Google’s ambition to participate in the AI race
Google has reached an agreement to provide California with millions of dollars to support local journalism jobs. While this deal is being hailed as a first-in-the-nation initiative, many journalists and media industry experts find it to be a disappointing arrangement that primarily favors the tech giant.
The announcement of the agreement this week has sparked criticism, with some viewing it as a strategic move by tech giants to avoid potential fees imposed by groundbreaking legislation. The agreement, reached through closed-door negotiations, aims to provide financial support to local news organizations using a combination of public and private funding. In return for Google’s financial commitment, California lawmakers have agreed to abandon a bill that would have required tech companies to provide support to the news outlets they benefit from.
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According to Victor Pickard, a professor of media policy and political economy at the University of Pennsylvania, California’s decision to shelve the bill means that the state has abandoned the opportunity to require Google and social media platforms to make continuous payments to publishers for linking news content. Additionally, Pickard highlights that California has also missed out on a significant amount of funding that could have been obtained through this legislation.
According to Pickard, Google received a lenient treatment.
Google announced that the agreement would benefit both journalism and the artificial intelligence sector in California.
Kent Walker, president of global affairs and chief legal officer for Google’s parent company Alphabet, stated that this collaboration between the public and private sectors builds upon their extensive experience in supporting journalism and the local news ecosystem in their home state. Moreover, it aims to establish a national center of excellence focused on AI policy.
State governments throughout the United States have been actively engaged in supporting struggling news organizations. The newspaper industry in the U.S. has experienced a prolonged decline, with traditional business models crumbling and advertising revenues diminishing in the digital age.
In the transition from print to digital, news organizations have come to heavily depend on Google and Facebook for content distribution. With a substantial decline in advertising revenues over the past few decades, publishers have turned to Google’s search engine, which has evolved into a digital advertising powerhouse generating over $200 billion in annual revenue.
The Los Angeles Times justified the layoff of more than 100 people earlier this year by stating that the newspaper was losing up to $40 million annually.
According to a report from Northwestern University’s Medill School of Journalism, over 2,500 newspapers have shut down since 2005. Additionally, around 200 counties in the United States currently lack any local news outlets.
California and New Mexico have taken steps to support local news fellowship programs, while New York has become the trailblazer by introducing a tax credit program that provides incentives for news outlets to hire and retain journalists. Following in New York’s footsteps, Illinois is currently deliberating a bill that mirrors the one that failed to pass in California.
Let’s take a closer look at the deal California made with Google this week.
The agreement, which amounts to $250 million, will allocate funds to two main endeavors: supporting journalism initiatives and establishing a new research program focused on AI. However, it is important to note that this funding commitment is limited to a timeframe of five years.
Approximately $110 million will be provided by Google, while an additional $70 million will come from the state budget to support the growth of journalism jobs. The management of this fund will be entrusted to UC Berkeley’s Graduate School of Journalism. Furthermore, Google has committed an additional $70 million to sponsor the AI research program, with the aim of developing tools that can effectively address “real-world problems,” as stated by Assemblymember Buffy Wicks, who facilitated the agreement.
The deal does not involve a tax, which is a significant change from a bill authored by Wicks. The bill proposed a “link tax” that would have mandated companies such as Google, Facebook, and Microsoft to pay a portion of their advertising revenue to media organizations in exchange for linking to their content. This bill was inspired by a similar policy implemented in Canada, where Google is obligated to pay around $74 million annually to support journalism.
Tech companies have been engaged in a fierce battle against Wicks’ bill for the past two years. They have invested significant resources in opposition campaigns and have even resorted to running ads that criticize the proposed legislation. In April, Google went so far as to issue a warning that it may temporarily block news websites from appearing in the search results of certain California users. Despite facing strong opposition, the bill had managed to make progress with support from both sides of the aisle. However, the situation has taken a turn this week.
In a recent interview with The Associated Press, Wicks expressed her doubts about the future of her bill. She emphasized that the funding obtained through the deal was a significant improvement compared to having no funding at all.
She said, “Politics is the art of the possible.”
According to industry experts, the deal is seen as a strategic move by Google that follows a familiar playbook they have used in various regions to circumvent regulatory measures.
According to Anya Schiffrin, a Columbia University professor specializing in global media and co-author of a working paper on the contributions of news publishers to Google and Meta, it is unlikely for Google to completely withdraw from news. She emphasizes that Google relies on news content and employs various strategies to oppose bills that seek fair compensation for publishers.
According to Schiffrin’s calculations, California publishers are owed $1.4 billion annually by Google. However, Google disputes Schiffrin’s findings, with a spokesperson stating that news-related searches make up less than 2% of all searches and that Google does not profit from them.
The Media Guild of the West, a union that represents journalists in Southern California, Arizona, and Texas, expressed its concern about journalists being excluded from the conversation. Although the union supported Wicks’ bill, it was not involved in the negotiations with Google.
“The letter sent by the union to lawmakers emphasizes that the future of journalism should not be determined through secretive negotiations. It criticizes the Legislature for its unsuccessful attempt to regulate monopolies, raising concerns about whether the state’s actions have had a negative impact rather than a positive one.”
In a letter sent to Wicks earlier this week, the union expressed concern that the agreement falls short in terms of funding when compared to what Google provides to newsrooms in Canada. They argue that this goes against the objective of rebalancing Google’s influence over local news organizations.
Some people are skeptical about the inclusion of funding for the development of new AI tools in the deal. They believe that this is just another way for tech companies to eventually replace human workers. It is worth noting that Wicks’ original bill did not have any provisions related to AI.
Several journalism groups, including the California News Publishers Association, Local Independent Online News Publishers, and California Black Media, have expressed their support for the deal.
The agreement will come into effect next year, with an initial investment of $100 million to initiate the initiatives.
According to Wicks, the specific details of the agreement are still being worked on. Wicks mentioned that California Governor Gavin Newsom has made a commitment to incorporate the funding for journalism in his January budget. However, there are concerns from other Democratic leaders that may complicate the implementation of the plan.
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The Media Guild of the West represents journalists in Arizona, not Nevada. Please note that this information has been updated to correct any previous inaccuracies.
