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Google forced to bow to Europe

Clair Cain Miller (via NYT/ AFR) | April 16, 2013
Google has for the first time agreed to legally binding changes to its search results after an antitrust investigation by European regulators.

Google has for the first time agreed to legally binding changes to its search results after an antitrust investigation by European regulators into whether it abuses its dominance of online search.

After a two-year inquiry, the European Commission has accepted Google's proposed settlement, according to two people briefed on the agreement who spoke anonymously because the proposal was not yet public.

Google will not have to change the algorithm for its search results, the people said. Under the proposal, Google will agree to clearly label search results from its own properties, such as Google Plus Local or Google News, and even show links from rival search engines.

The changes will not be heralded for at least a month, while rivals and others in the industry can weigh in on the plan, in a process called market testing.

The biggest change was to search results related to topics such as shopping and flights, a field known as vertical search. Google has been pushing into these areas, prompting complaints from competitors such as Yelp and Trip Advisor, which worry Google will favour its own results over theirs.

If the proposal is approved after market testing, the European Commission will have succeeded in demanding far more stringent concessions from Google than did US regulators, who in January closed a two-year antitrust investigation after finding Google had not violated antitrust statutes. Google agreed to make minor changes related to search advertising, but avoided a formal consent decree or litigation.

A Google spokesman, Al Verney, declined to comment beyond repeating Google's statement that it 'continued to work cooperatively with the European Commission'.

Europe opened its antitrust inquiry in 2010. It focused on whether Google unfairly took advantage of its market dominance by favouring links to its own services, whether it disadvantaged competitors by including material from other websites in search results and whether its advertising business complied with European antitrust law.

The investigation came about because of competitors such as Microsoft and Foundem, a British comparison-shopping site, which complained about the way Google conducted its search and advertising businesses.

In Europe, the agreement will be legally binding for five years, and a third party will ensure compliance. Google may face a fine of as much as 10 per cent of its global annual sales for failing to keep its promises.

If it abides by the agreement, though, Google will avoid fines and a formal finding of wrongdoing. Google will also escape the lengthy and expensive antitrust battles that Microsoft faced in Europe over its media player and server software.

Herbert Hovenkamp, a professor of antitrust law at the University of Iowa, said the penalty faced by Google was light. 'The no fine conclusion is a pretty important one,' said Mr. Hovenkamp, who has in the past been a paid adviser to Google. 'The question you have to ask is: Is labeling going to change any consumer behavior? And if the answer is no, then its not going to do any good for Microsoft Bing or for any rival search engines'.

 

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