Report from SFiST
In Brief – The latest budget proposal from California Governor Gavin Newsom (D) has eliminated funding for the News Transformation Fund, a state initiative to pay millions of dollars to California media companies. The fund was announced in 2024 as part of a deal to withdraw legislation aiming to force the largest online companies, especially Google and Meta, to pay California media companies when their content appeared on the platforms. Instead, Newsome, state legislators, and Google announced backing for a five-year plan that would provide $250 million to media companies. However, budget pressures quickly plagued the effort, with the state dropping its 2025 contribution to just $10 million, leading Google to do the same. Google responded to the latest state budget news that the company remains willing to match state funding.
Context – Media companies have been appealing to governments for nearly a decade to force Google and Meta to pay them when their content appears on the platforms. Australia, France, Spain and Canada have been especially responsive. California’s media funding plan was developed in response to the policy divergence of Google and Meta. When Canada enacted legislation in 2023 requiring the largest digital platforms to pay Canadian media companies, Google eventually complied while Meta refused to join the regime and instead blocked news uploads to their platforms in the country. The companies brought this divergence to the debate in California, with Google apparently in line to pay while Meta was prepared to block news media content. Accordingly, the deal for a public-private fund rather than a legal regime included Google but not Meta. In Australia, where both companies have made media payments since 2021, Meta announced plans to stop payments and the government responded with a new tax on large social media companies that won’t voluntarily pay Australian media companies. Lately, media company concerns over digital threats are far more focused on the implications of generative AI and both Google and Meta are exploring payments to publishers when their content is used in chatbot answers.