Google Strikes $250M Deal With California To Fund Newsrooms, But Journalist Unions Call It 'Disastrous'

Alphabet Inc.’s GOOG GOOGL Google has agreed to a deal with California to fund newsrooms in the state, thereby putting an end to proposed legislation that would have required tech giants to pay for news content. However, the deal has been met with criticism from journalist unions.

What Happened: The deal, announced on Wednesday, involves a $250 million commitment over five years from Google and the state, with the majority of the funds going to California newsrooms. The agreement also includes the launch of an artificial intelligence “accelerator” to support journalists’ work, CNN reported.

This arrangement effectively puts an end to the California Journalism Preservation Act, a bill that would have compelled technology companies, including Google and Meta Platforms Inc. META, to pay news organizations for the distribution of their content online.

State assembly member Buffy Wicks described the deal as a way for California to continue championing the crucial role of journalism in democracy. California Governor Gavin Newsom also praised the deal, calling it “a major breakthrough in ensuring the survival of newsrooms.”

However, the agreement faced immediate backlash from journalist unions, who labeled it “disastrous.” The Media Guild of the West and The NewsGuild-CWA criticized the deal, arguing it was made without their involvement and questioning its effectiveness.

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Why It Matters: The deal comes at a time when the journalism industry is grappling with significant challenges, including the shift of advertising dollars and audiences away from traditional publications.

The deal also includes the establishment of a “National AI Innovation Accelerator,” which some journalist groups have warned could pose a threat to the future of their industry.

A recent report revealed that more than half of Fortune 500 companies have flagged AI as a major risk, marking a 473.5% surge in warnings amid growing concerns about the potential risks associated with artificial intelligence.

Meanwhile, OpenAI, the maker of ChatGPT, recently forged a content partnership with Condé Nast, incorporating content from brands like Vogue and The New Yorker into its products. This move was seen as a way to ensure that as AI plays a larger role in news discovery and delivery, it maintains accuracy, integrity, and respect for quality reporting.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote