Two years ago, the French news agency Agence France Presse and later, Belgium's Copiepresse, sued Google for copyright infringement for indexing their content without permission. Google contended--and lost in EU court--that Google News is protected by the fair-use principle, because it reproduces published work. It later settled out of court.
American news companies have thus far stayed away from suing the search giant. The company now plans to add video to Google News, as well as social-media aspects, better personalization and customization tools. Google execs say they understand publisher's and editor's frustrations that the news service doesn't take quality into consideration and is working on improving that.
Still, Google does not engage in favoritism and does not pay certain news outlets for their content. In cases where Google goes beyond linking back and driving traffic (with say, a satellite map provider), the companies enter into a contractual relationship. There are no plans to sell ads on Google News.