Report from The Hill
In Brief – Following California Governor Gavin Newsome’s (D) decision to scale back the state money promised to a new fund to pay California media companies, Google, the one big online company that also promised to contribute millions of dollars, scaled back its commitment as well. Last fall, Newsome and a newspaper publisher trade group announced the creation of the News Transformation Fund as part of a deal to withdraw legislation that would have tried to force the largest online companies to pay media companies when their content appeared on the digital platforms. Google and Meta were the main targets. Instead of legislation, there was a five-year plan for $250 million to be contributed to the fund over five years, with $30 million from the state in FY 2025-26 and $15 million from Google. However, facing major budget challenges, the state announced that it would reduce its first contribution to just $10 million, and Google soon did likewise.
Context – California’s media fund plan was developed in response to the policy divergence of Google and Meta that emerged in Canada. When Canada enacted legislation in 2023 to force the two digital giants to pay its media companies, Meta chose to block news in the country instead. That policy is still in place. Google, although it initially hinted that it would remove news from search results, chose to pay. It will contribute $100 million Canadian to their media fund this year. The two diverged again in California. In Australia, the home of the first forced media payments scheme, both companies started making sizeable media payments in 2021 but Meta announced last year that they would stop this year and would block news if necessary. The Australian Government responded by threatening to enact a new tax on large social media companies that won’t voluntarily pay media companies, meaning Meta. Expect that to elicit pushback from the Trump Administration. The Oregon state legislature is now considering legislation modeled after the Canada and Australia regimes, as well as the bill set aside in California.