News companies have been at odds with tech giants like Google and Facebook and have been calling for them to pay for the news content that they display on their platforms. Google just agreed to pay millions of dollars to support local journalism in California but journalist groups are not happy.

California will create a “News Transformation Fund” which would provide nearly $250 million spread over the next five years, with the funding coming from both the state and tech giants.

California has agreed to shell out $70 million from the state’s general fund while Google would put in $55 million. The tech giant would contribute $15 million in the first year and the remaining would be spread equally over the next four years in installments of $10 million.

Google Agrees to Pay Millions of Dollars to News Organizations

The funds would be distributed to news organizations based on the number of journalists that they employ. In addition, Google would pay $62.5 million over the next five years to build the “National AI Innovation Accelerator.” Through the agreement, tech companies have managed to escape the so-called “link tax” which requires them to pay news outlets for linking to their content.

California’s Governor Gavin Newsom is quite upbeat on the deal and said, “This 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.”

He added, “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.”

Journalists Are Not Happy with the Arrangement

Meanwhile, The Media Guild of the West is opposed to the deal, and in its statement, it 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.”

The statement added, “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.”

It’s not hard to comprehend why journalists are against the agreement as it is a toned-down version of the AB866 California Journalism Preservation Act that Buffy Wicks (D-Oakland) initially proposed. That bill mandated tech companies to pay California newsrooms a share of online revenues for using their content. News publishers would then have been obligated to allocate 70% of the funds received from tech companies toward journalists’ salaries and news production.

Google Opposed the California Journalism Preservation Act

Google opposed the bill saying it would lead to “a level of business uncertainty that no company could accept.” Tech companies have been vociferously opposed to sharing revenues and Meta Platforms has threatened to block news in Australia if the government forced it to pay licensing fees to media companies.

Incidentally, the Facebook parent even threatened to ban news links in California if it was required to pay for the news under the California Journalism Preservation Act.

Tech Companies Got Away Lightly With The New Proposal

It seems that tech companies got away lightly as the original bill would have had a much bigger financial impact on them. Notably, Google agreed to pay Canadian news publishers $100 million annually indexed for inflation.

As part of the agreement, it would be exempt from the country’s Online News Act which mandates that tech companies enter into agreements with news publishers. In comparison, California journalists are getting a much lower compensation from Google.

Wicks sees the agreement as a good starting point. “This partnership represents a cross-sector commitment to supporting a free and vibrant press, empowering local news outlets up and down the state to continue in their essential work. This is just the beginning. I remain committed to finding even more ways to support journalism in our state for years to come,” she said in her statement.

Another worrisome point about the agreement as Sen. Steve Glazer (D-East Bay) also pointed out is that it does not talk about the efforts that Meta Platforms and Amazon would be taking to support journalism in California.

Senate President Pro Tempore Mike McGuire has questioned state support in the proposal instead of the burden entirely falling upon tech companies who benefit by displaying news on their platforms.

McGuire believes that the proposal is not enough and said, “We have concerns that this proposal lacks sufficient funding for newspapers and local media, and doesn’t fully address the inequities facing the industry.”

Google Is Testing a Generative AI Tool That Could “Help Journalists”

Separately, Google is testing an artificial intelligence (AI) tool to write news stories and recently said that it would pay publishers to test the platform. When reports of Google testing the new platform popped up last year, many lashed out at the company fearing it would eat away the already dwindling opportunities for journalists.

Mindful of the sensibilities, a Google representative said that the tool is meant “to help journalists with their work.” They added, “These tools are not intended to, and cannot, replace the essential role journalists have in reporting, creating, and fact-checking their articles,” the representative said.

Meanwhile, many fear that such AI tools will simply repackage and republish the original journalistic work of other news organizations. While Google has tried to allay fears, it has failed to cut ice with many publishers.

Publishers Have Sued AI Companies

Publishers have been at odds with AI companies for quite some time now. Last year, The New York Times filed a lawsuit accusing AI giants OpenAI and Microsoft of brazenly copying millions of articles from their websites without due permission to train their AI systems.

In a more recent but similar case, journalists Andrea Bartz, Kirk Wallace Johnson, and Charles Graeber have filed a class action suit against Anthropic in a California court accusing it of using their work without permission to train the company’s Claude chatbot.

For now, the relationship between publishers and tech companies has looked like a zero-sum game and one’s loss is the other’s gain. As AI continues to gain traction things could get even more problematic and all players would need to think of a workable mechanism to ensure that good journalism gets resources to thrive along with advancements in AI.