Google Commits $1 Billion to Content Deals Amid Pressure to Pay

Google is under growing pressure to pay for information that, for two decades, the search provider snipped from the web -- and made a mint from -- without paying a penny.

Australian and French efforts to force Google to compensate news publishers are only the latest examples of a trend spanning the globe. Canada is considering a similar requirement and rival Microsoft Corp. has urged the U.S. to pass a comparable law.

“If Australia is successful, it could be a precedent for the rest of the world,” said Belinda Barnet, a senior lecturer at Swinburne University of Technology in Melbourne.

In response, Google has begun paying for more information, but on its own terms rather than rules imposed by strict new laws. In October, the company committed $1 billion to fund a News Showcase that lets users discover and read stories from a variety of sources. The company also recently agreed to pay News Corp. tens of millions of dollars over three years. Beyond news, Google has been licensing more information about weather, stocks and cryptocurrency that appear at the top of search results.

The world’s largest internet company made $40 billion last year, so these new payments are relatively small. But if more countries follow suit and other content creators ask for similar treatment, this threatens to undermine the company’s mission and change its main business model.

Google was founded in 1998 on the idea that information online should be freely accessible. “A well functioning society should have abundant, free and unbiased access to high quality information,” the founders wrote before the company’s 2004 initial public offering.

That early approach made Google so useful, the search service became a verb for finding what you need, remembering a salient fact or researching a homework project. Users type in a phrase and the company shows a link to relevant websites and snippets of the information the sites have gathered. To fund the operation, Google often shows targeted ads alongside these results.

The company was a scrappy upstart for many years, but Google now controls at least 80% of most online search markets, making it a powerful digital gatekeeper beset by antitrust lawsuits. Governments and some partners have grown skeptical, realizing the company isn’t providing information for free, but generating more than $100 billion in annual advertising revenue from it -- without being responsible for most of the content. That’s coincided with slumping ad sales at publishers that rely on Google for traffic.

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