Google Attempts to Kill Sustainable Solution to Local Journalism in Backroom Deal

Sarah Kay Wiley is director of policy at Check My Ads Institute and Meetali Jain is director of the Tech Justice Law Project.

With less than seventy days until the US Presidential election, tech giants like Google and Meta continue to profit from placing advertisements alongside election misinformation and conspiracy theories, while local news – the most trusted source of information – financially starves.

The global digital advertising industry is valued at approximately $600 billion, yet in 2023, just one company – Google – captured approximately 39 percent of that revenue, a whopping $238 billion. These tech giants have positioned themselves between advertisers and publishers, creating a complex and opaque digital advertising system. Just this month, the DC District Court affirmed that Google “is a monopolist” in online search and text-based search advertising markets. This advertising revenue that once sustained journalism now funnels into the pockets of tech companies, accelerating the collapse of the media industry's ad-driven business model.

There was light on the horizon for local journalism in California to gain back some of that revenue. A bill proposed by Democratic state senator Steve Glazer (SB 1327) would have imposed a modest fee (3-6% of ad revenue after a $2.5B exemption) on the largest ad tech platforms – currently, Google, Amazon, and Meta – to support the revival of local news. The revenue from this fee, estimated to be approximately $1B, would provide $500 million for education. The other estimated $500 million would support an employment tax credit, helping news outlets offset a portion of their employees' wages.

By including a prohibition on tech companies from passing the cost of the fees onto consumers and the advertisers using their services, the bill would have been a first-in-the-nation remedy to meaningfully address Google’s monopoly power and how it has decimated local journalism.

That is, until last week when Google convinced California Assemblywoman Buffy Wicks (D-14) and Governor Gavin Newsom to cut a deal to table the bill and effectively shut down – once again – the prospect of any regulation.

The proposed deal calls for a $250 million investment over five years from Google and the State of California. As part of the deal (figures have yet to be finalized and disclosed), Google will contribute up to $15 million to a journalism fund in the first year, while the state of California will invest $30 million. The majority of the funds will be allocated to California newsrooms, while $70 million will be set aside for the creation of a national artificial intelligence "accelerator.”

If you compare Google’s $15 million a year contribution from this deal to the $500m it would have to pay under SB1327, it’s clear Google is trying to cut a spectacular deal that lets tech companies off the hook for most of the damage they have caused to local journalism. Even in Canada, where a similar deal was struck, Google agreed to contribute $100 million to a fund for Canadian publishers, but California’s GDP is 2.5 times that of Canada. Currently, the deal would only result in between an additional $5,000 and $8,000 per journalist in California – peanuts compared to Google’s impact on the local journalism industry. What’s more is that Google’s so-called contributions will be tax-deductible. The deal raises additional questions about why and how Californian taxpayers should be expected to contribute $30 million a year – essentially footing the bill for tech companies’ dominance.

The inclusion of an AI accelerator is also troubling to say the least. It’s clear Google has a vested interest in creating its own journalistic content using AI. Including funds for its expansion and the provision of “new tools to help journalists access and analyze public information” is like giving the blacksmith new tools to forge the nails for his own coffin.

And finally, there is no transparency about the details of the deal. We don’t know why Amazon and Meta are not included. We don’t know why TV reporters are for some reason omitted from being considered reporters. We don’t know the distribution process for the funds, or which types of news organizations will be included. We don’t know if the Al accelerator will be used to fund products aimed at replacing journalists, or if news organizations will be able to take part in the accelerator without first giving up control over their content without being able to secure their intellectual property rights. We don’t know any of these things because exact terms of the deal have yet to be shared. The details of this proposed deal need to be revealed so that journalists and the public can weigh in; democracy doesn’t take place behind closed doors.

Google is currently being scrutinized by multiple regulators and courts for its anti-competitive behavior. A private-public partnership is not how sound policy is made to regulate monopoly power. No deal Google supports will ever address its dominance and control; that can only occur through regulation and antitrust enforcement.

We urge policymakers to resist Google’s influence by rejecting this deal. Instead, attention should be paid to sensible approaches like the one put forth in SB1327. This bill would help to correct the concentrated market power that threatens the media industry and, like all effective solutions, impose necessary costs on those in power. As we grapple with broader questions of how to meaningfully address tech platforms’ monopolistic power, let us not lose sight of a creative solution that would inject much needed revenue into local journalism and education.