Google Threatens to Cut Investments in News Outlets Amid California Legislation

Google Threatens to Cut Funding to News Outlets in Response to California Bill

In a bold move that could have significant repercussions for the news industry, Google has warned nonprofit newsrooms that it may halt funding to the Google News Initiative, which provides over $300 million in funding to thousands of news outlets. This warning comes in response to a new bill in California that aims to charge a tax on large companies like Google whenever they sell user information to advertisers.

The bill, if passed, would impose a 7.25 percent tax on such transactions, with the collected funds going towards tax credits for news outlets in the state. While the law would only apply in California, Google has reportedly indicated that it could pause new grants nationwide, citing concerns about setting a precedent for other states.

This is not the first time Google has clashed with lawmakers over legislation aimed at supporting news publishers. Last month, the tech giant tested removing links to California news outlets in response to the pending California Journalism Preservation Act (CJPA), which would require major tech platforms to pay for linking to articles from California-based news publishers.

In a statement, Google’s vice president of news partnerships, Jaffer Zaidi, referenced the company’s decision to pause investments in the California news ecosystem, including new partnerships through Google News Showcase and expansions of the Google News Initiative. This move reflects Google’s ongoing dispute with news publishers who argue that tech companies should pay them more for linking to their articles.

A working paper published last year estimated that Google could owe publishers billions of dollars annually if a nationwide law similar to California’s were enacted. Similar disputes have arisen in other countries, such as Australia and Canada, where Google ultimately reached agreements to compensate news outlets.

As the battle between tech giants and news publishers continues to unfold, the future of journalism funding and the relationship between technology and media remains uncertain.