Google agrees to concessions to settle EU antitrust case

Google Inc. cleared out a key antitrust case, among other battles it faces, by agreeing to terms with European officials over allegations that the Internet giant abused its search-engine dominance to promote its own services over those of competitors.
Feb 6, 2014

Google Inc. cleared out a key antitrust case, among other battles it faces, by agreeing to terms with European officials over allegations that the Internet giant abused its search-engine dominance to promote its own services over those of competitors.

Google will change the way that it displays some search results on computers and mobile devices in Europe for the next five years as part of a tentative settlement announced by regulators Wednesday in Brussels.

The deal would end a more than three-year investigation into allegations of anti-competitive behavior made by Microsoft Corp. and other rivals. It would allow Google to avoid a large fine and other penalties.

“The concessions we extracted from Google in this case are far-reaching and have the clear potential to restore a level playing field in the important markets of online search and advertising,” said Joaquin Almunia, the European Commission’s vice president in charge of competition policy.

“No antitrust authority in the world has obtained such concessions,” he said.

Ending that inquiry was important for Google because it faces another review there over alleged anti-competitive behavior involving the dominance of its Android operating system on smartphones.

European regulators also are investigating patent licensing practices by Google’s Motorola Mobility unit, which now is being sold to China’s Lenovo Group.

Given those pending cases, Google heeded a warning last month by Almunia that it should settle the online search case or face a formal complaint process.

Under the settlement, which still must be approved by the full European Commission, Google promised that whenever it promotes its own specialized services in search results, it also will promote the services of three competitors. Those services will be displayed prominently next to those of Google’s own services with similar features, such as photos or videos.

The settlement applies only to Google’s European websites. A similar inquiry by the U.S. Federal Trade Commission ended in January 2013 with no major sanctions against Google.

The FTC found in its 19-month review that Google sometimes favored its own products and services in search results, but the agency found no proof that the Mountain View, Calif., company violated antitrust laws or harmed consumers.

Microsoft and other rivals had complained to U.S. and European regulators that Google was treating competing services differently in search results. They argued that Google touted its own services at the top of results when people searched for products, restaurants, hotels, airline tickets and other items.

“We will be making significant changes to the way Google operates in Europe,” said Kent Walker, Google’s senior vice president and general counsel. “We have been working with the European Commission to address issues they raised, and look forward to resolving this matter.”

Google’s rivals said two previous settlement proposals by the company did not adequately address their concerns. European regulators rejected those offers.

Almunia said Wednesday’s tentative settlement would not be tested first in the open market to see if it is effective. He said competitors’ concerns from reviews of the two previous offers were taken into account in the final deal, which he hopes will be approved by the European Commission in the coming months.

Still, rivals and consumer groups cried foul.

“Without a third-party review, Almunia risks having the wool pulled over his eyes by Google,” said ICOMP, a lobbying group that includes Microsoft and other online companies.

BEUC, a European consumer group, called the settlement “deeply disappointing” and suggested that Almunia rushed to complete it before leaving office later this year.

The organization and Consumer Watchdog, a Santa Monica, Calif., consumer group, both were concerned about how the three rival results to be displayed next to Google’s would be chosen.

In instances in which Google charges companies to have their products included in specialized search results, such as with Google Shopping, the three rival results would be chosen through an auction process, according to the proposed settlement.

“The deal as outlined by Almunia bizarrely not only allows Google to profit from the traffic it diverts from competitors, but also from the new possibilities to charge for their inclusion among the rival links listings,” said John Simpson, director of Consumer Watchdog’s Privacy Project.

Monique Goyens, BEUC’s director general, said the auction process would most likely favor companies “with the largest commercial clout.”

Almunia said he would discuss the settlement with rivals who filed the complaint and would “analyze their feedback.” But he was more concerned with how the settlement would affect consumers.

“The mission of the commission is to protect competition to the benefit of consumers and users and not to protect competitors,” he said.

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