Google has informed nonprofit newsrooms that it could stop funding the Google News Initiative, which supports over $300 million in funding for thousands of news outlets, after threatening to remove links to California news outlets because of a new state bill, sources told Axios.

This is the second time Google has threatened to withdraw investment in news this year due to a regulatory threat in California. Still, hundreds of publishers outside California would also be affected this time.

Google Pausing Further Investments in Publications

When asked for comment, Google last month directed The Verge to an April post about the CJPA, where Jaffer Zaidi, Google's vice president of news partnerships, announced it would pause further investments in California newsrooms, including new partnerships through its news licensing product, Google News Showcase, which is a product and licensing program for news organizations, and planned expansions of its $300 million global Google News Initiative (GNI) program until there's clarity on California's regulatory environment.

This statement was made in response to a bill introduced last year by California Assemblymember Buffy Wicks. The bill would effectively impose a link tax on Big Tech companies for links to news content and use the revenue to fund newsrooms.

California Journalism Preservation Act (CJPA)

The bill, known as the California Journalism Preservation Act, has also faced opposition from Google's rival Meta, which has threatened to block links to news sites in California on its platforms if the bill is enacted into law. In response to the bill, Google initiated testing the removal of news links from its search results in California in April, which would require major tech platforms like Google and Meta to pay for linking to articles from California-based news publishers. If passed, the bill would impose a 7.25% tax on large companies like Google when they sell user information to advertisers, which would fund tax credits for news outlets in the state. Although the law would only apply in California, Google has reportedly warned outlets that it might pause new grants nationwide. Sources also told Axios that Google is concerned about setting a broader precedent for other states. California's Senate tax committee approved the ad tax bill on May 8. Shortly after, according to sources cited by Axios, Google began reaching out to nonprofits about the possibility of pausing future funding through the Google News Initiative.

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News publishers have consistently argued that large technology firms should provide more significant compensation for publishing links to their articles, a contention supported by significant financial implications. A working paper released last year estimated that, under a proposed nationwide law, Google could owe publishers between $11.9 billion and $13.9 billion annually. This stance is not without precedent; other nations, such as Australia and Canada, have implemented legislation to safeguard publishers' interests. In these instances, Google initially responded with similar threats to withdraw services. However, the company eventually negotiated agreements to remunerate news outlets in both countries.

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