The ongoing financial tug-of-war between large tech/social media platforms and news media outlets, with governments trying to play a mediator/arbitrator role, has taken another turn with the announcement that California has cut a deal with Google, similar in principle to the one reached in Canada at the end of last year. When Google was fighting being subjected to regulation in Canada under the Online News Act, Bill C-18, it was glancing over its shoulder at impending developments on its own home turf, California. The California Journalism Preservation Act would have instituted a regime similar to that originally proposed in both Australia and Canada by requiring Google to negotiate agreements with news content providers, compensating them for Google’s use of news content links.
The California bill is similar to draft US federal legislation introduced, but not adopted, in the 2022 session of the US Congress. That legislation would have given news media enterprises an exemption from anti-trust laws allowing them to negotiate jointly with the tech platforms while specifying requirements regarding the negotiations, including arbitration in certain circumstances. (That draft US federal legislation made it difficult for Google to enlist the support of the US Government in opposing similar legislation in Canada, as I wrote about here). Google didn’t like the draft legislation in the US one bit and employed various measures to try to stop it. In California it threatened to drop news from Search, (as it did in Canada) and, similar to its tactics in Canada, it trialed blocking links to news sites for some users.
As most readers will know, and as I have written about on several occasions, Google played hardball in Australia and Canada, but in the end came to an accommodation of sorts. In Australia it reached unspecified content deals with the majority of Australian media players. In Canada, in return for avoiding designation under the Online News Act, Google agreed to contribute CAD $100 million (about US$75 million) annually to a journalism fund to support news media outlets, both print and broadcast. While the result was not what the government or the news media had originally expected, it was certainly better than nothing. It was not all “new money”, however, as Google had previously signed some voluntary content deals in a vain attempt to head off the legislation. This pre-existing funding will now be rolled into the $100 million fund. The voluntary deals will be wound up, thus putting an effective cap on Google’s contribution. Its tactics in Canada demonstrate that Google will do just about anything to avoid being made to share revenues for linking to the content of others, seeing this as an existential threat to its business and operating model. The same applies in California.
In return for withdrawal of California’s original legislation—which would have subjected links to compensation—Google has agreed to ante up approximately US$55 million over 5 years to be put into a fund to be managed by the Graduate School of Journalism at the University of California, contingent on the California legislature also contributing $70 million to the fund over the same period of time. That outcome is by no means guaranteed as the funding must be approved by the state legislature each year. In addition, according to the New York Times, Google has undertaken to provide approximately $60 million over 5 years to an AI Innovation Accelerator Fund, plus maintaining its existing $10 million annual support payments for journalism. That is pretty small change for Google. California’s population, at roughly 39 million, is almost exactly the same as that of Canada although California’s GDP is roughly twice as large. Taking that into consideration, maybe Canada did not fare so badly in getting Google to contribute $100 million (CAD) annually.
While Google and the California legislators who brokered the deal were touting its benefits, it received a mixed reaction from some publishers and outright condemnation from unions representing journalists and staff working at news outlets, who called it a “shakedown”. Meanwhile, Meta (Facebook) appears to have walked away scot-free. Meta was one of the targets of the original California legislation, as it was in Australia and Canada. Meta has claimed it gets no value from news links and in Canada “complied” with the Online News Act by blocking news links, thus eliminating any obligation to pay for news content. The result has been perverse, with non-news outlets, like a garbage disposal company in Saskatchewan being allowed to post news to Facebook because technically it is not a news provider, while legitimate professional journalism outlets are blocked. While Meta initially reached some content deals in Australia after its blockage of news content blew up in its face, it is now busy terminating them as renewals come up. The Australian government will have to decide whether to bite its tongue and do nothing or call Meta’s bluff. If they do, there is every likelihood that Meta will block news for Australian users as it has done in Canada.
There are still voices in California calling for ways to “encourage” Meta to make a financial contribution to news media, and the Google offer is not a completely “done deal” although it has support from the Governor of the state. With the California domino having fallen, government attempts to bring Google to heel seem to have sputtered out, at least for now. The Journalism Competition and Preservation Act in the US Congress appears unlikely to go anywhere. The UK is still trying to figure out its approach, as MediaPolicy.ca reported last week. Google and Meta appear to have successfully stared down sovereign governments at the national and state level. While Meta appears to have completely closed its wallet, Google has negotiated payments it can live with as part of the cost of doing business. And given the scale of its business, the amounts it is throwing on the table are exactly that, a business cost that is a small price to pay for its dominant quasi-monopolistic grip on the online advertising market which, at its most basic level, is a vehicle to provide access to content generated by others.
This article was first published on Hugh Stephens Blog