Google to pay publishers $1 billion over three years for their news

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BRUSSELS (Reuters) – Alphabet’s Google plans to pay $1 billion to publishers globally for their news over the next three years, its CEO said on Thursday, a step that could help it win over a powerful group amid heightened regulatory scrutiny worldwide.

News publishers have long fought the world’s most popular internet search engine for compensation for using their content, with European media groups leading the charge.

CEO Sundar Pichai said the new product called Google News Showcase will launch first in Germany, where it has signed up German newspapers including Der Spiegel, Stern, Die Zeit, and in Brazil with Folha de S.Paulo, Band and Infobae.

It will be rolled out in Belgium, India, the Netherlands and other countries. About 200 publishers in Argentina, Australia, Britain, Brazil, Canada and Germany have signed up to the product.

“This financial commitment – our biggest to date – will pay publishers to create and curate high-quality content for a different kind of online news experience,” Pichai said in a blog post.

Google parent Alphabet reported a net profit of $34.3 billion on revenue of almost $162 billion last year.

The product, which allows publishers to pick and present their stories, will launch on Google News on Android devices and eventually on Apple devices.

“This approach is distinct from our other news products because it leans on the editorial choices individual publishers make about which stories to show readers and how to present them,” Pichai said.

German publisher the Spiegel Group welcomed the project.

“With News Showcase and the new integration of editorial content like from Spiegel, Google shows that they are serious about supporting quality journalism in Germany. We are happy to be part of it from the start,” said Stefan Ottlitz, managing director of the Spiegel Group.

News Corp, which has urged EU antitrust regulators to act against Google, was equally enthusiastic.

“We applaud Google’s recognition of a premium for premium journalism and the understanding that the editorial eco-system has been dysfunctional, verging on dystopian. There are complex negotiations ahead but the principle and the precedent are now established,” its CEO Robert Thomson said in a statement.

The European Publishers Council (EPC), whose members include News UK, the Guardian, Pearson, the New York Times and Schibsted, however, was critical.

“By launching a product, they (Google) can dictate terms and conditions, undermine legislation designed to create conditions for a fair negotiation, while claiming they are helping to fund news production,” said EPC Executive Director Angela Mills Wade.

Google is negotiating with French publishers, among its most vocal critics, while Australia wants to force it and Facebook to share advertising revenue with local media groups.

Google’s funding for news organizations has frustrated other internet publishers, such as weather websites and recipe tools, which say Google has hurt their revenue.

(Reporting by Foo Yun Chee, additional reporting by Paresh Dave in San Francisco, Diane Bartz in Washingon DC and Klaus Lauer in Berlin; editing by Barbara Lewis)