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Google is to pay 60 million euros into a special fund to help French media develop their presence on the Internet under a top-level deal signed on Friday, but will not pay them for posting links to their content.
French publishers had been pushing for Google to pay them licensing fees for listing headlines and snippets of articles in its search engine results.
The agreement, signed by President Francois Hollande and Google's executive chairman Eric Schmidt, follows months of talks between local media companies and the Internet search giant which were brokered by a government-appointed mediator.
Google settled a similar case with Belgian publishers in December by helping them boost online revenue, but still faces a dispute with publishers in Germany.
Schmidt said in a Google blog post on Friday's deal in France that in addition to paying into the fund Google would help publishers increase their revenue using its advertising technology.
Hollande had threatened to draft legislation to force Google to pay media for posting links to their content if no deal was signed, and during the talks Google was hit with a tax audit over its practice of charging French advertisers via its European headquarters in Ireland.
In November satirical weekly Le Canard Enchaine had said the government had demanded 1 billion euros in back taxes from the company.
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