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Google eyes revamp of news service to fend off European criticism

A woman hovers a mouse over the Google and European Union logos in SarajevoA woman hovers a mouse over the Google and European Union logos in Sarajevo

Google Inc. (GOOG) is shaking up its news service in Europe, in a move that may help beleaguered publishers, bolster its position vis-a-vis Facebook Inc. (FB)–and gain the company some allies in its battle against European Union antitrust charges.

The Mountain View, Ca.-based company said Tuesday it will give €150 million ($163 million) to European publishers over the next three years to help them develop their digital products in a “Digital News Initiative”, money that most badly need after seeing their traditional business model largely destroyed by the spread of free news on the internet–a trend that Google has driven more than most.

In particular, most publishers resent Google’s “First Click Free” policy, which requires them to allow Google users to see a minimum of five articles per day in return for them being indexed in its searches.

The new initiative comes after a series of rulings that have gone against the company in Europe. Earlier in April, the E.U. accused it of abusing its dominant 85% market share in internet search, in a move that could lead to a multi-billion dollar fine. It’s also looking at similar charges for abusing its position as the owner of the Android operating system. And last year, the E.U.’s top court has ordered it to allow a “right to be forgotten” in its searches.

At national level, too, it has had problems, especially with Google News, which has been widely accused of diverting readers away from content behind firewalls, undermining the ability of publishers to monetize their products. Google closed down the service in Spain last year after a new law forced it to pay for publishing even small amounts of copyrighted information. It has had an uneasy truce with the French journalism industry since 2013 after setting up a fund to compensate publishers for news it culled from their sites.

Among the titles embracing the Digital News Initiative are the Financial Times, Spain’s El Pais, Germany’s Die Zeit and Frankfurter Allgemeine Zeitung, France’s Les Echos, the Netherlands’ NEC and Italy’s La Stampa.

However, neither Rupert Murdoch’s News Corp (NEWS) nor Germany’s Axel Springer SE (AXELF), two of the companies most skeptical about Google’s market power, have taken up the offer to join. Neither company was immediately reachable for comment.

Google’s initiative comes as Facebook is also starting to court publishers with a plan to share revenue with them for content hosted on its own site. Facebook’s initiative is in part a response to the fact that many publishers’ mobile sites load content too slowly for the tastes of consumers.