After threatening to remove links to California news outlets due to a new bill in the state, Google could cut back its investments in the industry even more. The tech giant has told nonprofit newsrooms that it could halt funding to the Google News Initiative, which provides more than $300 million in funding across thousands of news outlets, according to a report from Axios.
Google issued the warning in response to another California bill aimed at helping local news outlets. If passed, the bill would charge a 7.25 percent tax whenever large companies like Google sell user information to advertisers. The money collected from that tax would fund tax credits for news outlets in the state.
Although this law would only go into effect in California, Google has reportedly warned outlets that it could pause new grants nationwide. Sources tell Axios that Google is concerned about it setting a “wider precedent for other states.” Last month, Google tested removing links to California news outlets in response to the pending California Journalism Preservation Act (CJPA). This bill would make major tech platforms, like Google and Meta, pay to link to articles from news publishers based in California.
When reached for comment, Google referred The Verge to a post the company made in April about the CPJA. At the time, Jaffer Zaidi, Google’s vice president of news partnerships, wrote that the company is “pausing further investments in the California news ecosystem, including new partnerships through Google News Showcase, our product and licensing program for news organizations, and planned expansions of the Google News Initiative.”
News publishers have long argued that big tech should pay them more for publishing links to their articles — and for good reason. A working paper published last year estimated Google would owe publishers anywhere from $11.9 billion to $13.9 billion per year if the nationwide law were passed. Other countries that have enacted legislation designed to protect publishers, including Australia and Canada, were met with similar threats from Google. But the company ultimately reached a deal to compensate outlets in both countries.