Google Is Nearing Deal With EU on Search Antitrust Allegations

By Todd R. Weiss  |  Posted 2013-10-02
Google legal

Google Is Nearing Deal With EU on Search Antitrust Allegations

Google's long-awaited settlement with the European Union to put a 3-year-old antitrust case behind the company appears to be in its final stages, according to a speech given to the European Parliament Oct. 1 in Brussels by the EU's Competition Commissioner Joaquin Almunia.

A settlement could finally be reached by both sides within the next few weeks, Almunia said, after several previous settlement proposals from Google did not go far enough.

"I sought comments on a first proposal by Google through a market test launched in April of this year," Almunia said in his remarks. "The feedback received from the market test was very negative. Therefore, I asked Google on 9 July to improve significantly its proposals."

Real progress came recently, according to Almunia, when Google again brought new proposals to the table in an effort to reach a binding settlement. "Google has now improved the commitments it has offered," he said. "We have negotiated improvements until yesterday."

Almunia said he couldn't comment on the exact nature and specifics of the latest Google proposals, but he said they relate to issues including how Google search will from now on handle "queries entered in Google in whatever form—whether they are typed or spoken—and irrespective of the entry point or the device." A key part of the new Google proposals relates to concerns about how Google search handles vertical searches, which was the point that received the strongest critical comments during the market test, he said.

"Although I cannot describe the details, I can tell you that the new proposal more appropriately addresses the need for any commitments to be able to cover future developments," Almunia said.

One complaint from rivals in the antitrust investigation has been that Google's earlier proposals to highlight the links of competitors in searches failed to be visible enough to make them stand out for users, he said. That seems to be adequately resolved under the company's latest settlement offer.

"In my opinion, the new proposal makes these links significantly more visible," Almunia told the members of Parliament. "A larger space of the Google search results page is dedicated to them. Rivals have the possibility to display their logo next to the link, and there will be a dynamic text associated to each rival link to better inform the user of its content."

As part of a settlement, an independent monitoring trustee would be put in place to ensure that Google will fulfill its commitments to the proposals once they are agreed upon. The EU will also now seek feedback from Google's competitors and related complainants about the new proposals. "We know the general positions of the complainants and other stakeholders," said Almunia. "What we need now is to receive concrete technical elements on the effectiveness of the proposed package in order to conclude whether this new proposal is satisfactory from a competition point of view."

If those steps continue to be satisfactory, a formal decision on the matter could come by next spring, he said. If a settlement falls through, that would mean the antitrust case could go on to hearings and deeper proceedings.

"We have reached a key moment in this case," Almunia said. "Following the first market test, I had serious doubts whether it was possible to continue the route towards a Commitment decision. I expressed my opinion to Google and in public. Now, with the significant improvements on the table, I think we have the possibility to work again and seek to find an effective solution based on a decision under Article 9 of the Antitrust Regulation."

Making the settlement work is the best option for all sides, he told the group. "European users want undistorted competition and choice in online search and search advertising. They want it now and, if possible, deserve it now, and not after many years of litigation."

Google Is Nearing Deal With EU on Search Antitrust Allegations

In an email response to an Oct. 2 inquiry from eWEEK on the matter, Kent Walker, a Google senior vice president and general counsel, said: “This has been a very long and very thorough investigation. Given the feedback the European Commission received on our first proposal, they have insisted on further, significant changes to the way we display search results. While competition online is thriving, we've made the difficult decision to agree to their requirements in the interests of reaching a settlement."

In September, Google 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, which began in 2010.

Those proposals arrived two months after the EU's regulatory arm, the European Commission (EC), had asked for more concession ideas from Google. The EC has 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 officials are under investigation in Europe 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.

A guilty verdict on such charges could mean a fine of up to 10 percent of Google's annual revenue, which based on its 2012 annual results, could amount to about $5 billion.

In an earlier round in April, Google proposed several concessions that 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 monthlong "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.

The EU investigation centers on what the agency regards as Google's dominant position in search.

Google had also sent an earlier batch of concession ideas to the EC in January, 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.

Almunia had given Google officials that opportunity to address that issue and other concerns, including the use of material from other search engines in its results and its dominance in Web advertising, all of which investigators said put competitors at an unfair advantage.

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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