Bit hazy on the details, but isnt it just delisting of the news websites in news.google? I can still happily find them by a normal google search.
What baffles me more is that if users find google's offering so useful, why havent the news agencies made their own offering? Seems like a winner to me if properly executed.
And on the 'blackmail' part, you cant expect to force a website to list you, and pay you for the honour if they wouldnt want to? I understand the monopoly google has but dont these laws affect all search websites?
All in all, I dont really get the problem.