Google Reported Ready to Settle with EU on Search

By Peter Bernstein April 15, 2013

As a follow-up to last week’s article about Google trying to avoid the wrath of perceived European antitrust violations – in the form of fines – reports have surfaced as to what Google is willing to do to mollify European Union regulators.  

The Financial Times and The Wall Street Journal are both reporting the framework of proposed “commitments” Google is ready to implement. They would go into affect following a market test where competitors would have a chance to comment on the remedies effectiveness.  

The reports, quoting people close to the European Commission (EC) close to the negotiations, Google has offered to “make users clearly aware” when it is linking to its own specialized services and search.  Every time Google promotes its own links, it will also show “at least three links to rival, non-Google sites that have information relevant to a user’s query,” according to The Wall Street Journal article.  

Other concessions cited include:

  • The three-item linking would cover Google’s search services for restaurants, finance and shopping, but results from Google News would only have to be labeled and separated.
  • Google will also offer sites the ability to easily remove 10 percent of their content from its vertical search engines, making it easier for advertisers to move their campaigns to other search engines. As the articles note, this is virtually the same as what Google has agreed to do in its earlier settlement this past year with the U.S. Federal Trade Commission (FTC).
  • Google’s search algorithm, as previously reported, will remain untouched in this agreement as was the case with the FTC.

Most importantly, if the EU ultimately agrees after input from competitors, according to the reports, the agreement would be legally binding for five years, and a neutral third party would ensure that Google plays by the rules. This latter point is particularly important to Antoine Colombani, the EC’s spokesman on competition policy. The FTC settlement was not legally binding, which in the opinion of many, would give the company too much leeway, and that a carrot-and-stick approach was the best means for keeping them on the straight and narrow.

There are also other substantive difference between the proposed agreement with the EC and the FTC, which could lead to search looking different in the U.S. and Europe which ultimately may or may not be aligned.

The realities of the situation are that this is still all very much in flux. Questions remain as to how competitors will view the market test of these proposed solutions, how in practice 10 percent of content could be removed from vertical search engines, and why regulators seem reluctant to go after the search algorithms, which still leave Google very much in charge of how things are ranked.

Plus, even if the EU acts, it is likely not to stop separate private suits by competitors.

The bottom line remains the bottom line; Google wants to avoid fines by doing the minimum it needs in order to continue to be able to control its own destiny in terms of obtaining content from various inquiries, ranking links in general and vertical searches and maximizing ad dollars based on its dominance of search. It is a delicate balance that needs to be struck for all involved, since the utility of search is undeniable and throttling Google’s innovation would be problematic to say the least. This is the crux of antitrust laws around the world, which is how to allow dominant entities the ability to provide services that customers’ value, and at the same time create a level playing field for everyone else so that the dominance does not thwart competition, innovation and choice. 

The challenge is in that everyone has their own definition of level playing field.  

This last point is illustrated by the fact that Google is being attacked not just on issues surrounding search, but now also on potential abuse of its dominant position with Android on device operating systems. As has been universally recognized, while Google is hoping this is the beginning of the end, it is just as likely that this is the end of the beginning. 

Plus, we are still a long way from even this one being settled to the EU’s satisfaction. There’s going to be a lot more to come.

Edited by Braden Becker
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