Google Manages to Avoid the “Link Tax” with an $250 million Investment Plan in California

• The Link Tax", which has been a subject of the constant struggle between the state and Google for the last two years, is finally set aside.
• In its place, Google has promised to invest millions of dollars to boost the state's journalism and AI sector over the next 5 years.
• The deal has incurred mixed reactions. Some are in its favor while others feel Google got off easy.

Google has agreed to invest millions of dollars in California to help fund local journalism and an artificial intelligence initiative as a part of a deal to avoid the California link tax", also known as Wick's bill (since it was authored by Assembly member Buffy Wicks).

For those who don't know, the link tax" was a proposed bill that would have required Google and other similar platforms to give a percentage of its advertising revenue to local news outlets for linking to their news.

It was modeled after a similar policy that was passed in Canada which requires Google to pay roughly $74 million every year to fund journalism.

There will be two funds under this new deal.

1. News Transformation Fund

This fund will boost journalism in the state and will be managed by UC Berkeley's Graduate School of Journalism. It will receive around $110 million from Google and $70 million from the state.

2. National AI Innovation Accelerator

This fund is an AI initiative and will receive approximately $70 million from Google. This will be administered in collaboration with a private nonprofit and will be available to organizations across industries and provide them with resources to experiment with AI. The state will make no contribution here.

What Does Google Have to Say About This Bill?

Google is naturally quite happy with the outcome. After all, the company has been fighting this bill for the last 2 years. In fact, in April 2024, the company also threatened to block news websites from the search results of certain Californian users. Despite this, the bill continued to proceed.

But this week, Wicks finally decided to work out a deal with Google because she saw no path ahead for her proposed legislation. Plus, she feels this deal has managed to secure a better financial investment than the bill could ever have.

Addressing this news, a Google spokesperson said that this is the best outcome for both journalism and the AI industry in California.

This public-private partnership builds on our long history of working with journalism and the local news ecosystem in our home state while developing a national center of excellence on AI policy' - Kent Walker, president of global affairs and chief legal officer of Alphabet

Governor Gavin Newsom is also supportive of this bill. He feels this is a major breakthrough that will ensure the survival of local journalism in the state without imposing extra taxes on the citizens.

Media Groups Aren't Happy with the Deal

Although the state and Google might think the deal is a better alternative to the tax, media groups don't feel the same way.

For example, the Media Guild of the West Union published a statement criticizing the deal and calling it a shakedown". It also has an issue with journalists being left out of the discussion.

After all, this decision affects them the most and they have been a staunch supporter of the bill since day one. Naturally, they feel they deserve a say in the outcome.

• Critics said that it was a classic textbook political maneuver by the company to avoid paying taxes under what could have been a groundbreaking bill.
• They have also raised questions on why the deal includes investment in AI as well. After all, AI is one of the biggest factors behind the steady decline of the print industry.

But on the flip side, there are some supporters from the publishing industry as well. For example, the California News Publishers Association feels this is a great first step in order to ensure the survival of local journalism and they can't wait to see what future initiatives this deal will roll out.

Opposition in the Senate

The bill is also facing opposition in the Senate. Democratic State Senator Steve Glazer who had proposed a different bill to sustain local journalism has criticized it and said that Google's offer is inadequate and much smaller than the investment it has made in Canada to support local journalism.

• The Senator also raised questions on why Google was the only company involved in the deal. Google and Meta have an equally sprawling news business in the state yet Meta was absent from the announcement.
• The only other company that's involved in the deal is OpenAI. But it's only contributing to technology, not money.
• In addition to this, Senate President Pro Tempore Mike McGuire has questioned the legislative support for the state's share of the fund. He also feels that this proposal does not provide enough funds for the local media to thrive.

The condition of newspapers and other local media is dire in the state. For example, the Los Angeles Times was practically bleeding - it was losing up to USD 40 million on average every year which forced it to lay off more than 100 people earlier this year.

Let's just hope this deal can successfully accomplish its objectives, Otherwise, it might be a wrap for local journalism very soon.

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