Google, Europe Strike Last-Chance Antitrust Deal

The tentative agreement will bring an end to a long, winding investigation that potentially had billions in fines on the line.

A man passes under the Google sign at Google headquarters in Mountain View, California on January 5, 2010.  Google unveiled its new "superphone," the Nexus One, marking the online search giant's first leap into the smartphone market.  UPI/Mohammad Kheirkhah
National Journal
Dustin Volz
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Dustin Volz
Feb. 5, 2014, 6:24 a.m.

Google has reached a not-yet-fi­nal­ized set­tle­ment with European an­ti­trust au­thor­it­ies to change its search and ad­vert­ising func­tions in a bid to quiet charges it un­fairly pro­motes its own ser­vices over those of rivals, of­fi­cials an­nounced Wed­nes­day.

The tent­at­ive agree­ment would ex­empt Google from any wrong­do­ing and would not re­quire the In­ter­net gi­ant to pay any fine after a more than three-year in­vest­ig­a­tion. Joa­quin Almunia, the European Uni­on’s com­pet­i­tion com­mis­sion­er, said Google’s con­ces­sion of­fer­ings are “cap­able of ad­dress­ing the com­pet­i­tion con­cerns” the com­mis­sion had raised.

“After a care­ful ana­lys­is of the last pro­pos­als we re­ceived from Google last month, and in­tense ne­go­ti­ations that man­aged to fur­ther im­prove what Google sent to us in mid-Janu­ary, I be­lieve that Google’s new pro­pos­als are cap­able of ad­dress­ing the com­pet­i­tion con­cerns I set out to them,” Almunia said at a press con­fer­ence in Brus­sels, ac­cord­ing to his pre­pared re­marks. “The al­tern­at­ive of ad­versari­al pro­ceed­ings would take many years, with many un­cer­tain­ties, and would not have the same im­me­di­ate im­pact.”

Almunia noted that four kinds of busi­ness prac­tices waged by Google “raised con­cerns from a com­pet­i­tion point of view” when the com­mis­sion opened its in­vest­ig­a­tion back in Novem­ber 2012.

The first two con­cerns in­volved Google’s “spe­cial­ized search ser­vices” on things like ho­tels and res­taur­ants, which the com­mis­sion wor­ried demon­strated a fa­vor­ing of the com­pany’s own ser­vices above rival of­fer­ings. The oth­er two con­cerns dealt with on­line ad­vert­ising.

“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.”

The deal will make Google guar­an­tee that it dis­plays the res­ults of three rivals dur­ing ser­vice searches in a fash­ion sim­il­ar to its own ser­vices.

Almunia had pre­vi­ously re­jec­ted pro­pos­als by Google twice and warned that “the third try should be the last one.” He ad­di­tion­ally cau­tioned in his re­marks that he would have been “ob­liged to go in a dif­fer­ent dir­ec­tion” had the latest round of ne­go­ti­ations not meted out a work­able com­prom­ise.

The deal goes farther than the set­tle­ment Google reached last year with the Fed­er­al Trade Com­mis­sion over sim­il­ar con­cerns that it was ma­nip­u­lat­ing its search res­ults to hurt com­pet­i­tion. Google agreed to only minor changes to its busi­ness in the United States.

But the European set­tle­ment was not enough to sat­is­fy Google’s com­pet­it­ors, who have been lob­by­ing reg­u­lat­ors around the world to crack down on the search gi­ant.

“The European Com­mis­sion has tent­at­ively ac­cep­ted a pro­pos­al by Google which is worse than do­ing noth­ing,” said Thomas Vin­je, leg­al coun­sel for Fair­Search, a group rep­res­ent­ing Mi­crosoft, Ex­pe­dia, Tri­pAd­visor, and oth­er com­pan­ies.

Vin­je claimed Google’s com­mit­ments “lock in dis­crim­in­a­tion” and raise rivals’ costs.

“The Google pro­pos­al re­quires rivals to pay Google for place­ment sim­il­ar to that of Google’s own ma­ter­i­al, un­der­cut­ting the abil­ity of oth­er to com­pete and provide con­sumer choice,” he said. “This will be done through an auc­tion mech­an­ism that re­quires par­ti­cip­at­ing com­pan­ies to hand the vast ma­jor­ity of their profits to Google.”

Brendan Sas­so con­trib­uted

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