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Why Google’s $1 billion deal with news publishers isn’t the end of their war

October 1, 2020, 2:07 PM UTC

Google has been at war with the news-publishing industry for most of the past decade, over the issue of whether the search giant should be paying fees to display snippets of articles in Google News.

On Thursday, it appeared a truce may have been struck. Google unveiled a new product called News Showcase, which will start life as a feature in the Google News app before spreading to its Discover and Search platforms “in the future.”

Showcase will “give participating publishers the ability to package the stories that appear within Google’s news products, providing deeper storytelling and more context through features like timelines, bullets, and related articles,” explained Google and Alphabet CEO Sundar Pichai in a blog post.

Crucially, Google will be paying the publishers for this content; it’s devoting $1 billion to the cause over the next three years.

“Both News Showcase and our financial investment—which will extend beyond the initial three years—are focused on contributing to the overall sustainability of our news partners around the world,” Pichai wrote.

Google says nearly 200 publications have signed up to participate in News Showcase, in Germany, Brazil, Argentina, Canada, the U.K., and Australia. There are some big names on the list, such as Handelsblatt, Der Spiegel, and Infobae.

But where’s Axel Springer?

Fighting for fees

The conservative German giant—publisher of mega-tabloid Bild and broadsheet Die Welt—is, along with Rupert Murdoch’s News Corp, one of Google’s most bitter critics when it comes to the issue of licensing. It hasn’t signed up for Google’s new initiative, and that says a lot.

Springer was the main driver behind a trailblazing 2013 German law that forced the likes of Google to pay for the use of snippets in Google News—in theory. In reality, Google responded by axing its use of snippets, instead delivering users just bland headlines. The move strangled the flow of traffic to Springer’s websites, so it relented, giving Google a temporary license to use snippets as it wished.

Spain followed the German example, but with a stricter version of the law that forced publishers to seek licensing fees from Google. As a result, Google shut down News in Spain.

However, news publishers’ relentless lobbying last year finally resulted in a new EU directive introducing the concept of such licensing (technically known as “ancillary copyright” licensing) across the bloc. The move affects not only Google but also Facebook, whose users are also used to seeing images and snippets from articles (and which last year struck a deal to pay some American publishers for their snippets).

EU member states will all have to turn the directive into national law by early July 2021, but France was quick off the starting blocks, taking mere months to come up with its ancillary copyright law. The result? Google stopped showing snippets of French publishers’ articles by default. The publishers took Google to the French competition authority, which this year told Google to enter into good-faith negotiations with them.

Germany has yet to implement its version of the new EU directive. And that is why Axel Springer and many others are sitting out Google’s $1 billion initiative for now; they don’t want to get locked into anything that might prejudice their ability to make the best of the incoming laws.

“Axel Springer is open to examine cooperations with Facebook, Google & Co., but only to the extent that they do not make it difficult or impossible to effectively exercise the Publisher’s Right,” a Springer spokesman told Fortune by email. “In this respect, we continue to work hard for an effective implementation of the EU Copyright Directive.”

A similar sentiment came from the European Publishers Council, an association that represents the likes of News Corp’s News UK, the Guardian…and Axel Springer. According to an EPC statement released Thursday, Google previously tried to get publishers to participate in News Showcase with a contract “saying that Google may terminate this agreement immediately if a publisher participates in or initiates a legal claim or complaint relating to Google or its Affiliates’ use of news content.”

“Many are quite cynical about Google’s perceived strategy. By launching their own product, they 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 in the statement.

Lobbying continues

It will also be interesting to see what effect Google’s Thursday announcement has in Australia, where the company is engaging in a furious lobbying battle over a new “news media bargaining code” that will dictate how much Google and Facebook need to pay publishers.

Just this week, Google released a video featuring local comedian Greta Lee Jackson, in an effort to win the public over to its cause. In it, Jackson uses the analogy of a bus driver having to pay a restaurant owner to drop passengers off at their establishment. Google has also recently run a public campaign on its own site, warning Search users that “the way Aussies search every day is at risk from new government regulation.”

Google’s new, $1 billion wave of partnerships might have unprecedented scale—its existing News Initiative, which aims to help publishers come up with new digital models, is worth just $300 million—but it seems clear that it won’t be enough to settle all the disputes that continue to whirl away.

Also of note: No U.S. publishers have signed up for News Showcase yet. This definitely isn’t the end of the story.