Dear Politicians: Don't Help Google Destroy the News

PLUS: The RealPage reckoning is coming.

Phot credit: GuillermoJM

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And with that out of the way, on to today’s horror story.

For two years, legislators in California have been working on a bill that would have addressed the ways in which big tech platforms — Google and Facebook chief among them — profit off the work of journalists while sucking away the revenue that used to sustain the news industry. Modeled off of policies implemented in Australia and Canada, the goal was to reclaim some of that money, redirect it to news outlets, and ensure that news publishers used at least a hefty percentage to hire working reporters.

But over the last couple of weeks, everything went sideways.

Instead of passing their groundbreaking bill aimed at some of the root causes of the journalism crisis in America, California lawmakers cut a deal that will accelerate Google’s destruction of the news industry. Actual working journalists hate it, and they’re right: The end result will make Google more powerful and the problem of its monopoly power over the news industry worse. It’s a shining example of how monopolistic corporations push around state legislatures and entrench their own dominance.

I don’t want to dwell too much on the background or the specific policy design of the now-dead bill in question, AB 886, because I want to spend more time on what happened and what the consequences will be. If you’re interested in the policy details, please read this post, which explains how big tech monopolies harm journalism, and why we need a policy-based response, including compensation like that envisioned in AB 886 and the breakup of Google’s search and advertising technology monopolies.

According to a whole host of reporting at this point, the primary obstacle to AB 886 becoming law was California Gov. Gavin Newsom, who threatened to veto anything that would rein in tech’s monopoly power. Instead, Newsom, Google, and members of the California legislature settled on a framework that involves Google paying approximately $110 million into a fund to promote journalism over the next five years, which will be supplemented with $70 million from the state itself, to be appropriated in the state budget next year.

Google also received the state’s blessing to spend about $70 million on an artificial intelligence accelerator housed in some sort of non-profit, the details of which remain very sketchy. But being included in this deal will put the state seal of approval on whatever Google cooks up.

As someone who followed this debate relatively closely, it’s hard to adequately describe the feeling of whiplash. What originated as a bill that would have addressed big tech’s ability to profit off of work done in newsrooms without providing fair compensation to journalists ended with the state agreeing to a backroom deal that bestows public approval on a Google-funded entity that will almost certainly accelerate the destruction of journalism jobs through the further development of AI tools.

The deal was negotiated without any input from the public or from the working journalists whose livelihoods are at stake, as compared to the very public debate AB 886 had been subjected to over a couple of legislative years, including public hearings, and a seemingly endless stream of ads and op-eds. AB 886 had no AI component at all, yet Google somehow emerged from the mix with a state-approved AI accelerator.

If this all sounds absurd, well, it is.

As Matt Pearce, president of the Media Guild of the West, put it, “this whole settlement is a massive get out of jail free card for a monopoly with an illegal business model.” Oh, and Google will get to write off most of its spending under the deal as a tax deduction.

There are two specific points I need to make before moving on to the broader context. First the $110 million Google and its partners agreed to pay over five years is a pittance compared to the profits it has made off the work of journalists. A study last year found that under a fair compensation framework, Google owes news publishers $10-$12 billion per year, with $1.4 billion of that due to California publishers alone.

From a potential payment of nearly $1.5 billion per year, Google talked and threatened its way down to $110 million spread out over five years. That’s some deft business.

Second, Google recently lost one antitrust lawsuit at the federal level over its search monopoly, was found guilty by a jury of violating California unfair business practices law in another, and is about to begin yet another trial over its monopoly in the advertising technology industry, which has a direct bearing on its power over publishers and ad markets. There’s perhaps no worse moment to lock in Google’s power over the journalism industry and wider markets than now, when it is facing so many legitimate questions about its behavior.

Settling for a short-term infusion of funding, provided alongside a pot of money seeding their own destruction, is not the deal working journalists wanted and is short-sighted in the extreme for the publishers accepting and celebrating it. They’ll become not only wards of the state, but wards of the very powerful corporations they are supposed to be holding to account, dependent on continued corporate benevolence to keep the lights on.

Remember, Google does not want to preserve journalism. Its creep toward providing AI written answers to queries is the latest evidence of that. Every click away from Google to a news publisher’s site is lost potential profit for Google. It wants users to stay on Google properties, looking at Google content, and seeing Google-placed ads, making more money for Google.

Publishers who believe they can take this funding and continue to coexist in their current form beside Google — and continue to benefit from clicks provided by Google — are delusional. At the end of the day, public infusions of cash, even if paired with private money, can’t save journalism if the market for the product still suffers from tech middlemen taking most of the fruits of everyone else’s labor.

The worst part is, I don’t even think Google’s political playbook worked all that well. Its leaders did what they always do when threatened by a new regulation: They threw a temper tantrum, in this instance threatening to block all news content in the state of California were AB 886 to become law. But that threat didn’t derail the bill, which kept merrily chugging along after Google made it.

No, they seem to have simply gone over the legislature’s head to the governor, sowing enough fear and doubt that they won the day, flexing their power in the executive’s office with the guy who clearly styles himself a future presidential contender. They banked on Newsom not wanting to take on the major corporations that are synonymous with his state, and they were right.

And now, embarrassingly, Newsom and some legislators are going to run around claiming credit for the destructive deal they wrought, presenting themselves as the saviors of the state’s journalism industry when they are, in fact, its pallbearers.

There will most certainly be a chilling effect too: For better or (mostly) worse, state legislators across the country take cues from the experience of legislators in other, bigger states. Seeing California faceplant won’t buck up lawmakers anywhere else to take on a similar challenge.

I will say, though, I’m increasingly of the opinion that bills like AB 886, while important, are in many ways fighting the last war. They’re an effort at reparations, if you will, for the money Google, Facebook, and others have wantonly siphoned away from the news industry over the years. But they don’t address a future in which Google is delivering AI-created drivel to everyone, mashing up journalists’ work into new word salads that bear only a passing resemblance to the original content.

To address that will require some combination of payments like those envisioned in AB 886, an end to Google’s ad tech and search monopolies, stricter controls around what content can and can’t be used to train AI technology, and, to be fair, more publishers embracing subscription-based models than have in the past.

But in the meantime, we can still call out California’s cave for what it is: A craven sell-out to a corporate monopoly, justified by neither the facts, the policy, nor the politics.

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COOL EVENT ALERT: Speaking of Google and antitrust, my organization, the American Economic Liberties Project, is hosting a virtual workshop on “How the Google Antitrust Trials Could Save the Future of Journalism” on Wednesday, August 28, from 1-2 p.m. EST. RSVP here.

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UPDATE: Last week, the Department of Justice and a bipartisan group of state attorneys general representing North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington sued RealPage, which sells price-setting software to landlords. They allege that RealPage has engaged in an “unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments.”

This case joins a private class-action suit based in Tennessee, as well as state-level cases from the attorneys general of Washington, D.C., and Arizona.

I’ve written before about the ways in which RealPage and other corporations selling algorithmic price-setting software are helping landlords rig rental housing markets, driving, according to the lawsuits and RealPage’s own executives, double-digit rent increases in major metro markets. You can read that coverage here and here, as well as a broader explanation of why housing refomers need to embrace the fight against corporate power here.

It’s great to see more states and DoJ pile into this arena, and I also hope the plethora of lawsuits pushes more states and municipalities to follow the lead of San Francisco, which recently banned algorithmic rent-setting entirely.

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— Pat Garofalo