- The deal follows a similar agreement with Belgium but Google faces a tougher challenge in Germany
- Google said the agreement meant it would not have to pay a share of its French revenues
- The ad deals will be similar to agreements it has with newspaper publishers around the world
Google has agreed to pay 60 million euros ($81.3 million) into a fund to help French newspapers develop their internet presence, in the biggest breakthrough yet in the dispute over copyright payments between Europe's print publishers and the search engine.
The deal was announced on Friday evening after a meeting at the Elysée palace between François Hollande, French president, and Eric Schmidt, Google's chairman.
Mr Hollande had threatened to draft legislation forcing Google to pay a share of its revenues derived from links to French media articles and snippets of stories if it did not reach a deal to do so with publishers. Germany is pushing ahead with a proposal for similar legislation.
Google said the agreement meant it would not have to pay a share of its French revenues. Mr Schmidt described the deal, which came after two months of tense negotiations, as a "historic agreement".
As well as the €60m fund, he has promised to develop relationships with French publishers. Google will supply advertising to their sites and share revenues from those ads. The ad deals will be similar to agreements it has with newspaper publishers around the world.
"It is far better that we have an agreement than a law. It was the right approach," Mr Schmidt said.
French press publishers had been demanding the US group pay for displaying snippets or links to newspaper articles, but Google rejected the demands and threatened to stop carrying references to French media.
In a blog post on Friday night, Mr Schmidt said: "Our search engine generates billions of clicks each month, and our advertising solutions (in which we have invested billions of dollars) help them make money from that traffic."
The deal with France follows a similar agreement with Belgium but Google faces a far tougher challenge in Germany.
Chancellor Angela Merkel's Christian Democrats and their Free Democrat junior partners are pursuing legislation that could force online news aggregators such as Google to ask permission to publish links to and excerpts of newspapers' web offerings -- an extension of copyright that many lawmakers hope will allow publishers to charge search engines licence fees.
Google has launched a campaign warning that the bill before the Bundestag could end easy access to information on the web and calling its users to phone or email their member of parliament in protest.
With newspapers across Europe struggling to make money, publisher groups in France and Germany have been joined by counterparts in Italy, Portugal and Switzerland to call for "regulation of the digital economy" and "rebalancing the economy of the web".