Ottawa has agreed to set a $100-million yearly cap on payments that Google will be required to make to media companies when the government's controversial online news legislation takes effect at the end of the year.
The announcement Wednesday has the Liberals bending to the tech giant's demands after Google threatened to remove news from its platform.
The Online News Act compels tech giants to enter into agreements with news publishers to pay them for news content that appears on Google sites, if that content contributes to revenues.
A formula in the government's draft regulations to implement the bill would have seen Google contribute up to $172 million to news organizations.
Google signalled its disapproval for those regulations, saying it was expecting a figure closer to $100 million, based on what the company says is a previous estimate offered by Canadian Heritage officials.
The company appears to have gotten what it wanted after an extended period of negotiation.
Still, Canadian Heritage Minister Pascale St-Onge called it a "historic development," insisting Wednesday that the agreement was ultimately a win for the government and for the local news publishers it is seeking to support.
"We have found a path forward to answer Google's questions about the process and the act. Google wanted certainty about the amount of compensation it would have to pay to Canadian news outlets," she said on Parliament Hill.
"Canada reserves the right to reopen our regulations if there are better agreements struck elsewhere in the world," she added.
The deal will allow Google to comply with the legislation by paying into a single collective bargaining group that will serve as a media fund.
Meta's way of complying was to simply block all news content from Instagram and Facebook in Canada.
Last month, News Media Canada — a lobby group for hundreds of Canadian newspapers and magazines — said it agreed with many of the issues Google raised during the back-and-forth over how the bill would be implemented.
The group said there should be a cap on how much the search giant would have to pay under the law.
"Google plays an essential role in helping Canadians find trusted news sources, and we are confident there is a path forward for the company and publishers to continue what has been a mutually beneficial relationship for many years to come," the group's president and CEO Paul Deegan said at the time.
In addition to its financial contribution, Canadian Heritage said Google will continue to make programs available for Canadian news businesses, such as training, tools and resources for business development and support for non-profit journalism projects.
Google said Wednesday that the deal means there will be immediate changes to existing agreements it has with publishers in Canada under its Google News Showcase agreements, which were part of a $1-billion global investment.
The company said it will review its ongoing investments in Canada when the final regulations are published.
Google wouldn't say how much it is already paying publishers under existing contracts, saying such agreements are confidential commercial arrangements.
Companies that fall under the Online News Act must have total global revenue of $1 billion or more in a calendar year, "operate in a search engine or social-media market distributing and providing access to news content in Canada" and have 20 million or more Canadian average monthly unique visitors or average monthly active users.
For now, Google and Meta are the only companies that meet those criteria.