Google, EU Reach Apparent Settlement in Antitrust Cases

By Todd R. Weiss  |  Posted 2014-02-05
antitrust settlement

Google, EU Reach Apparent Settlement in Antitrust Cases

In a settlement that has taken some 39 months to reach, Google and the European Union (EU) have apparently brokered a deal that will end an antitrust investigation that has saddled Google in Europe since November 2010.

The settlement, which still faces formal final approval by the EU and its regulatory arm, the European Commission (EC), includes concessions from Google on how it will display competitors' links through the Google search engine, according to a Feb. 5 report by Reuters.

The EU probe had been investigating Google's Internet search processes, which competitors including Microsoft, Expedia and British search services company Foundem, argued unfairly promoted Google's advertisers at the expense of competitors.

The pending agreement, according to Reuters, means that Google will change its display practices but not have to pay a fine that could have amounted to as much as $5 billion. The settlement agreement will remain in place for five years, the story reported.

Some of Google's competitors, however, loudly protested one major condition of the settlement—that the deal would be accepted without being reviewed by competitors who had been protesting the company's alleged behavior, Reuters reported.

"Without a third-party review, [EC Vice President Joaquin] Almunia risks having the wool pulled over his eyes by Google," David Wood of the lobby group ICOMP, told Reuters. Microsoft and four other Google complainants are members of the lobbying group.

In an email response to an inquiry from eWEEK, Kent Walker, Google's general counsel, said that the company "will be making significant changes to the way Google operates in Europe. We have been working with the European Commission to address issues they raised and look forward to resolving this matter."

Under the terms of the apparent settlement with the EU, Google will more clearly identify its own paid ad content from its own customers when displaying search content to users, and will display them with unique identifications and separate placement to make their presence clearer to users.

That will be done to address concerns from competitors that Google promoted its own ads more strongly than those from other online ad companies, according to the EU proposal. "Within its Web search results, Google displays its own specialized search services more favorably than competing services," the EU stated. "In many instances, relevant competing services are as a consequence more difficult for the user to find. Users are not informed of this favorable treatment of Google's own services."

To help make the sources of such content easier by users, Google will now have to "display prominent links to three rival specialized search services in a format which is visually comparable to that of links to its own services," the EU stated. "For instance, if the Google links have images, the rival links will have images as well, including on mobile devices."

Under the settlement, Google will also have to address other concerns about its past search behavior by allowing third parties to opt out from the use of their content in Google's specialized search services without impacting their rankings in Google's general search results, according to the EU. "A general opt-out will be open to all Websites, on a subdomain-by-subdomain basis. A more specific opt-out with finer granularity and more control over content will be accessible to news publishers only, for the control of the use of their content in Google News."

Google, EU Reach Apparent Settlement in Antitrust Cases

Google will also no longer be permitted to impose exclusivity requirements in agreements with online publishers for the display of Google search advertisements displayed on their Websites, the EU stated.

"Google's agreements with publishers result in (de facto) exclusivity. This means that these agreements require publishers to obtain all or most of the search advertisements displayed on their Websites from Google. Google's competitors therefore have only limited access to those publishers. To address this concern, Google proposes no longer to include in its agreements with publishers any written or unwritten obligations that would require them to source online search advertisements exclusively from Google."

Finally, the settlement also addresses another concern from Google's competitors—"that Google does not allow software developers to offer software tools that make it easy to manage and transfer search advertising campaigns across AdWords and other search advertising platforms such as Microsoft's AdCenter," according to the EU. "To address this concern, Google proposes no longer to impose obligations that would prevent advertisers from porting or managing search advertising campaigns across competing advertising platforms."

The settlement dance between the EU and Google has been going on since at least early 2013, when it appeared that the two sides were close to a tentative deal. Similar rumors about settlements also surfaced in November 2013.

But competitors, including Microsoft, Expedia and Foundem often criticized the proposals that arose in the past, arguing that they still didn't go far enough to level the playing field for rivals.

In October 2013, after Google had submitted an earlier settlement offer, the EU asked Google rivals for their opinions on the offer from Google. Those rivals loudly criticized the company's proposals at the time. In September, Google had submitted a fresh batch of concession proposals to the EU, but they failed to address the key concerns of the EU and the complainants in the case.

Those proposals arrived two months after the EC had asked for more concession ideas from Google. The EC had been seeking Google's ideas on how it could settle complaints that the company was blocking competitors' results in Web searches in favor of its own results.

Google has been under investigation in Europe since 2010 regarding its search engine, which holds more than 60 percent of the search market, with Microsoft's Bing being a distant second. Competitors have claimed that Google works its search algorithms to favor its own products and results over those of others, giving it an unfair advantage in search and Web advertising.

In an earlier proposed settlement round in April 2013, Google proposed several concessions that again were apparently not seen as going far enough. The company had offered to improve how it labels ads in its search engine to make them clearer, and to change and improve how it displays links to competitors' ads in search. Proposed under the deal was a plan for a month-long "market test" of the arrangement to provide competitors, many of whom are behind the antitrust complaints against Google, some time to offer their input into whether the proposed changes are sufficient.

Another change under the April proposals was that Google would allow Websites to keep their content out of Google's specialized search services while ensuring that any opt-out does not unduly affect the ranking of those Websites in Google's general Web search results.

Google had also sent an earlier batch of concession ideas to the EC in January 2013, which was the second batch since an initial offering in July 2012, when Google executives sent a list of initial concessions to address the potential antitrust concerns. At that time, Google Chairman Eric Schmidt sent a letter to Almunia that outlined steps the massive Web company would be willing to take to resolve the EU's concerns, including claims that it favors its own search results over those of others.

Google's legal situation in Europe continues, even as a similar antitrust probe in the United States was resolved in Google's favor in January 2013. Instead of a major antitrust prosecution in the United States, Google entered into a voluntary agreement with the Federal Trade Commission to change some of its business practices to resolve the complaints of some competitors about Google's practices. In the FTC case, key competitor Microsoft had led a fight with other technology companies to argue for strong FTC actions against Google to punish it for what they believed were unfair business practices.

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