California's Deal With Big Tech on Newsroom Funding Kills Revenue-Sharing Legislation

The Newsom administration, news publishers and major tech players, most notably Google and OpenAI, have reached a deal that will kill two state bills that would have forced tech platforms to share ad revenues with news organizations.

The $250 million agreement promises to provide funding over the next five years to newsrooms across California and launch a “National AI Innovation Accelerator.” The accelerator would provide financial resources “and other support” to enable newsrooms to experiment with AI to bolster their work.

In a statement, Gov. Gavin Newsom wrote the agreement leverages “substantial tech industry resources without imposing new taxes on Californians.” As part of the deal, the Newsom administration is committing $70 million from the state’s general fund.

“You know, politics is about the art of the possible,” said Assemblymember Buffy Wicks (D-Oakland), whose bill, AB 886, would have forced large tech platforms to pay California newsrooms a portion of their online advertising revenues in exchange for using their content. SB 1327, by state Sen. Steve Glazer (D-East Bay), would have levied a 7.25% tax on digital advertising revenue to create a tax credit for newsrooms. This deal effectively tables both bills less than two weeks before the deadline for both to make it to the governor’s desk.

“I did not want to do something that was going to spend five years in the courts being litigated,” Wicks told KQED. “I’ve taken on tech before, and I’ve had other bills sit in court cases for a long time and in the court system.”

She added that the state of California is losing newsrooms “every single day. We don’t have time for that. This really, I think, will enable us to get resources into newsrooms quickly.”

But Glazer was less conciliatory. “This agreement, unfortunately, seriously undercuts our work toward a long term solution to rescue independent journalism,” he wrote in a statement. “There is a stark absence in this announcement of any support for journalism from Meta and Amazon. These platforms have captured the intimate data from Californians without paying for it. Their use of that data in advertising is the harm to news outlets that this agreement should mitigate.”

The “News Transformation Fund” established by the deal will be administered by the UC Berkeley School of Journalism, which would distribute funding to California-based state and local news organizations, particularly those serving “news deserts” and underserved and underrepresented communities. “The University and specifically the UC Berkeley School of Journalism stand ready to support this endeavor,” UC President Michael V. Drake said.

In the first year, Google will deposit $15 million into the new journalism fund, $5 million into the AI accelerator and $10 million toward existing journalism grants.

In a statement, Kent Walker, president of global affairs and chief legal officer for Alphabet, the umbrella company that owns Google, wrote, “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 nonprofit organizations.”

Google ran an aggressive lobbying campaign against both bills in Sacramento and even temporarily removed news links from its search engine in California in reaction to AB 886.

The company made similar threats in both Canada and Australia before coming to agreements to contribute to news organizations in both countries.

Meta followed through on threats to remove news links in both Australia and Canada in response to specific legislative actions in order to influence the terms of legislation. Meta did not respond to a request for comment.

The agreement has the support of the California News Publishers Association, which represents 700-plus member newsrooms. “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,” CEO Chuck Champion and Board Chair Julie Makinen wrote.

But the deal has critics, including Free Press Action Co-CEO Jessica J. Gonzàlez, who wrote: “We are disappointed in this outcome and this process. Good policy is made out in the open, where people can see and participate in the democratic process.”

The group said the agreement fails to address the harms Silicon Valley has done to journalism in California, noting that “Since 2004, the state has lost 25 percent of its newspapers, total news circulation has plummeted more than 50 percent, and many ethnic media outlets and nonprofit newsrooms have struggled to survive.”

Work will begin immediately to set up the AI accelerator and the UC Berkeley-administered fund, with plans to go live in 2025.