Apologies in advance, but this long and weedsy post about Google’s proposed California journalism funding deal will be directed toward the journalism and policy nerds among us. If you’d like to hear me yap more accessibly about the bigger picture — about journalism, monopolies and the future of the internet — Paris Marx interviewed me for his podcast “Tech Won’t Save Us” in a new episode out this week on Apple, Spotify, YouTube and other places you get your podcasts.

Some quick background on how Google went from potential regulation to a fuzzy settlement

If you’re reading this, you’re probably already aware the California legislature introduced and then failed to pass two massive journalism jobs bills with a Big Tech antimonopoly character.

One of those bills was Assemblymember Buffy Wicks’ AB 886, also known as the California Journalism Preservation Act, a “bargaining code” bill aimed at Google and Meta based on similar measures previously enacted in Canada and Australia. Most of the revenues thusly given to newsrooms, distributed based on the number of journalists employed, would have to be spent on payroll.

The other bill was Senator Steve Glazer’s SB 1327, a data-mining tax (somewhat akin to Maryland’s digital advertising tax) on Google, Meta and Amazon. Half of the revenues from that tax would have massively funded journalist employment tax credits similar to those recently created in New York and Illinois.

The premise implied in the structure of each bill is that monopolistic Big Tech platforms have a responsibility to give back some of their monopoly profits to the newsrooms they’ve been profiting from. On the spending side, each bill proposed on a macro level that those revenues be returned to newsrooms in the form of a journalist wage subsidy. (Hence why every practically every journalist and news worker union in the state, including mine, supported the bills.)

Each bill passed out of its house of origin on a bipartisan supermajority vote — legislative interest in journalism policy is growing, and Big Tech’s stock is falling — but both faced a lethal obstacle: California’s pro-tech Governor Gavin Newsom. “No way was the governor going to sign either of the bills,” said former Assembly Speaker and Sen. Bob Hertzberg, who helped Assemblymember Wicks negotiate the settlement that followed. “He viewed them as a tax.”

So Google and Assemblymember Wicks’ office went into closed-door negotiations and emerged (sort of) with the following framework that Gov. Newsom could live with. It’s not well reported what, exactly, happened in the proverbial backroom, and I couldn’t tell you either. But either way, the proposed deal links up somewhat with Assemblymember Wicks’ AB 886 framework.

First, the biggest of all caveats: Is there a Google deal?

What I’m about to describe and analyze here are a bunch of words on an unpublished .pdf that aren’t actually real yet.

There is no legislation or any vote codifying any of this; there are public dollars proposed to be involved that haven’t been lawfully allocated; the Senate is vocally unhappy with this outcome and has signaled it will have its say; and there’s a whole new Legislature about to be seated that might have its own feelings about all this come budget season. And practically everybody who doesn’t already get Google money is mad.

That’s all to say that anybody writing analyses for NiemanLab about, gosh, how nice all this looks (*cough*) is engaging in unsupported optimism that what could emerge at the end of a contested budgeting process will look like what we’re all currently discussing.

With all that said: onward!

Part I: Summary

“Summary: Creation of first-in-the-nation partnerships that will provide nearly $250 million in public and private funding over the next five years, with the majority of going to support newsrooms. The goal is to front-load $100 million in the first year to kickstart the efforts. Total investment could increase over the next several years if additional funding from private or state sources becomes available.”

A yadda yadda summary. The relevant details are in the following sections.

Part II: The state introduces some public dollars for funding private newsrooms

“State Contribution: 30mm in year one. 10mm in each of the next four years (years 2-5). All money will be contributed to a new fund established at UC Berkeley School for Journalism.”

This was one of the first major surprises to emerge in this framework: That public money would be included for subsidizing local newsrooms.

I’ll get to the UC Berkeley fund a bit lower down. The concept is that this 501(c)3 will be the vehicle for accepting deposits from the state and (tax deductibly) from Google. The 501(c)3 would then redistribute those funds to newsrooms across California based on the number of journalists they employ, per the terms laid out in the most recent version of AB 886. I’ll talk about the 501(c)3 vehicle a bit further down.

In the abstract, there’s nothing inherently wrong with expanding public support for journalism, though the more senior libertarian-minded folks in my corner of the world often disagree. Most of the world’s advanced democracies directly spend far larger sums on supporting journalism than the U.S., often in the form of a public option like the BBC in the U.K. or the CBC in Canada. In the U.S., private-sector-oriented journalist refundable employment tax credits have become an increasingly popular tool to directly subsidize newsrooms on a relatively nondiscriminatory and content-neutral basis, like the recent programs in New York and Illinois. Guilds like mine often support these policies.

But there are three major issues, to my eyes, with California’s particular proposed deployment of public dollars here:

1. We don’t know how much money we’re actually potentially talking about. The public dollars haven’t been lawfully allocated by the state and still has to go through a contested budgeting process next year, where an unsatisfied Senate will have its say.

2. Tying journalism support to the annual budgeting process, rather than a more durable economic structure, creates both economic uncertainty and a reason for all of us to keep going back to lawmakers every year with our hands out. As far as constructing public subsidies for journalism goes, this is one of the least politically independent structures I can think of. The rank-and-file journalists who have cover politics here can tell you that it’s already uncomfy how our bosses are barnstorming the statehouse right now, while not exactly cluing their own reporters in on what they’re up to in our newsrooms’ names.

3. By using the AB 886 formula, taxpayer dollars would go directly to large news employers like McClatchy (owned by the hedge fund Chatham Asset Management), Alden Global Capital (“destroyer of newspapers”), Los Angeles Times (owned by the wealthiest man in Los Angeles) and CalMatters (largest consolidator of the nonprofit sector), many of which are unionized but don’t currently have collective bargaining agreements with their own employees. It’s one thing to return monopolist money that had effectively been stolen from the journalists these entities employ. But this is a direct public subsidy, and in California those tend to come with stricter labor standards than what AB 886 most recently required.

Something I’ve sensed, primarily from the philanthropy-associated side of the journalism industry, is something of an indifference toward where journalism funding comes from. As long as there’s money for journalism that didn’t exist before, what’s the big deal whether it comes from Google or the state? If your sole objective is to acquire funding for journalism by any means necessary, then sure: No harm sticking your name on a press release to celebrate being served a few more crumbs. “Better than nothing” is the calling card of this faction, which has been decreasingly willing to publicly defend this settlement as it continues taking a beating under close scrutiny.

My view, and increasingly the view of many journalists and antitrust experts, is that journalism very specifically has a Big Tech monopoly problem — a monopoly problem that increasingly is turning the increasingly dependent journalism industry into a drag on public funding and public services rather than acting as a regenerative (or at least self-sustaining) force in our communities.

At least journalist employment tax credits represents a conscious democratic structuring of the public dole for local newsrooms. The news industry has already become reliant on government support, just the kind nobody voted on: more newsrooms organized as 501(c)3 nonprofits that don’t pay corporate income taxes; more philanthropic grants creating deductions for their wealthy donors; more underpaid journalists subsidized by government food stamps and housing assistance; more universities offering journalism students to provide coverage for news deserts. (Which means a growing share of the capital supporting local news production consists of student debt.) In 2021, ProPublica reported that billionaire Patrick Soon-Shiong hadn’t paid personal federal income taxes in five years in part because of massive corporate losses from his investments into the ailing Los Angeles Times. So when California launched an antitrust attack on Big Tech’s monopoly profits to restore some economic rationality to local news production — and failed — the charitable public-private partnership that inevitably emerged is less a “first in the nation partnership” than the continued embrace of the U.S. tax code as the best Band-Aid for a mortally injured local news economy.

In California, the state is one of the largest funders of public schools. The introduction of direct public subsidies for newsrooms, on top of charitable deductions for Google, means that journalists are simultaneously shrinking the tax base for K-12 schools while pitting journalists against teachers to compete for the public dollars that remain. Is that “better than nothing”? At minimum, it should be subject to hearing, debate and a public vote.

Part III: Google’s (paltry) contribution to local newsrooms

• “Google Commitment to Journalism, up to 30mm a year, as follows:

  • a. Year one:

    • 15mm to the Journalism Fund

    • 5mm to AI fund accelerator

    • 10mm in funding for existing journalism programs

  • b. Years 2-5: Google continues its contribution to Journalism Fund at 10mm minimum. Google maintains 10mm in funding for existing journalism programs”

This is the part where you can see how badly California got steamrolled by Google.

In Australia — which originated the “bargaining code” framework that loosely inspired AB 886 — Australian officials estimated that Meta and Google paid $166 million a year to Australian newsrooms after striking a settlement with regulators. That’s for a country with 26 million people.

In Canada, Meta banned journalism entirely rather than pay anything under last year’s C-18, the Online News Act — a net negative — but it was offset by Google agreeing to pay roughly $75 million a year to Canadian newsrooms. That’s for a country with 39 million people.

In California, Meta is also nowhere to be seen in this settlement, and Google’s new investment in California newsrooms is a whopping $15 million in year one, and $10 million annually after that. That’s for a state of 39 million with almost twice Canada’s GDP. As a bonus, Google agrees to keep funding its existing journalism programs (Google News Initiative grants, etc), which turned many small California publishers into unwitting astroturfers for a deal that will exclude many of them from receiving anything, given AB 886’s qualification framework under 3273.80(j)(7)(A) that excludes small for-profit digital publishers with less than $100,000 in annual editorial revenue or startups that have been in business for less than two years. I am sorry, but if you are a small publisher in California, your interests have been very poorly represented on this legislation for the past two years — to the point that it was my own Guild that had helped craft amendment language expanding funding access to small publishers more heavily reliant on freelancers. Although I’d love to believe we are the smartest journalism union in the world, we don’t speak for small publishers, though many of them are former union members themselves.

Finally, unlike Australia and Canada, Google’s contribution under this proposed settlement isn’t tied to any kind of statute that drops a regulatory hammer if the company doesn’t stick to its word. If this deal is even a “deal,” Google can exit whenever it likes — and exit seems probable. Google did not appear to feel any remorse about threatening to cut funding for existing Google grant recipients in California when facing a regulatory threat. But to the extent publishers will gobble up “something instead of nothing,” it naturally raises the situation that those same publishers will be scared of losing “something” if California lawmakers try again to go after the real monopoly money.

Part IV. The appearance of dumb AI money

1. “National AI Accelerator

   1. Managed by as-yet-to-be finalized non-profit organization, under terms to be defined by funders

   2. Google commitment of additional 10mm to Accelerator

   3. Google commitment of additional 2.5mm to fund AI research

   4. Additional contributions from other tech companies”

Look, guys. I don’t really know what to say about this stuff and its potential nexus (if any) with actual journalism. I think it was initially drawn up as a honeypot to attract Big Tech money from Meta et al who successfully evaded the legislature’s sights.

Here’s how it’s described in the initial announcement from Assemblymember Wicks’ office:

“…researchers and businesses will have access to new resources to explore the use of AI to tackle some of the most complex challenges facing society, and strengthen the workforce through a new National AI Innovation Accelerator. This will be administered in collaboration with a private nonprofit, and will provide organizations across industries and communities — from journalism, to the environment, to racial equity and beyond — with financial resources and other support to experiment with AI to assist them in their work. The AI accelerator will empower organizations with the new technology, and complement the work of the Journalism Fund by creating new tools to help journalists access and analyze public information.”

OpenAI is involved, reportedly to contribute some technology to the accelerator, with Chief Strategy Officer Jason Kwon commenting “we’re proud to be part of this partnership to utilize AI in support of local journalism across California.” But what exactly is OpenAI’s involvement? Assemblymember Wicks added further comments in an interview with the Sacramento Bee:

“Wicks envisioned AI being used to make school boards and city and county governments more accessible to both journalists and the public, much as CalMatters’ AI-infused Digital Democracy project has done for the Legislature.

“She acknowledged the concern shared by many journalists that AI could be used to replace them in their work. While she didn’t list any specific safeguards that this nonprofit would employ, she did say, ‘The goal of this is to provide technology that will provide solutions to challenges instead of creating more challenges.’”

Using machine learning to scrape and compile non-infringeable public data a la CalMatters’ Digital Democracy project is one of the more responsible possible deployments of the current wave of AI tech, which has otherwise largely struggled to find a non-fraudulent use case for many newsrooms.

But what’s a little weird about an AI partnership appearing alongside a paltry journalism settlement is that it represents a potential jackpot of dumb AI money for whoever wins the race to reap the accelerator’s multimillion-dollar rewards. This raises the peculiar behavior of CalMatters CEO Neil Chase over the past couple of years, who couldn’t seem to decide if he was lobbying on AB 886 on behalf of CalMatters, himself, or as a LION Publishers board member. Fortunately, he seems to have tried all three. In his third role, as a LION board member, Chase was rallying LION publishers to support the backroom Google deal before it was public — reportedly without telling them it was Google doing the asking, or without reminding LION members that many of them wouldn’t see a cent from what their own trade organization was asking them to support, or apparently without disclosing that Chase was floating his own organization, CalMatters, to host potentially the biggest prize of all: the AI accelerator. Is it possible for a CEO and a board member of two organizations to advocate for the best interests both simultaneously, particularly when there’s a vast (and undisclosed) delta between how each organization might benefit? When asked about all this, Chase told The Lever that his own AI proposal for CalMatters was “just a casual conversation” with Assemblymember Wicks’ office, which certainly puts to rest any concerns about a possible conflict of interest. As for LION, well, “LION is a trade association fighting for its members. It’s brought in millions and millions of dollars for publishers all over the country through grant programs,” Chase told The Lever. “And that’s what they do, they try to figure out how to get more resources for publishers. I appreciate there’s an organization out there scrambling to do this stuff.” Sounds great.

Returning to the antitrust perspective, the concerning part about state’s potential involvement in an AI accelerator is that the framework says the accelerator will ultimately be managed “under terms to be defined by funders.” The only funder I see is Google, the monopoly currently facing multiple federal antitrust cases for wrapping too many of its technological tentacles around the information economy. Unless the government is going to regulate Google like a telecom, the journalism industry should be moving toward decentralizing, not consolidating, the technological infrastructure on which we’ve all become dependent.

V. The nonprofit handling the journalism money

1. UC School of Journalism non-profit public charity

   1. Administration costs are not to exceed a customary overhead

   2. Purpose is to bolster UC’s efforts to support and catalyze local news throughout the state

   3. Overseen by a 7-member governing board:

      1. CNPA member

      2. CNPA member

      3. Ethnic Media Services

      4. Local Independent Online News

      5. Latino Media Collaborative

      6. California Black Media

      7. Media Guild of the West

   4. Funds allocated by board to be distributed by claims administrator

   5. 12% of funding reserved for locally focused publications and publications targeting underrepresented groups

   6. The function of the board will be to validate the distribution formula based on the number of journalists per publication. Funds to be distributed to eligible organizations by dividing the number of eligible journalism positions or freelancers of each organization by the total number of overall eligible positions multiplied by the total eligible amount in the fund consistent with the current language of AB886. The board will have no other discretion relative to the distribution of funds.

   7. The definition of a journalist does not include broadcasters

Well, this is the messiest one. A nonprofit set up at a public university to administer a logistically complicated and politically fraught subsidy program under the rules of AB 886, overseen by a seven-member board including six publisher seats and one seat for my own union, Media Guild of the West, one of the two NewsGuild-CWA locals representing journalists in California.

For what it’s worth, although journalist membership organizations are bizarrely underrepresented in journalism policy discussions relative to publishers or philanthropy-associated groups, my own Guild — although loyally promoting journalist codetermination! — didn’t specifically ask for our own dedicated seat. Although we were the loudest and most aggressive policy advocates for this round of legislation, we are also just one of many news unions across California. I haven’t asked Assemblymember Wicks’ office about this (they know where we stand), but I presume this is a product of our union being a squeaky wheel. The more you lobby, the more you get, I guess.

Anyway. Journalism advocates like myself often prefer 501(c)3 nonprofits as a vehicle for delivering public subsidies (a la the congressionally chartered Corporation for Public Broadcasting) to try to build another layer of political independence between policymakers and the newsrooms they would fund. It’s not bulletproof, but nothing is, really.

Some basic logistical stuff: How would it work for UC Berkeley to host this 501(c)3? Who writes the bylaws? Can the board — dominated by the publishers receiving the funding the nonprofit is handling — vote to rewrite those bylaws and the rules on distribution? Will any of this be codified into statute, or will it just kind of appear out of nowhere under university-designed rules like the UC Berkeley California Local News Fellowship did a couple years ago? What kind of staff and administration overhead costs are going to be incurred by evaluating requests from hundreds of publishers requesting AB 886 disbursements for thousands of journalists? Is AB 886’s 70% payroll spending requirement, which my union demanded, even enforceable by a nonprofit organization if an Alden Global Capital news executive takes the money and tells the Berkeley people to eat shit? Can the nonprofit withhold payments from publishers that fail to complete AB 886’s required transparency reports? If the fund does withhold payments to scofflaws, could there be litigation? What in-state publication won’t qualify for the 12% set-aside for “locally focused” publications?

A lot of these questions seem answerable and solvable, but maybe only after a lot of yelling, intra-industry hairpulling, and many, many more demands for more state funding. Meanwhile, Google will loom, sphinxlike, in a position of rest, having escaped the threat of regulation, having already promised its initial $15 million, and not feeling compelled to offer a penny more.

What’s also been publicly less explored in the weeks since this proposed settlement is that nobody actually has a reliable guess on exactly how many eligible publishers and journalists California has.

Broadcast journalists (TV and radio) got thrown overboard in the settlement, presumably to fatten up otherwise paltry payments to the print and digital newsrooms that are being the most demanding right now. So we have a weird situation where public media journalists facing layoffs at LAist KPCC, CapRadio and KQED don’t receive support, while journalists larger employers like Alden Global Capital, L.A. Times, McClatchy, Gannett, San Francisco Chronicle and CalMatters do. Commercial broadcast faces quite a bit of implicit hostility in the journalism policy space, I’ve noticed — either from people who think TV journalism isn’t real journalism, or who think that local TV news is still commercially healthier than other types of journalism. But similar signs of economic rot are starting to appear in the commercial broadcast space, and when those outlets work online, they face the same monopoly marketplace as the rest of us. One of the many journalist organizations opposing this deal includes the National Association of Hispanic Journalists, which wrote that excluding broadcast journalists “is very problematic in a state where TV networks such as Univision, Telemundo and Estrella TV, as well as Spanish-language radio stations in major cities, play a central role in informing and engaging Latinos.”

That leaves the rest of the print and digital industry. Reliable government statistics don’t exist for how many such publishers and qualifying journalists exist in California, let alone how many would meet AB 886’s particular eligibility standards. Even if such statistics did exist, it would be challenging to calculate potential grants to small publishers with due to AB 886’s standard allowing $40,000 in freelance spending to be counted as equivalent to a single journalist for the purpose of receiving disbursements from the journalism fund, up to the equivalent of five journalists.

Basic research and some napkin math from Rebuild Local News guesses there could be 4,200 qualifying journalists in California, which could pencil out to an average annual per-journalist subsidy of $5,000 to $8,000 if you combine the Google and state dollars. That’s not nothing. But it’s also artificially inflated by the exclusion of broadcast journalists, doesn’t include potentially considerable administration expenses (are those supposed to be borne by UC Berkeley or deducted from the fund?), and the per capita allotment starts getting smaller if uncounted publishers not irrationally come forward to claim their piece.

VI. State advertising

“Additional State Support: California will work with its departments on plans to prioritize state government advertising in local publications and publications in underserved markets, with the goal of redirecting millions in advertising dollars.”

This final section is technically a standalone that’s connected to Assemblymember Miguel Santiago’s AB 1511 related to government advertising, which I’m not an expert in, so I’ll leave to others to analyze and discuss.

Conclusion

If you’ve gotten this far, I congratulate you. My conclusion is that this is a pretty rotten deal with no bigger winner than Google, which got to escape regulation for a pittance. Or maybe Gov. Gavin Newsom, who got out of having to avoid vetoing something that his tech friends didn’t like — Newsom won, too.

The losers are the journalists, the teachers and anybody else dependent on state money, and the public.