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Wednesday, December 5, 2012

For Europe, Search Bias Is Still Central in Settlement Talks With Google

In their inquiry of Google, European antitrust officials remain focused on accusations that Google's dominant search engine gives favored placement to the company's commerce and other services, thwarting competition.

In their settlement talks with Google, European regulators insist that the search bias issue must be addressed, even if the Federal Trade Commission chooses to back off that element of its antitrust pursuit of Google.

That was a message that Joaquin Almunia, the European Union antitrust commissioner, delivered to his American counterpart, Jon Leibowitz, chairman of the F.T.C., when the men met on Monday in Brussels, according to two people told of Mr. Almunia's stance, conveyed in a private meeting. The two people spoke on the condition that they not be identified.

European and American antitrust authorities communicate regularly and cooperate, but they operate independently. So the European position is not particularly surprising. Still, it comes after reports in recent weeks that the F.T.C. may be moving toward a settlement that sidesteps complaints by rivals of search bias, which was a centerpiece of the commission staff's investigation.

The settlement talks between F.T.C. and Google, according to the reports, have focused on other competition issues. These include Google's contracts with Web publishers and advertisers, the search engine's use of text copied from commerce sites and news publishers, and Google's handling of essential communication patents in the smartphone market.

But accusations of search bias were what really started the Google investigatio n. Rivals complain that the search giant gives more prominent placement and display for its online shopping and travel services, for example, than to competitors. The potential antitrust concern is that such specialized, or “vertical,” search services are partial substitutes for Google's search engine because they allow people to find information and compete with Google for online advertising.

In a statement in May, Mr. Almunia identified four areas of concern in Europe's antitrust investigation of Google. He listed its contracts, and its copying and use of information from competing sites in Google's search results. But the first concern he cited was search bias.

“In its general search results,” Mr. Almunia said, “Google displays links to its own vertical search services differently than it does for links to competitors. We are concerned that this may result in preferential treatment compared with those of competing services, which may be hurt as a res ult.”

Google has consistently denied these accusations, saying its search results are determined impartially by its software algorithm. And the changes Google frequently makes in search, the company says, have been to deliver more useful and relevant information to consumers. Besides, Google adds that alternatives, like Microsoft's Bing search engine, are “just a click away.”

A split between the United States and Europe on the resolution of the case could complicate operations for Google. But just how would depend on the particulars of the outcome.

And it's well to keep in mind that settlement talks in antitrust cases are like so many deal negotiations. The interim positions are not meaningless, but what is really meaningful is where things end up. And because Mr. Leibowitz isn't talking, it could be that the F.T.C. is dealing with the more peripheral matters first and will put search bias on the table later, as the final issue to take up.