It is just Google news - and really this isn't very different from how they rank pages now.
For normal search results they call it 'relevance' instead of quality, but it sounds like the factors are pretty much the same.
When google comes out with features like News they're typically not fleshed out for months. They gather the info first, and then look at how to imporve the delivery of it.
Google Local is the same. If you type in florist Calgary it'll show you local listings for florists - but its starts with Google's version of the centre of Calgary and moves out to rank them. In a few months to a year, that list will be ranked according to some algorithm as well.
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