Why is this important?
The settlement on Wednesday in effect closes the chapter on Europe’s three-year antitrust investigation into Google, and puts to bed Google’s concerns that it would end, much like US and European regulators’ decade-long fight with Microsoft during the 1990s, with long legal battle, big fines and intrusive curbs.
Still, it will mark the first time that Google has bowed to regulatory pressure to make changes to its search business. A similar US probe gave Google the all clear last year.
What were the commission’s main concerns?
In the broadest sense, Joaquín Almunia, the EU antitrust chief, was worried that Google was using its dominance in search to exclude rivals and squeeze its customers. This boiled down to four main concerns:
1) Display of search results
The commission is concerned about how Google displays certain searches, such as for hotels, restaurants or air tickets, and whether it was giving more prominence to its own sponsored results than those of rival, specialised, search engines.
As illustration, this is what a Google search for “gas grill” looks like now:
This is how it would look after the changes:
2) How Google uses other search sites’ materials.
A Google search now will automatically turn up user reviews from, say, TripAdvisor or Yelp. The EU wants Google to let those rival sites opt out of having their material displayed. Google has agreed.
The commission feels that websites that show (and earn money from) Google search ads are locked in to using Google search ads exclusively. Mr Almunia wants Google to let website publishers source their search ads elsewhere. Google has agreed.
The commission is concerned that advertisers who designed campaigns on Google’s AdWords platform (the one used for search ads) find it too difficult to transfer those campaigns to a rival service. Google has agreed to no longer impose obligations that prevent that from happening.
What happens now?
Kent Walker, Google’s general counsel, says Google “will be making significant changes to the way Google operates in Europe”.
On the European Commission’s side, there is still going to be a final approval process. The groups that filed the original complaint against Google will be consulted, but it will not be a formal “market test”.
The commission will monitor whether Google sticks to its promises, and separately, it is also continuing with a probe into whether Google has abused the dominant position of Android.
What is the reaction?
David Wood, legal counsel for the Microsoft-backed Initiative for a Competitive Online Marketplace, called the settlement a “massive failure”.
“Complaints and others must see Google’s proposed commitments, not just the commission’s analysis of why they will work. Hard data from market tests proved that the previous settlement would not work – we need time and opportunity to ensure full technical assessment of how effective the proposed remedies would be,” he said.
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