Saving News, the Controversial Deal between Google and the California Government

The number of reliable sources of information available to the Californian population — local newsrooms and print media companies — is dwindling. Over the past fifteen years, online news platforms and social media have become increasingly prevalent sources of information for the US population. The popularity of digital news platforms has completely changed the news industry, with many local newsrooms struggling to adapt. Measures such as budget cuts, staff cuts, and buyouts have become increasingly common as news organizations have been overwhelmed by online platforms. Recently, Google and the Newsom administration have been in negotiations for a controversial deal aimed to counteract this decline.
The new popularity of digital media has eclipsed many local and national print publications. The percentage of the American population relying on social media as their primary source of information has risen from 27% in 2013 to 48% in 2023 according to Paws Research Center. Additionally, 86% of adults claim that they receive news from an electronic device and 57% claim that they do so frequently. The inability of print publications to adapt to the online market has led to reductions in advertisement revenue and publication circulation. The decline in both areas has made it apparent that as digital media becomes more popular, print media will continue to decrease in popularity. A key example is the Fresno Bee, which has seen a 79% decrease in its publication volume in the last eight years. Similarly, the Los Angeles Times has experienced a 30% reduction. In contrast, digital advertising revenue has increased by 54%, while print media advertisement has decreased by 27%.
Attempts to join the online newspace have commonly proved unsuccessful. Despite reputable print publications creating online websites, viewers often still prefer social media platforms such as X, TikTok, and YouTube as sources for news. Major news websites such as latimes.com and sfchronicle.com have seen a 35% decrease in the number of their website visitors, while social media viewership continues to grow.
The California government recognized the decline of local journalism and began to develop strategies to revitalize the news industry. Both Assemblymember Buffy Wicks and State Senator Steve Glazer have proposed bills — AB 886 and SB 1327 — intended to revive local journalism. Wicks’ AB 886, or the California Journalism Preservation Act, would force technology companies such as Google and META to pay a journalism usage fee for using content from digital news providers. These collected fees will be doled out to qualified news outlets to help sustain journalism jobs, especially in California. The California Journalism Preservation Act is meant to level the playing field between struggling small news outlets and dominant tech companies who profit from journalism content without compensation. Gavin Newsom states that “[t]his 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.”
Glazer’s SB 1327 would establish a tax credit — a reduction in the amount owed to the government — for newsrooms from 2024 to 2029. In order to be eligible for this credit, a newsroom would need to submit an application to the Franchise Tax Board (FTB), which would then allocate the limited credits to small publications. The credit would be funded by a 7.25% tax on corporations, specifically revenue generated through the sale of user data. This tax would be levied on corporations — including Google, which annually generates 247 billion dollars — exceeding 2.5 billion dollars worth of profit from this process. The money from the tax would be placed into the Data Extraction Mitigation Fee Fund, where 15 million dollars of the fund would be allocated to journalism fellowships and the rest for grants to nonprofit news organizations. The bill is classified as an emergency statute, meaning that it would take place immediately.
These bills drew the attention of Google, which organized campaigns against both bills. Additionally, they removed the links of many articles and publications from their website in anticipation of the bills. Google’s disposition against the legislation initiated a new deal with the California government that would replace AB 886 and SB 1327. Over the course of the next five years, Google and the California government will provide 250 million dollars through the News Transformation Fund to local newsrooms around the country. A key stipulation within the deal is the “National AI Innovation Accelerator,” which would take a portion of the 250 million dollars to develop experimental AI for the benefit of local newsrooms. The UC Berkeley School of Journalism has been selected to distribute the 250 million and manage the fund, however, they still have yet to accept the position. The Newsom administration will provide 70 million dollars, while Google will provide the rest of the money over the course of the five-year period. The first contribution made by Google would be 15 million dollars to the News Transformation Fund, 5 million dollars to the National AI Innovation Accelerator, and 10 million dollars to established funds.
Supporters of this deal point to the urgency of rescuing local journalism — which has been in decline since the rise of digital news platforms and the collapse of traditional ad revenue models. Supporters, including Gov. Gavin Newsom, view the deal as an opportunity to tap into the tech industry’s resources without raising new taxes and avoiding the backlash that comes with these increases. A 2023 study from Northwestern University indicates that newspapers are closing at a staggering pace — two and a half local newspapers every week — making immediate intervention necessary. The deal has also drawn support because it is not a bill or piece of legislation, thus allowing it to bypass lengthy court procedures, present in the legislative process. Assemblymember Buffy Wicks, who had earlier supported legislation that would have forced revenue-sharing from tech platforms, acknowledged that going down that road could lead to years of court battles. The Google Newsroom deal provides immediate resources to newsrooms who need it most, thus steering clear of delays or uncertainties in court.
On the other hand, The Google Newsroom deal faces criticism for undermining long-term solutions and excluding other large tech companies from sharing responsibility. For example, Senator Steve Glazer believed the deal undermined bills like AB 886, which had been attempting to implement a revenue-sharing model where tech giants would pay for the content they financially benefit from. Critics believe that Glazer’s bill would be a more sustainable, long-term solution. They fear that, instead of paying newsrooms for their content, Google will neglect this responsibility, ultimately contributing to the news disaster the corporation helped create — by taking necessary ad revenue from newsrooms into its own platform. Critics say the deal doesn’t alter the problematic structural issues between the tech giants and local news media. The AI accelerator program is one of the more controversial elements of the deal. Many journalists and union representatives feel AI presents a high threat to jobs inside the journalism industry. This view was highlighted by the Media Guild of the West, which described the deal as potentially accelerating the loss of jobs, not only automating human-held jobs but also allowing the AI systems to misuse existing content. Others are concerned the AI tool could replace journalists via automatically generated content provided by tech platforms. Additionally, critics find the scope of this deal to be too narrow, as it does not include contributions from other companies such as Meta and Amazon, even though they play a vital role in the weakening of local news outlets.
The decline of local journalism has been accelerated by the rise of digital platforms and shifts in advertising revenue. The recent Google Newsroom deal represents an attempt to address these challenges by providing immediate financial support and fostering innovation in local newsrooms. However, this deal has sparked debate about its effectiveness and sustainability. Critics argue that it fails to tackle the deeper, systemic issues that plague the industry, whereas advocates argue that it offers a necessary lifeline to struggling news organizations. Ultimately, the effectiveness and sustainability of the Google Newsroom deal remains a subject of ongoing discussion, highlighting the need for a more comprehensive approach to support journalism in the complex media landscape of California.