Google has entered into a $250 million agreement with the state of California to support local newsrooms. This deal provides a much-needed financial boost to an industry that has faced severe layoffs this year, but some critics view it as a superficial solution and a way for Google to sidestep more substantial legislative measures.

By agreeing to this deal, Google avoids potential legislation that would have required tech companies to compensate news providers for displaying ads next to their content.

The Media Guild of the West (MGW), a local chapter of the NewsGuild-CWA, criticized the agreement on social media, labeling it a “shakedown.” In a statement, MGW expressed their disappointment, stating, “After two years of advocacy for strong anti-monopoly action to start turning around the decline of local newsrooms, we are left almost without words. The publishers who claim to represent our industry are celebrating... minimum financial commitments to Google to return the wealth this monopoly has stolen from our newsrooms.”

But what will the Google deal actually achieve if California’s policymakers approve it? Are there any reasons for optimism?

### Funding for Five Years

Last year, California Assemblymember Buffy Wicks introduced a bill, AB 886, which would have mandated certain platforms to pay publishers a percentage of their ad revenues for linking to their articles. Additionally, Senator Steve Glazer proposed SB 1327, which would have imposed a 7.25% tax on ad revenue to create a tax credit for newsrooms. However, the $250 million Google deal effectively renders both proposals obsolete.

Rather than implementing a fee structure, the agreement will fund 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 support California-based newsrooms (excluding broadcasters). Taxpayer contributions will amount to $70 million, while Google is committing at least $55 million, totaling around $125 million, to be distributed based on the number of reporters each news organization employs. This funding will be allocated over five years, with 12% earmarked for “locally focused” publishers and publications aimed at underrepresented groups, according to The New York Times. Google will contribute $15 million in the first year and a minimum of $10 million in subsequent years, while California taxpayers will provide $30 million in the first year and $10 million each in the following four years.

The National AI Innovation Accelerator has a different focus, with a $62.5 million commitment from Google over five years to provide funding for organizations to explore how AI can assist their work, spanning various sectors, including journalism, the environment, and racial equity.

### Mixed Reactions

The initiatives, set to launch in 2025, received support from California Governor Gavin Newsom and the California News Publishers Association (CNPA), which represents California newspapers. Newsom stated, “The deal not only provides funding to support hundreds of new journalists but helps rebuild a robust and dynamic California press corps for years to come, reinforcing the vital role of journalism in our democracy.” CNPA described the agreement as “a first step toward what we hope will become a comprehensive program to sustain local news in the long term.”

However, skepticism remains regarding the deal's effectiveness. Senate President pro tempore Mike McGuire questioned legislative support for California’s share of the funding. Senator Glazer criticized the deal as “completely inadequate,” noting that Google is the only tech company involved, despite OpenAI’s technology contributions without financial input. He remarked, “There is a stark absence in this announcement of any support for journalism from Meta and Amazon... Their use of that data in advertising is the harm to news outlets that this agreement should mitigate.” Glazer also suggested that Google’s financial contribution is less than it should be, with a study indicating that Google could owe U.S. publishers between $10 billion and $12 billion in annual revenue sharing.

### Ongoing Challenges

The news industry has faced significant challenges over the past six months, with an estimated 10,000 jobs at risk this year, which is an improvement compared to the 21,400 jobs lost last year. California has been particularly hard hit, losing one-third of its publishers and 68% of its journalists since 2005, according to a 2023 Northwestern Medill School of Journalism report. The Los Angeles Times, the largest metro daily newspaper in the U.S., made drastic cuts to its newsroom in January, resulting in a reduction of over 20%.

Several factors contribute to this decline, including stagnant advertising budgets and inflation, which has impacted subscription growth. Additionally, the struggle to establish a sustainable business model has been exacerbated by Big Tech’s influence, with algorithm changes and AI-generated content reducing publisher traffic. Analysts argue that tech companies have conditioned consumers to expect free content, with nearly half of Americans obtaining their news from social media, despite frequent inaccuracies. Big Tech companies now account for approximately 60% of global ad spending, resulting in significant revenue losses for traditional publishers.

Historically, tech companies have resisted efforts to fund journalism through platform fees. In response to Wicks’ bill, Google threatened to temporarily block news websites from appearing in search results for some California users. The company has fought similar legislative efforts in Australia and Canada, previously threatening to leave Australia over proposed legislation and removing snippets from Google Search in France after the implementation of a new law.

Since then, Google has forged agreements with publishers in these countries through its Google News Showcase program, which launched in 2020. This initiative compensates selected outlets based on Google’s terms, with the company claiming to have committed over $1 billion to journalism since the program's inception.