Google has agreed to pay the Associated Press for use of its news stories and pictures, according to a statement released by the two companies on Wednesday. The deal settles a dispute between Google and the AP and has implications for a lawsuit Google is facing from the Paris-based Agence France Presse news agency, which sued the search powerhouse last year for allegedly infringing its copyrights on Google News. Agence France Presse, which is seeking $17.5 million in damages, hopes that Google's revelation of payment to another news source for content will add weight to its argument, according to published reports.

Financial terms were not disclosed. Consequently, it's unclear whether the deal involves a flat fee or paying AP according to traffic statistics.

On the surface, paying the Associated Press seems to conflict with the stance Google has traditionally taken regarding its Google News service. Because Google News is an aggregator, the company has argued, Google is not obliged to reimburse news outlets for linking to their content. But Wednesday's announcement said the AP content will be the foundation for a new product that will merely complement Google News. Thus Google maintains that the deal supports its original stance on fair use.