing swift backlash from news outlets in the state.

The News/Media Alliance, which represents US newspapers and online publications, said it had sent letters to the Department of Justice, Federal Trade Commission and the California Attorney General to request an investigation into whether Google broke any laws by limiting access to the news outlets.

Google previously threatened to take similar action in Canada ahead of the country’s new law requiring digital platforms to compensate news publishers for their work, but eventually backed down. Under Canada’s Online News Act, Google will pay $74 million per year into a fund that will be distributed to publishers.

“Google is the biggest source of referral traffic on the internet. When you are doing journalism on the internet, you have to do business with Google,” Media Guild of the West President Matt Pearce said after Wednesday’s announcement. “The premise of these bills is that if we are going to be dominated by a monopolist whose product we cannot escape, except at enormous cost to our own business, that monopoly needs to pay its fair share for our journalism.”

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