California Gov. Gavin Newsom once talked big about forcing internet giants to pay for the products they heist and profit off. But last week he scuttled legislation to require payment for news stories.
The governor read “tax increase” in the legislation and sent word he’d veto it. And that’s politically understandable.
But it conflicts with what Newsom said in his first State of the State address shortly after being sworn in as governor in 2019.
He talked about people having “a right to know and control how their data is used” by internet companies making billions off it.
And the governor added importantly — or so it seemed — that Californians should “be able to share in the wealth that is created from their data. And so I’ve asked my team to develop a proposal for a new Data Dividend for Californians because we recognize that your data has value and it belongs to you.”
Yes, you’d think that articles produced by news organizations would belong to them and they could sell the work rather than having it ripped off. The new governor’s declaration created some excitement within the news media.
The industry broadly interpreted “data” to include its products. The big internet and social media platforms have been grabbing journalists’ work without paying for it and building their own profitable advertising programs around the pilfered articles. Or they seize the info and create their own posts.
Consequently, newspaper advertising has been drying up. And because of the platforms’ manipulation, the revenue isn’t being replaced by newspaper digital ads.
Roughly a third of the nation’s newspapers have closed shop since 2005. In California, small and medium-sized towns are in danger of becoming so-called news deserts.
But nothing came of Newsom’s “data dividend” idea.
Some legislators, however, have tried for two years to craft bills to force Google and other tech giants to pay news outlets for distributing their products.
One measure, by Assemblywoman Buffy Wicks, D-Oakland, would have required large platforms such as Google to pay news outfits for their articles.
Another bill, by Sen. Steve Glazer, D-Orinda, would have imposed a “data extract fee” — a sales tax — on platforms that gross more than $2.5 billion annually from advertising to state residents. That would have hit Google, Amazon and Meta and generated $1 billion annually — half to fund partial tax credits for reporters’ salaries and 40% for schools.
Negotiations were intense between Wicks, working with the California Newspaper Publishers Assn., and the internet behemoths.
But Google and its colossal compatriots are so powerful they can pretty much dictate to the Legislature and easily intimidate the governor. They’re reminiscent of the railroad robber barons of more than a century ago that were finally corralled by Progressive reforms.
No major politician is leading a charge against the tech monopolies today, although near election time there’s a stampede to Silicon Valley for campaign contributions.
The big platforms ran disingenuous ads blasting the legislation as an “internet tax” — as if consumers would have to pay the government to sign into Amazon.
The huge techies feared that any California legislation requiring them to pay news organizations significantly would set a pattern for the rest of the nation, so they kept the bite to a minimum.
And Newsom was in no mood to fight them — or sign any bill that smacked of a tax increase.
“No way was the governor going to sign either of the bills. He viewed them as a tax,” says former Assembly Speaker and Sen. Bob Hertzberg, who was Wicks’ chief negotiator while she was bogged down chairing the busy Assembly Appropriations Committee.
“So how do we get money for journalism?” he asks.
“Politics is the art of the possible,” Wicks answers.
They negotiated a deal with Google and Newsom that doesn’t require legislation. Just a pledge from the governor to commit $70 million in state money over the next five years — even though he’ll be out of office in two. Google will put up about $173 million. In all, there’ll be nearly $250 million — starting with $100 million next year.
The public-private partnership will be administered by UC Berkeley’s Graduate School of Journalism. Most of the money will be doled out to journalism entities. Some will be spent on developing ways for journalists to use AI technology.
“The agreement represents a major breakthrough in ensuring the survival of newsrooms and bolstering local journalism across California — leveraging substantial tech industry resources without imposing new taxes on Californians,” Newsom said in a statement.
But Glazer asserted the agreement “does not provide sufficient resources to bring independent news gathering in California out of its death spiral.”
The newspaper industry was split.
The publishers association called the deal “a positive development,” but complained “it does not fully address the critical needs of California’s news industry…. The financial commitments from Google and other tech companies should have been more robust, given the substantial revenues they generate from the distribution of journalistic content.”
Leaders of journalists’ unions questioned “whether the state has done more harm than good” by agreeing to a “disastrous deal.”
But, hey, journalists’ unions have absolutely no political leverage over elected officials. Unlike other unions, it would be unethical for them to make campaign contributions — even if they had money to donate. And it would be unethical to threaten to boycott coverage of lawmakers.
So, be grateful for what we got. Google’s day is coming — just as it did for railroads long ago. This is a continuing story.