California officials took a public relations victory lap month upon reaching an agreement with Google under which a combination of state taxpayer dollars and financial contributions from the technology giant will finance a “News Transformation Fund” to “support California-based state and local news organizations.” Governor Gavin Newsom called it “a major breakthrough in ensuring the survival of newsrooms and bolstering local journalism across California.” State Assemblymember Buffy Wicks hailed the deal as “empowering local news outlets up and down the state to continue in their essential work.”

The compact was brewing for more than a month, with Techdirt reporting in early July that Google had proposed a “$30 million contribution to a fund for journalism.” Ultimately, as reported by CalMatters, Google will deposit $55 million and California will contribute $70 million to the News Transformation Fund over a five-year period, with the University of California Berkeley School of Journalism administering it.

The reality is that the agreement shelved enactment of a likely unconstitutional (and certainly litigation-bound) piece of amended legislation––Assembly Bill 886, the California Journalism Preservation Act (CJPA)––that Wicks introduced some 18 months ago. Pro-business and major tech stakeholders, including Google, had vigorously lobbied against it.

The CJPA, which passed California’s Senate Appropriations Committee on August 15, attempted to compel extremely large online platforms (think Google and Meta’s Facebook) to pay “digital journalism providers“ when the platforms link to (including during search engine results) the providers’ news stories. The measure also barred platforms from blocking “access [to] content or changing the ranking, identification, modification, branding, or placement of the content of the digital journalism provider” if the provider sought CJPA funds from the platforms.

The latter compelled-speech, must-carry provision is likely unconstitutional after the US Supreme Court’s July decision in Moody v. NetChoice. A majority of the justices recognized that online platforms “receive the First Amendment’s protection” of “editorial discretion” when they “make choices about what third-party speech to display and how to display it.”

Flexing its information-gatekeeping muscles against the CJPA, Google earlier this year reportedly tested a process of removing some news links for California users. As the Associated Press put it, Google’s test “acted as a threat should the state Legislature pass a law requiring the search giant to pay media companies for linking to their content.” Google and Facebook reportedly had done something similar to counter such legislation in Australia.

All of this plays out against a deteriorating journalistic landscape in which some individuals and news organizations blame Google and Meta for local journalism’s dire straits. As Courthouse News Service editor Bill Girdner stated when commenting on California’s agreement, “The fundamental problem in news publishing today is Google’s complete and total domination of the advertising market” and that “the news publishers that provide the grist of the search engine’s mill receive next to nothing from that enormous advertising income.” A union for journalists dubbed it an “undemocratic and secretive deal with one of the businesses destroying our industry.”

Google denies responsibility for journalism’s current woes. As Google’s Jaffer Zaidi wrote in April when criticizing the CJPA, “[b]y helping people find news stories, we help publishers of all sizes grow their audiences at no cost to them.” He added that Google has “provided substantial support to help news publishers navigate the changing digital landscape and innovate. We’ve rolled out Google News Showcase, which operates in 26 countries, including the US, and has more than 2,500 participating publications.”

Finger-pointing aside, and stipulating that journalism plays a vital role in a democratic society, the California agreement raises larger public policy questions of whether state governments should (1) be in the business of using taxpayer dollars to save local journalism and (2) strike deals with a single powerful private entity––not a broad cross section of the industry in which that entity operates––to fund journalism. As TechCrunch noted regarding the latter issue, “Google is the sole tech company participating” in funding.

The first question affects the watchdog role or Fourth Estate function the press plays to expose government abuses of power. It requires significant separation between the government and the press. If journalism organizations depend on the government for cash infusions, will the watchdog stop barking and eventually become a passive lapdog? Journalists will deny the possibility of censoring negative news about government entities, but the watchdog might not risk biting the hand that feeds it. The second question raises the issue of whether journalists might go easier in their reporting on the one company that funds them and harder on others in the same business sector that don’t.

California should have considered these problematic possibilities before entering a face-saving, taxpayer-handout deal that warded off a flawed law Wicks acknowledged “was going to spend five years in the courts being litigated.”

The post Paying Off the Watchdog: Why California’s Funding of Journalism Is Wrong appeared first on American Enterprise Institute – AEI.