Google closes in on deal in EU antitrust case

Antitrust chief accepts US firm's concessions, paving way for an end to three-year case

PUBLISHED : Wednesday, 05 February, 2014, 9:09pm
UPDATED : Thursday, 06 February, 2014, 4:18am

The European Union's antitrust watchdog has accepted new and "far reaching" concessions offered by US internet search giant Google to settle allegations it is abusing its dominant position in internet searches, bringing the three-year-old case close to an end.

Google would significantly change the ways it displays some search results in Europe in favour of its competitors. But reaching a settlement will spare the company a longer antitrust procedure that could have resulted in fines of up to 10 per cent of the company's annual revenue, or about US$5 billion.

EU antitrust commissioner Joaquin Almunia said yesterday he was "strongly convinced" the internet company's proposals - its third attempt to address the competition concerns - are sufficient. "This is an important step forward," he said in Brussels.

Now that the EU has accepted Google's offer, the proposals will be sent to the 18 original plaintiffs for evaluation before the commission makes a final decision in the coming months.

Under its proposal, Google will guarantee to display results from three competitors in a similar way to its own whenever it promotes its specialised search services like Google shopping, restaurant or hotel searches, the commission said. It will also label more clearly search results stemming from its own services to allow users to distinguish between natural search results and those promoted by Google.

A shopping search for a gas grill, for example, would yield two boxes of the same size and position at the top of the search results page, one showing three "Google shopping results" and immediately to the left of it three results labelled "Alternatives", according to an example provided by the commission.

At present, only Google's own results are displayed prominently above all other search results. The changes will also be valid for search results displayed on mobile devices.

"Without preventing Google from improving its own services, it provides users with real choice between competing services presented in a comparable way; it is then up to them to choose the best alternative," Almunia said.

The results from three competing search providers would be chosen using Google's normal web search algorithm. In many cases, the competitors would have to pay for their placement through an auction mechanism, the commission said.

The EU Commission last year threw out two sets of proposed concessions by Google because they were deemed insufficient.

Once a settlement is reached, the concessions will be legally binding for Google for five years across the 28-country European Union, the world's largest economy.

The company, based in Mountain View, California, has a market share of about 90 per cent of internet searches in Europe, compared with around 70 per cent in the United States.

"We will be making significant changes to the way Google operates in Europe," said Kent Walker, Google's general counsel. The company now looked forward to resolving the matter for good, he said.

Google's compliance would be monitored by a trustee chosen by the European Commission.

"The concessions are far-reaching and have the clear potential of restoring a level playing field with competitors, said Almunia. "No antitrust authority in the world has obtained such concessions."