Google was negotiating a $110 million deal to support California’s struggling journalism industry, but with a condition: taxpayers needed to contribute tens of millions as well. State Assemblywoman Buffy Wicks, an Oakland Democrat, contacted Governor Gavin Newsom’s office to secure his support for $70 million from taxpayers, despite the state’s challenging budget deficit. The agreement was finalized in late August, though some provisions remain unresolved.
“This framework represents the most impactful deal we could reach amid the current political reality,” Wicks stated, adding that it’s just the beginning and she hopes to further support California journalists.
Although the deal between Wicks, Google, and the governor was made public in August, it wasn’t previously known that Google threatened to walk away unless the state contributed funds. Google aimed to set a precedent for negotiations with other states seeking similar deals. The University of California, Berkeley’s surprise at being named a potential administrator of a new journalism fund, and discussions with the University of Southern California for that role, also hadn’t been reported earlier.
Wicks’ and Senator Steve Glazer’s aggressive proposals to charge tech companies like Google hundreds of millions annually were toned down through private negotiations. The deal helped Google avoid a costly outcome, as AI advancements might result in further media job losses. Google, the governor, and Wicks praised the deal, but many in California’s journalism industry criticized the state for not extracting more money from the tech giant, missing an opportunity to sustain local news.
Neil Chase, CEO of California news nonprofit CalMatters, remarked, “We wish this had gotten us more money, but why would you turn down the money it did get? That’s going to help me pay my reporters next year.”
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The US newspaper industry has been declining for decades, with more than 2,900 local weeklies closing since 2005. Google and Facebook have benefitted by pulling in news stories for free and selling ads around them, further diminishing the revenue stream for local publications. Efforts to support local journalism have been hindered by disagreements over the best approach, with tech companies like Google playing a dual role as both antagonist and benefactor.
In California, Wicks proposed a bill to charge companies like Google and Meta for using and advertising alongside news content, while Glazer suggested a “link tax” on companies like Amazon, Meta, and Alphabet to fund tax credits for news outlets employing journalists in California. Both bills aimed to sustain the state’s news industry, which has 580 local outlets. However, Google pushed back, limiting search results from California news sites and pausing planned investments in news.
Newsom, facing a budget deficit, was reluctant to support either bill, viewing Glazer’s as a tax increase. For nearly a year, Newsom’s office had told Wicks that taxpayer money wouldn’t be part of the Google-journalism deal.
Bob Salladay, an adviser to Newsom, said the deal balanced providing nearly a quarter-billion dollars to help the industry while ensuring publishers weren’t cut off from news sites, including Google News. Google framed the deal as a model public-private partnership, building on its support for local news.
Google shares rose about 1% following the announcement. The company, which has close relations with California’s leadership, has won a series of victories in the state, including Newsom’s veto of an AI safety bill.
Without stronger backing from Newsom, Wicks narrowed negotiations to Google and a select few after the state legislature returned from summer recess. The deal was finalized in about two weeks and announced in August.
“The path forward for the bills…was uncertain,” Wicks’ office stated. This led them to negotiate directly with Google. Wicks relied on Bob Hertzberg, a former speaker of the California assembly, while Google’s Jaffer Zaidi relocated to Sacramento to complete the deal.
Google will contribute $110 million over five years to the news industry, along with $12.5 million for AI research. The state will contribute $70 million, with $30 million distributed in the first year. The California legislature must still approve the state’s contribution, which is expected to be discussed next year.
Google has maintained that a healthy news industry in California requires both government and private sector support. However, the deal was criticized for being negotiated behind closed doors, leaving many publishers and interest groups out of the loop.
The announcement named UC Berkeley as the administrator of the journalism fund, though the university was surprised by its inclusion. The University of Southern California is now being considered for the role.
Danielle Coffey, CEO of the News/Media Alliance trade group, criticized the deal for not reflecting Google’s market value. She noted that Google gained the upper hand by negotiating directly rather than being subjected to legislation. Some argue that relying on tech companies like Google won’t be enough to support the future of California journalism, especially as AI advancements pose new challenges to the industry.
Ted Glasser, a professor emeritus at Stanford University, emphasized that such negotiations need to be done legislatively, stating, “Google’s self-interest is not enough to sustain this project.”
