Support for media: Google threatens to stop the news initiative in the USA

Google has warned non-profit newsrooms that the passage of a new California law taxing online advertising would jeopardize the company's future investments in the US news industry. At issue is the suspension of the multi-million dollar Google News Initiative (GNI) and new partnerships via the licensing product Google News Showcase throughout the US, reports the portal Axios. A few days after the California Senate Tax Committee approved the legislative initiative on May 8, the first calls were received from Google employees with threats to non-profit journalistic projects.

Tax credit for hiring more journalists

The draft tax bill, introduced by Senator Steve Glazer of the Democratic Party, aims to oblige big tech companies such as Google and Meta to pay a tax on revenue from transactions based on data extraction. This is compensation for the use of users' personal information for targeted advertising, for example. The revenue is intended to fund tax credits that enable the hiring of more journalists in California by eligible non-profit local news organizations.

The relationship between Google and Californian lawmakers is already strained. In April, the Alphabet subsidiary stepped up the pressure in the fight against another planned law in the US state, which would introduce a kind of link tax. This California Journalism Preservation Act (CJPA) stipulates that large social networks such as Google with YouTube and Meta with Facebook and Instagram must share advertising revenue with newspapers based on news and other reports from publishers that users distribute via their platforms. The search engine giant announced that it would no longer display press publications from the state for "a small percentage" of users in California as a test. Previously, there was controversy due to link taxes in Canada and Australia, as well as the comparable ancillary copyright in the EU.

Help for media from the state or from Google makes more sense?

Meta has also announced that it will block links to news sites in California on its platforms if the CJPA comes into force. Considering the draft link tax, Google has already threatened to withdraw investments in news projects via the GNI in California, according to Axios. Now, however, the company has told local partners that the ad tax proposal would jeopardize consideration of new federal grants through the funding initiative. This could affect hundreds of smaller news producers in the US.

The ad tax bill is expected to be voted on by the full California Senate on Tuesday afternoon. If it is passed there, it would still have to go through the lower house, the California State Assembly. It is the other way around with the initiative for the link tax: it has already passed the House of Representatives and is now going to the Senate. Opponents of the proposed advertising tax fear that those liable to pay would pass on the burden of the tax to consumers and other companies. In addition, a federal law prohibits discriminatory taxes on e-commerce. In Maryland, which was the first US state to introduce a separate tax on "sales derived from online advertising" in 2021, court cases followed due to the unresolved legal issues.

Google expanded the GNI, which was initially launched in Europe, worldwide in 2018 to calm the waters in the dispute with publishers. At the time, it was announced that the funding pot would be endowed with 300 million US dollars over the next three years. According to a current status report, the fund has supported 662 digital news projects in Europe in recent years with 150 million euros.

(nie)