California lawmakers intend to shelve legislation that would have required Google to pay news outlets for distributing their content, and in its place announced a new public-private partnership between the state and the tech giant that will fund programs to research artificial intelligence and bolster local journalism.

The plan lays out a commitment of nearly $250 million over the next five years, with one-fourth of the money coming from state taxpayers and three-fourths of it coming from Google and possibly other private donors. The money will go toward two new initiatives administered by UC Berkeley’s Graduate School of Journalism: a fund to distribute millions of dollars to California news outlets, and an “AI accelerator” to develop ways for journalists to use the powerful technology.

“This agreement represents a major breakthrough in ensuring the survival of newsrooms and bolstering local journalism across California — leveraging substantial tech industry resources without imposing new taxes on Californians,” Gov. Gavin Newsom said in a statement. “The deal not only provides funding to support hundreds of new journalists, but helps rebuild a robust and dynamic California press corps for years to come, reinforcing the vital role of journalism in our democracy.”

The agreement marks the culmination of a two-year battle between the news industry and the tech sector over how to resuscitate local journalism amid massive upheavals in how people consume news and how advertisers reach consumers.

Assemblymember Buffy Wicks (D-Oakland) led the effort, arguing that supporting California journalism is essential to maintaining democracy because local news outlets play a vital role informing the public about their government. Dwindling advertising revenue has caused many media companies to lay off journalists, or shutter entirely, leaving some communities without the independent watchdogs that local news outlets provide.

“This partnership represents a cross-sector commitment to supporting a free and vibrant press, empowering local news outlets up and down the state to continue in their essential work,” Wicks said in a statement. “This is just the beginning. I remain committed to finding even more ways to support journalism in our state for years to come.”

The debate over how to solve the problem fractured the news industry, with traditional publishers getting behind a bill that digital news outlets did not support, and the union that represents reporters turning against the negotiated compromise. Politicians found themselves squeezed between the divided journalism community and the powerful tech sector, a major contributor to California’s economy.

As part of the agreement, the state will put $30 million from next year’s budget into the fund, and contribute $10 million in each of the next four years. Google will put $15 million into the fund, and pay another $15 million to support other journalism initiatives, including the AI accelerator and direct donations to digital news outlets. A new nonprofit organization will be formed to administer the programs at UC Berkeley, with a board made up of representatives from across California’s industry.

“This public-private partnership builds on our long history of working with journalism and the local news ecosystem in our home state, while developing a national center of excellence on AI policy,” said a statement from Kent Walker, chief legal officer for Alphabet, the parent company of Google.

The agreement has support from several professional associations that represent publishers and news outlets, but not from the labor union that represents journalists.

Matt Pearce, president of the Media Guild of the West, criticized the plan in emails with union members in recent days, calling it a “total rout of the state’s attempts to check Google’s stranglehold over our newsrooms.”

The union had lobbied for the deal to include a provision requiring media companies that receive the funds to have a non-expired collective bargaining agreement, and for Google to contribute more than the $74 million it pays annually to newsrooms in Canada.

As part of the agreement, Assemblymember Buffy Wicks (D-Oakland) agreed to set aside legislation she’s championed for the last two years.

Assembly Bill 886 also, known as the California Journalism Preservation Act, sought to blunt the financial hardships that have hit the news business as Google and Meta grew to dominate digital advertising, and technology radically changed the way people consume news. Sponsored by the California News Publishers Assn., of which the Los Angeles Times is a member, the bill set off a fierce battle between news organizations and Big Tech.

Publishers argue that online search and social media platforms are unfairly gobbling up advertising revenue while publishing content they don’t pay for. The bill would have required Google to pay into a fund that would in turn distribute millions of dollars to California news outlets based on how many journalists they employ. The amount of the payment was never spelled out in legislation, though lawmakers were hopeful that Google and the news business could negotiate an agreement.

But Google argued in testimony before the Legislature earlier this summer that the bill would “break the fundamental and foundational principles of the open internet, forcing platforms to pay publishers for sending valuable free traffic to them.”

Google threatened to remove California news content from its platform if the bill passed, and then ran ads saying the legislation would reduce Californians’ access to news.

Lobbying over the bill grew intense, with a trade association Google belongs to launching an ad campaign aimed at lawmakers that cast the legislation as a giveaway to large media corporations. Records show the Computer and Communications Industry Assn. spent $5 million on ads against AB 886 over the last two years as the bill made its way through the Legislature.

The most recent version of the bill was modeled after similar legislation in Canada, where Google is paying $74 million annually into a fund for the news industry. California’s bill would have been the first such law in the United States.

Lawmakers this year also considered a different bill that sought to aid the news industry by providing a tax credit for employing full-time journalists. Senate Bill 1327 would impose a new tax on Amazon, Meta and Google for the data they take from users and pump the money from this “data extraction mitigation fee” into tax credits for news outlets.

As a tax measure, it required approval from two-thirds of the Legislature, presenting a political challenge in an election year.