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Monday, April 15, 2013

Daily Report: European Regulators and Google Reach an Antitrust Deal

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, Claire Cain Miller reports in The New York Times on Monday.

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 that produces its search results, the people said. Under the proposal, Google agrees to clearly label search results from its own properties, like Google Plus Local or Google News, and in some cases to show links from rival search engines.

The changes will not be widely seen 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 has to do with search results related to topics like shopping and flights, a field known as vertical search. Google has been pushing into these areas, prompting complaints from competitors like Yelp and TripAdvisor who worry that Google will favor 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 United States regulators, who in January closed a two-year antitrust investigation after finding that Google had not violated antitrust statutes. Google agreed to make some 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.” Antoine Colombani, a commission spokesman, did not respond to requests for comment on Sunday.

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

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

In Europe, the agreement would be legally binding for five years, and a third party would ensure compliance, the people briefed on the proposal said. Google could face a fine of as much as 10 percent 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 it’s not going to do any good for Microsoft Bing or for any rival search engines.”