Last updated: October 1, 2013 9:45 am

Google moves nearer to search deal with EU

A pedestrian walks past a Google Inc. signage displayed outside of the company's headquarters in Mountain View, California©Bloomberg

Google’s main antitrust fight in Europe is on course to end in settlement, after Brussels gave a favourable assessment of the US group’s improved offer to abide by legal restrictions when it presents search results.

After months of speculation that talks were on the brink of collapse, Joaquín Almunia, the EU competition chief, on Tuesday announced significant progress that suggested a settlement would address his concerns about Google skewing results to its own advantage.

The US internet group’s latest offer to the European Commission closes loopholes and boosts the prominence and information provided in mandatory links to rival services, such as shopping or restaurant sites.

Given the improvements, Mr Almunia is open to pursuing a pre-charge deal, but the final decision will be subject to Google submitting data to show the effectiveness of the promises it is making. Rivals will be informally consulted during that process, but there will be no formal “market test” on the draft pact.

Mr Almunia’s decision moves a significant way to winding-up a three year EU probe – triggered by complaints from a cluster of tech rivals including Microsoft – that threatened to drag Google into a long legal battle that could end with big fines and intrusive restrictions on its business.

Last summer Mr Almunia ordered draft charges against Google to be updated after a draft settlement – published in April after more than a year of talks – drew scorn from tech groups that claimed it was “worse than doing nothing”.

However, even with the extra concessions, the deal will probably be a hard sell to the anti-Google camp, which includes consumer organisations and lobby groups such as FairSearch and the Microsoft-backed Initiative for a Competitive Online Marketplace.

The complainants reacted warily to the announcement. David Wood, Icomp’s legal counsel, said “the suggestion that consumer harm and lack of choice can be remedied by labelling seems unrealistic”. Thomas Vinje, a lawyer for FairSearch, said it was “essential” that the settlement include a principle of non-discrimination.

Talks on adjustments to the latest Google offer were finely balanced and only concluded on Monday. It is the first time the US group has yielded to an antitrust enforcement agency over its search business and agreed to legally binding restrictions on how its website is presented.

Kent Walker, Google’s general counsel, said: “This has been a very long and very thorough investigation. Given the feedback the European Commission received on our first proposal, they have insisted on further, significant changes to the way we display search results. While competition online is thriving, we’ve made the difficult decision to agree to their requirements in the interests of reaching a settlement.”

In its sweetened offer, Google promised that the restrictions would apply to search queries in any form, irrespective of device – a measure that closes a key loophole in the first draft settlement.

A new auction system is also introduced that allows rivals to bid for a link based on a specific search query – a provision Mr Almunia said was important for specialised search operators.

In depth

Google

google

Google is showing results from heavy investments in areas beyond search, with notable inroads in the mobile, video and display markets

Rival links are given more space, logos can be displayed next to the link and Mr Almunia said there would be “dynamic text” to better inform users of the content provided by rivals.

Mr Almunia said the case had reached a “key moment” and admitted that he had “serious doubts” after the negative feedback to the draft settlement published in the Spring.

“Now with significant improvements on the table I think we have the possibility to work again to seek a solution based on a . . . settlement decision.”

If Mr Almunia is satisfied by the empirical data provided by Google and the informal feedback from rivals does not expose serious problems, he intends to move to a formal settlement decision by the Spring of 2014.

Yet the deal will bitterly disappoint Google’s harshest critics, who put pressure on antitrust investigators in the US and in Brussels, hoping they would force Google to hive-off its search business or ban it from favouring its own in-house services.

While the EU pact goes further than the Federal Trade Commission, which gave the all-clear to Google’s search engine, the company’s jealously guarded search algorithm is untouched by the deal.

Brussels’ probe homed in on how Google unfairly steered users to its own specialised, or “vertical”, services – such as maps, shopping and travel listings – robbing others of traffic. It did not conclude that the US group deliberately demoted its competitors – a key concern of many complainants.

As part of the pact, Google also promises to give third-party websites an easier opt-out from being used in Google services, such as news searches – a measure intended to prevent Google “scraping” valuable content from rivals without permission.

Google’s draft settlement stops it from including clauses in its agreements requiring exclusivity in online search or preventing an advertising campaign being run on other platforms such as Microsoft’s Bing search engine.

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE