By Dow Jones Business News, October 01, 2013, 04:25:00 AM EDT
Google Nears EU Settlement
BRUSSELS--Google Inc. ( GOOG ) and the European Union are moving closer to settling a long-running antitrust
investigation, potentially helping the company cement its position in Europe, but risking ire among rivals who have
argued the U.S. technology giant abuses its dominance in Internet search.
EU competition chief Joaquin Almunia said Tuesday that Google had offered a series of concessions that more fully
address concerns that it unfairly uses its popular search engine to promote its in-house services. He added that a
settlement with Google--rather than a formal legal proceedings and a potential multibillion-dollar fine--would be the
best option for European consumers.
The announcement came as a surprise nearly three years after the EU's executive arm began looking into Google's search
business following complaints from rivals. An initial round of proposals from the Mountain View, Calif. company were
slammed by other web businesses earlier this year, making it seem possible the EU could resort to the same type of legal
proceedings it used to levy hefty fines against Microsoft Corp. ( MSFT ) last decade.
A potential settlement--which isn't assured--would be a positive sign for Google, which in January avoided formal
charges in a similar investigation by the U.S. Federal Trade Commission by making only voluntary changes to its search
But the search giant and a handful of other largely U.S.-based tech firms remain under close scrutiny in Europe, where
governments and regulators are probing everything from Amazon.com Inc.'s (AMZN) tax practices to whether Apple Inc.
(AAPL) is abusing its market position in high-end smartphones.
Google itself is currently under threat of sanctions in six European countries for how it stores and uses personal
data, and Mr. Almunia's agency in Brussels is also looking into its use of mobile patents and the growing power of its
Android operating system.
Mr. Almunia said Tuesday that Google's "search practices' as they currently stand could still potentially harm
consumers, but added that its "new proposal more proportionately addresses the needs for commitments." He said he hoped
to reach a final decision on the case next spring--otherwise he will turn to full legal proceedings under EU antitrust
"While competition online is thriving, we've made the difficult decision to agree to their requirements in the
interests of reaching a settlement," said Google General Counsel Kent Walker in a statement.
At issue in the EU's antitrust investigation are four specific issues, including that users weren't generally aware
that Google was promoting its own services within its search results, and that it was "scraping" content from other
websites, such as online reviews, that it integrated into search results. Also at issue were contractual restrictions
that Google placed on advertisers exporting users' information.
Mr. Almunia was upbeat about the new set of commitments from Google, saying they make rivals' links significantly more
visible, and extended to any device, not just search results in a Web browser. In addition, the new proposal foresees an
auction mechanism, which includes the option for rival companies to bid for each specific search query, aimed at helping
Rivals would have the possibility to display their logos next to links using their content, and companies can opt out
of allowing their content to be use at all. "It also tightens the provision that ensures that Google cannot retaliate
against websites that make use of the opt-out," Mr. Almunia said.
An independent trustee would also be appointed to help assure the commitments are put in place, Mr. Almunia said.
The potential for a settlement is already riling some who brought complaints against Google in the first place.
Michael Weber, chief executive of Hot-Maps Medien GmbH, a German online mapping company, which is one of the
complainants, said that Google's entire search approach is biased, and that creating a new auction mechanism for rival
companies to bid for search queries was insufficient. "What Google is doing is opening a new stream of revenue," off the
back of rivals, Mr. Weber said.
Shivaun Raff, chief executive of Foundem, a U.K.-based search service and the first complainant against Google said "
if Google's new proposals fall in anything like that previous framework they're going to do nothing to fix the problem."
"It is far from clear from Commissioner Almunia's description of the revised package of proposed commitments that they
go nearly far enough to meet third party concerns and to restore effective competition," added David Wood, legal counsel
for iComp, another group of complainants backed in part by Microsoft Corp., in an emailed statement.
On Tuesday, Mr. Almunia said it isn't possible for the commission to force Google to change its algorithm, the formula
it uses to search online--and that negotiations with the search company had only concluded on Monday.
"It is complex in many ways," Mr. Almunia said. "It is the first time we are investigating online search market, there
have been many formal complaints, and a lot of informal concerns arrived on my desk on the same issues."
Mr. Almunia said that he would seek "feedback" on the improved proposals from Google, its competitors and business
partners before making a final decision on whether to sign a settlement or pursue legal proceedings.
Write to Frances Robinson at firstname.lastname@example.org and to Sam Schechner at sam.schechner @wsj.com
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