Google agrees to America’s first newsroom funding deal. It’s already unpopular.

SACRAMENTO, California — Google has brokered a first-in-the-nation deal with California lawmakers to direct millions of dollars to local newsrooms, the latest in a series of global efforts to require tech companies to support the journalism they profit from.

California emulated a strategy that other countries like Canada have used to try and reverse the journalism industry’s decline as readership migrated online and advertising dollars evaporated. But the California agreement includes a novel – and controversial — element with funding earmarked for artificial intelligence, a technology that many journalists fear could replace their jobs, and it immediately drew sharp criticism from journalists and Democratic lawmakers.

Under the deal, the details of which were first reported by POLITICO on Monday , Google and the state of California would jointly contribute money over five years to support local newsrooms, excluding broadcasters, through a “News Transformation Fund” housed at UC Berkeley’s journalism school. Google would give $110 million to journalism initiatives, and the state would kick in $70 million, according to Assemblymember Buffy Wicks, an Oakland Democrat who led negotiations on the deal.

The deal would also steer $70 million in private dollars toward the development of artificial intelligence tools through a to-be-established nonprofit, Wicks said, an item that people familiar with the negotiations described as an effort to cultivate tech industry buy-in. Funding for artificial intelligence was not included in earlier legislation from Wicks.

Wicks emphasized in an interview with POLITICO that the majority of funds would go toward local California newsrooms, and that the AI component was a small piece of negotiations. Wicks said the aim of the so-called “National AI Accelerator” would be to solve problems across a sector of industries, including journalism, where it could create tools like CalMatters' Digital Democracy program that uses AI to track state legislation.

The deal does not require legislation to implement, Wicks said, adding that her bill was used as leverage to force the conversation. Wicks sees the final agreement as the best way to get money into publishers' hands quickly, as a controversial law could get tied up in court for years.

"If you look at Canada, they passed that over a year ago, and publishers haven't received a penny from that yet," Wicks said.

But the deal immediately drew wide-ranging criticism — including from fellow Democratic legislators, reflecting a broad perception that Google had wielded its influence to wring favorable terms from Sacramento.

Sen. Steve Glazer, a Bay Area Democrat who authored a parallel bill that sought to sustain newsrooms by taxing digital ad revenue, said Google’s contribution was “completely inadequate” and warned the compromise “ undercuts our work towards a longterm solution.” California Senate President Pro Tem Mike McGuire (D-Sonoma) also questioned the outcome.

“We have concerns that this proposal lacks sufficient funding for newspapers and local media, and doesn’t fully address the inequities facing the industry,” McGuire said in a statement.

And while the terms placated Google, they divided the journalism sector along lines that parallel fissures within the news industry. The California News Publishers Association offered tepid support for what it called a “first step” toward crafting a sustainable business model.

But a journalist union that had championed Wicks’ effort, Media Guild of the West, blasted the deal as a giveaway to Google that would not alter the company’s vast power over newsrooms.

“This was just a total rout,” Media Guild of the West President Matt Pearce, a former Los Angeles Times reporter, said. “Google used its monopoly power and held the line.”

Wicks responded that she has great respect for the unions, but felt this was the attainable compromise.

“I think I’m dealing with the art of the possible," she said. "This represents, to me, the best case scenario for the moment we’re in. And I would rather take a nearly quarter of a billion dollar deal than nothing.”

Powerful California tech companies fought to repel Wicks’ bill, with Google spending more than $1.1 million last year on an ad campaign branding the bill a “link tax” and temporarily blocking news access for some California consumers earlier this year, redeploying a tactic it used when other countries like Australia and Canada considered similar policies. The company launched another negative ad blitz amid negotiations this summer warning the bill would “reduce your access to trusted, reliable information online.”

The deal emerged from complex negotiations that stretched over a year. Technology industry and business lobbying groups were also in Glazer’s bill, increasing the pressure to forge a broader compromise.

Debate over Wicks’ bill centered around the best way to resuscitate an industry that has shed thousands of jobs in recent years as its business model collapsed. Wicks and a coalition that included news publishers and unions argued online platforms helped decimate newsrooms — and thus undermined democracy — by sapping vital advertising revenue.

Google and others countered that they have marshaled enormous readership and directed substantial financial assistance to newsrooms already. They warned Wicks’ approach would incentivize clickbait or fringe content, appealing to California’s overwhelmingly Democratic Legislature by emphasizing the risk of boosting right-wing outlets.