Google reaches deal with French news websites

Google and France signed an agreement Friday resolving a dispute with French news websites that sees the US Internet search giant setting up a 60 million euro fund to help old media adapt to the digital age.

"France is proud to have reached this agreement with Google, the first of its kind in the world," the French president's office said on Twitter after Francois Hollande and Google chief Eric Schmidt signed the accord.

Google will set up a 60 million euro ($82 mn) fund to help French media develop online projects, the French president's office said.

The president's office said the fund "will help the news press transition to the digital world."

Under the agreement French news media would also have access to Google advertising platforms at reduced cost.

The deal follows two months of mediation with French news websites, who were unhappy they were getting none of the advertising revenue Google earned from sending search clients to their news content.

The news websites had wanted Google to share revenue earned from linking to their content, but the California-based search engine said the practice would "threaten (Google's) very existence".

The French government had threatened to introduce legislation if Google did not reach a settlement, while Google said it could retaliate by no longer indexing content from French news websites.

Schmidt said it was better to have an agreement than a law.