Google is to pay 60 million euros to help digital innovation by French media and assist them in increasing advertising revenue in a settlement of a row in which the government threatened to slap a tax on the digital search giant.

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“This is a historic agreement,” Google boss Eric Schmidt after signing the deal in the presence of French President François Hollande, although his company reached a deal in December with Belgian newspapers after a six year dispute.

The Belgian settlement did not involve the establishment of a fund such as the one to be set up in France.

The French agreement is “a model for effective partnership and is a pointer to the future in the global digital economic”, the French presidency said in a statement.

Google is presenting it as a “commercial partnership” and the plan to boost advertising revenue will involve their specialised platforms, AdSense, AdMob and AdExchanges.

In mid-October the search engine operator, which controls 90 per cent of the market, threatened not to carry French publishers because they were pushing for a tax on Google’s advertising revenue, which they claimed was attracted by the content it links but does not pay for.

Other agreements may see the light of day since cinema and music producers and telecoms operators share the media companies’ grouse with Google.

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