California's revamped Google journalism deal raises new questions

Politico

22-05-2025

SAN FRANCISCO — California's bold experiment to make Big Tech pay for local journalism just hit a double-speed bump.
Last week, Gov. Gavin Newsom dialed back state support for a first-in-the-nation newsroom fund in the face of a $12 billion state deficit. Then on Wednesday, Google — the lone corporate backer of the initiative — decided to lower its own tab by a third, from $15 million to $10 million for this year.
The handshake deal to support local journalism with both state and Google funds emerged from negotiations with Sacramento lawmakers last summer, who had initially proposed legislation to force tech giants to compensate online publishers as they're required to in countries like Canada.
The deal was hailed as a landmark arrangement that could set a precedent for other states seeking to prop up struggling newsrooms decimated by lost advertising revenues as readers turn to aggregation sites such as Google News. Those concerns have been particularly acute in California, where outlets like the Los Angeles Times, the state's largest newspaper, have seen mass layoffs in recent years.
Google did leave the door open to match up to $5 million more if other private, public or philanthropic donors step up. None did on Wednesday. But the latest changes to the deal are drawing vocal criticism, both old and new, while also raising questions about what it means for the future of the initiative.
Here's a rundown of the lingering unknowns as California reworks its Google news deal.
A version of this story first appeared in California Decoded, POLITICO's morning newsletter for Pros about how the Golden State is shaping tech policy within its borders and beyond.
That's the new name for the initiative, previously known as the 'Newsroom Transformation Fund.' The rebrand came out of discussions with stakeholders and the state library as the new public partner, a spokesperson for Assemblymember Buffy Wicks, a Bay Area Democrat who announced the details and led negotiations for the fund, told POLITICO.
California Press Forward, California Black Media and a journalism professor joined the press release with statements of support. Several skeptics of the deal turned even more doubtful.
'Google got almost everything they wanted,' bemoaned former state Sen. Steve Glazer, who had authored a shot-down bill that sought to sustain newsrooms by taxing digital ad revenue. 'One, they wanted their amount to be at a modest level. Two, they wanted a state match so they could avoid setting a precedent that other states could follow.'
Glazer added that the downsizing of the program would force newsrooms to 'fight over crumbs,' without making a dent in reversing the journalism industry's decline. He downgraded his assessment of the initiative from a '2 percent' solution last year to a '1 percent solution.'
Rebuild Local News President Steven Waldman similarly said that while he appreciates that efforts to help local news are moving forward, 'the plan is more than 50 percent smaller than the already-too-small program.'
California Broadcasters Association President Steve Stuck, whose members are not part of the deal, told POLITICO: 'It was disappointing, I think, to everybody. When Newsom released a budget and they saw it went from 30 to 10, you know it's going in the wrong direction.'
Other media groups that had been more supportive have since gone quiet. The California News Publishers Association, which issued a statement of support to Wicks' summer announcement and will have two seats on the fund's advisory board, did not respond to a request for comment.
In another twist, the California State Library is officially hosting the fund after UC Berkeley's journalism school walked away from the responsibility late last year over concerns about how the money would be distributed.
One area of hesitation from critics was oversight over and independence in allocating the millions. Under the revised agreement, an advisory board will help the state librarian create programs supported by the fund and offer direction on how they should be spent.
However, the state library still gets the final say. The board will expand from seven to nine members, adding two seats reserved for State Library appointees alongside news publishers, members of journalism ethics groups and journalists' unions.
'Whenever we encounter proposals to provide grants to news organizations from the executive branch of government, we want to ensure that it's done in a way that doesn't inadvertently undermine editorial independence,' said Waldman, who considered the issue 'fixable.'
Wicks' plan is to release a fuller proposal in a budget trailer bill in the coming days. State lawmakers will consider the bill as leaders work with Newsom's office to iron out a final state budget over the next few weeks.
Waldman urged lawmakers to reject Newsom's proposed $20 million cut to the fund, while Glazer said he would prefer a separate bill outside the budget process.
'It's actually a significant policy matter, and that should typically be the contents of a legislative bill that goes through the hearing process in both houses,' the former state senator argued.
In addition to the fund, last summer's agreement included plans to invest $12.5 million more per year of Google's funding into researching and developing AI tools as part of an accelerator program.
The program drew backlash, as news organizations feared the technology could replace reporters' jobs. Though Wednesday's announcement didn't mention the accelerator, a Google spokesperson confirmed to POLITICO that the company's funding for it remains unchanged.
Wednesday's announcement made clear that the fund is actively seeking additional funders. And OpenAI's vice president of global affairs, Chris Lehane, provided a quote for the release, saying the company 'appreciates the opportunity to collaborate on this important project.'
But spokespeople for the AI developer declined to clarify its current role in the effort. When the partnership was first announced last summer, OpenAI said it was proud to be part of the initiative 'to utilize AI in support of local journalism across California.'
A program funded in 2022 by the Legislature, called the California Local News Fellowship and run out of UC Berkeley, has put $25 million into placing more than 100 early career reporters and editors into newsrooms. It's also running out of money.
On Wednesday, a state Senate budget subcommittee heard why the program should, or should not, be given another infusion of cash in a severely budget-strapped year in Sacramento. University of California Associate Director of State Budget Relations Seija Virtanen said the money would be exhausted by the end of 2027, while Republican state Sen. Rosilicie Ochoa Bogh questioned what the value was to taxpayers.
Appearing as a witness, Glazer put it plainly, saying: 'It's important because most of the decision that you make as senators comes from learning about problems in your community.'
He added: 'Local news is essential to our ability to be an independent democracy.'
Tyler Katzenberger contributed to this report.