Google has signaled a potential suspension of its financial contributions to news publishers across the United States. This development comes in reaction to a proposed bill in California designed to support local journalism. Google has informed nonprofit newsrooms that it might discontinue funding via the Google News Initiative, which currently distributes over $300 million to numerous news outlets, as reported by Axios.
California’s Proposed Legislation
News publishers have long argued that tech companies should pay more for using their content. A working paper published last year estimated that Google could owe publishers between $11.9 billion and $13.9 billion annually if a similar law were implemented nationwide. In countries like Australia and Canada, where similar legislation has been enacted, Google initially issued threats but eventually reached agreements to compensate news outlets.
The California Journalism Preservation Act, introduced by Assembly member Buffy Wicks, aims to impose a 7.25 percent tax on large tech companies like Google when they sell user data to advertisers. The revenue generated would fund tax credits for news outlets within the state. Although the law targets California, Google is concerned about the possibility of similar legislation being adopted in other states, potentially affecting its broader operations.
California has taken some of the most aggressive steps of any U.S. state to target Big Tech firms to help finance the troubled news industry. National proposals like the Journalism Competition and Preservation Act (JCPA) have failed to become law. The JCPA is modeled on a 2021 Australian law requiring companies like Google and Meta to negotiate payments with news companies for their content.
In response to the pending California Journalism Preservation Act, Google recently experimented with removing links to California news outlets. This bill mandates that major tech platforms, including Google and Meta, compensate news publishers for linking to their articles. Google has warned that if the bill passes, it might halt new grants nationwide, fearing it could set a precedent for other states.
Google has communicated that the ad tax proposal threatens the consideration of new grants nationwide by the Google News Initiative. However, previous commitments through the Google News Initiative are believed to be secure, according to a spokesperson for the Institute for Nonprofit News.
Meta’s Stance and Broader Legislative Context
Meta has also opposed the California Journalism Preservation Act, warning it would block links to news sites in California if the bill becomes law. Meanwhile, Google’s outreach to smaller news outlets is in response to a different bill introduced by State Sen. Steve Glazer. This bill would tax Big Tech companies for “data extraction transactions” or digital ad transactions, with the revenue funding tax credits to support the hiring of more journalists in California by eligible nonprofit local news organizations.
Potential Legal Challenges and Future Developments
Opponents of the ad tax argue that the burden would be passed down to consumers and businesses and that the measure would face legal challenges. Danielle Coffey, president and chief executive of the News/Media Alliance, argues that the industry needs a legally founded right to payment to ensure fair market value for the revenue generated from their content. The ad tax bill is expected to reach the California Senate floor soon, and if it passes, it would go to the California Assembly. The link tax bill has passed through the Assembly and is waiting to be introduced to the California Senate. Google and California lawmakers could potentially reach a deal to avoid court battles over both bills.
