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Google offers compromise to EU regulators to settle antitrust probe

One News Page Staff
Tuesday, 3 July 2012

Google offers compromise to EU regulators to settle antitrust probeby

Google chairman Eric Schmidt has submitted proposals to the European Commission in an attempt to end an antitrust investigation into its dominance in the search market

BRUSSELS, Belgium -- Google has submitted proposals to EU regulators concerned the Internet giant may have abused its dominant market position in search to its competitive advantage.

A letter from Google chairman Eric Schmidt is understood to contain the search giant's proposals addressing four areas in which Google has allegedly abused its dominant market position in search to gain a competitive advantage and stifle competition. The proposals were submitted to the European Commission on Monday afternoon, within hours of a deadline set by EU Competition Commissioner Joaquín Almunia in May.

Al Verney, a Google spokesman in Brussels, said: "We have made a proposal to address the four areas the European Commission described as potential concerns."

The four areas in which Google may be exploiting its market dominance in online search identified by the Commission are:

1) Preferential Treatment: The way in which Google displays its own services, including news, in preferential positions on Google search results pages. "In its general search results, Google displays links to its own vertical search services differently than it does for links to competitors," Competition Commissioner Almunia explained. "We are concerned that this may result in preferential treatment."

2) Copyright: The way in which Google may be copying copyrighted material from other sources, such as restaurant reviews, without the copyright holder's authorisation.

3) Restrictions: The way in which Google appears to unduly grant itself exclusivity as the sole display ad provider according to its advertising contracts with its partner websites.

4) Portability: The way in which Google imposes contractual restrictions on software developers preventing them to offer tools allowing clients to export advertising campaign data from Google's AdWords online advertising platform to competitor products.

Google declined to provide any detail on what its proposals submitted to the Commission entailed. A spokesperson for Commissioner Almunia confirmed that a letter from Google had been received and anti-trust officials would now analyze the response - without giving any further details on the letter's content at this stage.

Greg Sterling, a senior analyst at Opus Research, said that "three of the four areas are relatively easy to address," isolating the first area of concern about how Google displays its search results as more problematic in nature.

Given Google's dominant market position in search, with 94% of all European search queries handled by the U.S. corporation, the Internet giant has effectively become the "gateway" to the Internet for the vast majority of users. The anatomy of its search results pages, and the way in which results are ranked are crucial in determining the fate of online providers.

Some competitors have complained that Google ranks its own products far more highly in search results than rivals' offerings, giving it an unfair and illegal advantage when users view the result listings.

The obscurity surrounding search results is also at the heart of the "Have I been penalized..?" campaign for greater transparency in search - an essential ingredient to make search, and therefore the online marketplace, fairer.

"Google's move to respond to, rather than contest, the Commission's concerns that it is behaving in an anti-competitive way is an important step forward in making the online marketplace fairer for all participants", said Dr Marc Pinter-Krainer, founder of news portal website One News Page which is spearheading the "Have I been penalized..?" campaign.

"Particularly in the area of how search results are displayed, Google needs to make fundamental changes to re-establish a fair environment for everyone, and hopefully Google's proposals address this," Pinter-Krainer continued.

The "Have I been penalized..?" campaign specifically focuses on the topic of search penalties, which are often applied by Google in an obscure way to websites which are "good citizens" of the Internet but happen to compete with Google in any of its verticals including news, travel, price comparison and mapping. Concerned website owners are invited to join the campaign mailing list to stay updated with news and developments.

Other industry bodies representing online market participants welcomed the news of Google submitting proposals to address the EU antitrust concerns.

ICOMP, the Initiative of a Competitive Online Marketplace, welcomed "Google's admission of guilt that their market dominance and business practises have harmed numerous companies across the Internet" in a blog post on Monday.

"Over many years, Google’s dominance in the search market has harmed hundreds of companies who have voiced their concerns that Google’s conduct violated European competition law, distorted competition, curbed innovation, restricted consumer choice and ultimately held back economic growth," said David Wood, ICOMP counsel.

Wood continued: "It is essential that the proposed remedies receive vigorous scrutiny not only by the Commission but also by third parties, to ensure they provide full redress for the damage caused by Google’s behaviour and prevent its repetition. Any failure to do so will likely have grave consequences for online competition, innovation and consumer choice."

FairSearch, an coalition of U.S. online providers, said Google's letter could signal change.

"We hope the proposals reflect a greater willingness to end Google's anti-competitive behaviour than has its consistent rejection of the concerns that Mr. Almunia identified after collecting evidence for nearly two years," said Thomas Vinje, EU counsel to the FairSearch coalition.

The European Commission is expected to rule on Google's proposals within several weeks, but no date has yet been set.

Meanwhile, Google is facing similar scrutiny over its business practises from other regulators around the globe.

In the U.S., the Federal Trade Commission is looking into whether the company has been unfairly and preferentially treating its own services in its search results pages and rigging its recommendations to drive up online advertising prices.

Other current regulatory probes into Google's alleged anti-competitive practises are taking place in South Korea, Australia, Brazil, India and Argentina.

Note to readers: One News Page is a council member of ICOMP.
Image: Google chairman Eric Schmidt
Credit: Guillaume Paumier / Wikimedia Commons, CC-BY-3.0 / One News Page
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