History repeats itself as Google has tentatively agreed with California to a fund model just like Canada.
The effort to push a link tax in California has been hit with a huge setback. Apparently, Google has tentatively agreed to pay a $55 million fund model in exchange for not paying a link tax.
The move is seemingly a case of history repeating itself. Last November, Google was on the verge of dropping news links in Canada, all but condemning the Canadian media sector to a digital existence with little to no reach. This especially after Meta dropped news links in Canada. While Google was always open to a fund model to help journalism outlets, the Canadian government was refusing and demanding “negotiations” for payments for the privilege of sending journalism outlets traffic. At nearly the 11th hour, though, the Canadian government folded to Google and agreed to a $100 million fund model.
The money itself barely constituted a consolation prize because it wasn’t even all new revenue. Instead, it basically rolled up existing deals into the fund. So, it wasn’t even new money. Even worse was the $230 million losses the sector experienced when Meta dropped news links. As a result, the Canadian media sector found itself at a major loss when all is said and done. Mainstream media in Canada walked away with little more than a severe amount of humiliation, knowing that they basically played themselves.
Today, we’re learning that history may be repeating itself in California. California has been pushing the California Journalism Preservation Act (CJPA). It is basically California’s version of the link tax. Much like Canada, Google has been test blocking news links on their services. So, the threat of getting delisted from Google in California was very real. Well, it seems that a tentative agreement has happened. From Ars Technica:
Google has agreed to fund local journalism and work on artificial intelligence in California as part of a deal that would reportedly result in lawmakers shelving a proposal to require Google to pay news outlets for distributing their content. But the deal’s state financing requires legislative approval as part of California’s annual budget process and is drawing criticism from some lawmakers and a union for journalists.
Governor Gavin Newsom is on board, saying that the “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.” The deal “will provide nearly $250 million in public and private funding over the next five years, with the majority of funding going to newsrooms,” said an announcement by Assemblymember Buffy Wicks, a Democrat.
A “News Transformation Fund” would be created with funding from the state and Google and be administered by the UC Berkeley School of Journalism. The state would contribute $30 million the first year and $10 million in each of the next four years, according to a summary provided to Ars by Wicks’ office.
Google would contribute $55 million to the news fund over five years, consisting of $15 million the first year and $10 million in each of the next four years. The funds would be distributed to news organizations based on how many journalists they employ.
Google also agreed to provide $62.5 million over five years for a “National AI Innovation Accelerator.” Wicks’ office said the accelerator “will be administered in collaboration with a private nonprofit, and will provide organizations across industries and communities—from journalism, to the environment, to racial equity and beyond—with financial resources and other support to experiment with AI to assist them in their work.”
The amount Google agreed to pay news outlets is actually very eyebrow raising. In Canada, Google agreed to pay $100 million per year indexed to inflation. In California, it is $55 million over the next 5 years. This is actually far less than what Canadian mainstream media ended up gobbling up. Still, apparently, the other companies affected by this have also agreed to the fund model which makes up the remainder of the mentioned $250 million price tag.
Of course, there is the practical implication to all of this. Assuming this deal is agreed to by Californian lawmakers, then this basically kills the link tax concept entirely in the state. What’s more, there will apparently be no link blocking which is an inherent advantage over the Canadian link tax (which saw Meta drop news links entirely).
Some purists out there might look at all of this and say that this still represents a massive loss to the open internet because the companies are agreeing to fork over a single dollar at all. They’ll probably say that the platforms agreed to pay off the media companies rather than stand up to principle. Personally, if the companies are fine with offering some cash to the media sector, the only real threat is the open marketplace for news outlets. This is because smaller startups would be hard pressed to compete against a company that receives millions in subsidies. Other than that, it’s hard to point to anything about this and say that the open internet is threatened in general.
As for the media outlets, they are, ironically, calling this whole thing a “shakedown” even though they were the ones trying to perform a massive shakedown in this rent seeking excercise:
The Media Guild of the West union slammed the deal as a “shakedown” in a statement issued yesterday. The agreement is disappointing partly because it came “after two years of advocacy for strong antimonopoly action to start turning around the decline of local newsrooms,” the group said.
“The publishers who claim to represent our industry are celebrating an opaque deal involving taxpayer funds, a vague AI accelerator project that could very well destroy journalism jobs, and minimal financial commitments from Google to return the wealth this monopoly has stolen from our newsrooms,” the union said. “Not a single organization representing journalists and news workers agreed to this undemocratic and secretive deal with one of the businesses destroying our industry.”
Perhaps explaining why journalism and AI funding are part of the same agreement, Wicks’ office said the AI accelerator will “complement the work of the Journalism Fund by creating new tools to help journalists access and analyze public information.”
Google recently testified against pending legislation submitted by Wicks, known as the California Journalism Preservation Act. Google said the bill would “break the foundational principles of the open Internet, forcing platforms to pay publishers for sending valuable free traffic to them, which they choose to receive.” Google has called the bill a “link tax.”
Alphabet Chief Legal Officer Kent Walker praised the deal yesterday as “a collaborative framework to accelerate AI innovation and support local and national businesses and non-profit organizations.”
So, there will probably be whining from the mainstream media outlets in journalism for the next while as their extortion bid basically went down in flames.
While this isn’t a perfect outcome by any means, I say it could have been a heck of a lot worse. If news links were dropped on Google, the carnage across the media landscape would’ve been immense. So, it could’ve been a heck of a lot worse. Still, all of this could have been better had there been no push for link taxes at all. Unfortunately, we can’t turn back the hands of time on that one.
(Via @LukeRdeGruchy)
