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Google and Europe Near Deal Google and Europe Near Deal
(about 2 hours later)
BRUSSELS — Google’s antitrust troubles in Europe moved closer to settlement Tuesday after the European Union’s top competition official accepted the company’s latest offer to settle a long-running case concerning its search and advertising businesses. BRUSSELS — Google’s antitrust troubles in Europe moved closer to a settlement Tuesday after the European Union’s antitrust chief said he had accepted the online giant’s latest offer to settle a long-running investigation of its search and advertising businesses.
But Joaquín Almunia, the E.U. competition commissioner, said Google’s rivals should be given an opportunity to respond to the proposals. That means that the process of reaching a final agreement with Google would probably last until spring 2014. But Joaquín Almunia, the E.U. competition commissioner, said Google’s rivals should be given an opportunity to respond to the proposals. That means that the process of reaching a final agreement with Google would probably last until spring 2014 — nearly four years after the inquiry began, and long after Google’s $50 billion business has evolved well beyond basic Web search.
Mr. Almunia said it was still possible that efforts to reach a negotiated agreement could break down, leaving him with no choice but to send Google formal charges. And Mr. Almunia said it was still possible that efforts to reach a negotiated agreement could break down, leaving him with no choice but to send Google formal charges.
“The settlement route remains the best choice,” Mr. Almunia said at a meeting of digital companies and lobbyists at the European Parliament in Brussels.“The settlement route remains the best choice,” Mr. Almunia said at a meeting of digital companies and lobbyists at the European Parliament in Brussels.
He has been seeking a settlement with the company since the early stages of the case, which formally began in 2010.
A settlement in Europe would allow Google to escape a potential fine of up to $5 billion and a finding of wrongdoing that could limit its activities in the future. The company has already settled a similar case in the United States.A settlement in Europe would allow Google to escape a potential fine of up to $5 billion and a finding of wrongdoing that could limit its activities in the future. The company has already settled a similar case in the United States.
The case revolves around claims that Google has abused its dominance in the Internet search and advertising field by, among other things, favoring its own products and services in search results. Google powers 90 percent of searches in many European markets; its share in the United States is closer to 70 percent. Google’s competitors raised immediate concerns about the latest effort by Mr. Almunia to settle with Google.
Among the new elements that Google had offered to open up competition was “an option to bid for each specific query so smaller search operators can be displayed,” Mr. Almunia said. “It is far from clear from Commissioner Almunia’s description of the revised package of proposed commitments that they go nearly far enough,” said David Wood, the legal counsel for Icomp, an industry group backed by Microsoft and a number of other companies that have complained about Google to European authorities.
In July, Mr. Almunia was forced to reject a preliminary settlement struck with Google after industry groups complained that aspects of the deal could strengthen, rather than loosen, Google’s hold in Europe. That proposal would not have required the company to change the algorithm, or formula, that produces its search results. Mr. Wood said the latest offer by Google should be carefully tested in the marketplace to assure that the remedies addressed complaints that the company favored its own products in search results.
The case, which the European Commission formally opened in November 2010, revolves around claims that Google has abused its dominance in the Internet search and advertising field by, among other things, favoring its own products and services in search results. Google powers 90 percent of searches in many European markets; its share in the United States is closer to 70 percent.
Among the latest elements that Google has offered to open up competition was “an option to bid for each specific query so smaller search operators can be displayed,” Mr. Almunia said Tuesday.
In July, Mr. Almunia rejected a preliminary settlement he had struck with Google after industry groups complained that aspects of the deal could strengthen, rather than loosen, Google’s hold in Europe. That proposal would not have required the company to change the algorithm, or formula, that produces its search results.
But it would have been the first time Google had agreed to legally binding changes to its search results, and it went much further than the minor concessions it made to settle a case before the U.S. Federal Trade Commission.But it would have been the first time Google had agreed to legally binding changes to its search results, and it went much further than the minor concessions it made to settle a case before the U.S. Federal Trade Commission.
Mr. Almunia said Tuesday that he was not seeking to regulate “a specific algorithm” or prevent the company from improving its services.Mr. Almunia said Tuesday that he was not seeking to regulate “a specific algorithm” or prevent the company from improving its services.
Google portrayed its latest offer as something it only agreed to under considerable pressure from the European authorities. The European Commission had "insisted on further, significant changes to the way we display search results," Kent Walker, a senior vice president at Google , said in a statement that was issued shortly after Mr. Almunia finished speaking. "While competition online is thriving, we’ve made the difficult decision to agree to their requirements in the interests of reaching a settlement," said Mr. Walker. Google on Tuesday portrayed its latest offer as something it agreed to only under considerable pressure from the European authorities.
The European Commission had “insisted on further, significant changes to the way we display search results,” Kent Walker, a senior vice president at Google, said in a statement that was issued shortly after Mr. Almunia finished speaking. “While competition online is thriving, we’ve made the difficult decision to agree to their requirements in the interests of reaching a settlement.”
To be sure, Mr. Almunia has been under pressure for years from Google’s rivals to prolong its legal entanglements in Europe and toughen the terms of any deal.
Apparently seeking to tamp down those demands, Mr. Almunia suggested the latest offer was the best deal he could get for the European consumer in a sector as complex and rapidly evolving as online commerce and digital media.
“Since we started the investigation, the way search results are presented and the kind of services provided have changed many times,” he told the lawyers and lobbyists. “European users want undistorted competition and choice in online search and search advertising.” Mr. Almunia added that users “want it now and, if possible, deserve it now, and not after many years of litigation.”
Whatever its limits, the deal may also be the most that Mr. Almunia would be able to get from Google, without resorting to years of litigation.
Executives at the company have grown frustrated in recent months, particularly after being asked to tweak their offer a second time. Each of those changes required careful analysis by teams of engineers and experts in advertising in California — several time zones away from the company’s legal team in Brussels where much of the negotiation has taken place.
Mr. Almunia said Google improved its previous offer in four areas that he said in May 2012 “may be considered as abuses of dominance.”
These original four areas of concern included whether Google might have unfairly exploited its market position by displaying links to its own services, like Google maps or images, when it answers a query, giving preference to them over those of competitors.
The four original concerns also covered whether Google put material in its own search results that was copied from competitors’ Web sites. The other two areas involved how Google conducts its advertising business, including how it delivers search ads on partner sites.
Mr. Almunia said on Tuesday that he “cannot describe the details” of the latest offer by Google, and the company said it would not release them yet, either.
But in the area of search, Mr. Almunia said links to rivals would be made “significantly more visible” and that a “larger space of the Google search result page is dedicated to them.” The rivals “have the possibility to display their logo next to the link, and there will be a dynamic text associated to each rival link to better inform the user of its content,” he said. Smaller specialized search companies also would be given a better chance of being found on Google’s powerful search engine.
To placate publishers and advertisers, Mr. Almunia said he had accepted terms from Google that tightened the terms of the company’s previous concessions.
Even with a settlement Mr. Almunia would be able to do what the United States has not, and reach a legally binding deal on the way the company runs its search business.
That showed that Brussels, where the European Commission is based, is becoming the powerhouse for regulating multinational companies, said Luke M. Froeb, who teaches competition policy at the Vanderbilt University business school and formerly worked on antitrust at the F.T.C.
“In the U.S., the agencies try to make a big deal of, ‘We are enforcers, not regulators.’ In the E.U., they are not concerned with that distinction,” said Mr. Froeb.
Mr. Almunia can fine and order companies to change their business practices directly, unlike in the United States, where agencies need a court order first. Companies can appeal such penalties, but such cases can take years to make their way through the European Court of Justice, the highest tribunal in the bloc.
But experts also cautioned that this might come too late in a fast-changing industry like technology. For instance, much of the digital world has moved to mobile phones, where Google and its competitors face different issues.
“By the time this decision comes down, the world will have moved on to something else,” Mr. Froeb said.
Even some of Google’s competitors that have in the past complained about Google’s behavior to regulators said the time had come and gone for a decision in the European Union to make a big difference to them. They have already been forced to adapt to living in Google’s world, they said, and have in most cases been growing despite the hurdles that Google erected. Those competitors spoke on condition of anonymity because they did not want to comment publicly on a rival and because they still support efforts to rein in Google’s power.
On Tuesday, Mr. Almunia suggested that some of the concessions he had extracted from Google would apply to that world of new, mobile devices.
The “new proposal more appropriately addresses the need for any commitments to be able to cover future developments,” said Mr. Almunia, adding that it “relates to queries entered in Google in whatever form, whether they are typed or spoken, and irrespective of the entry point or the device.”

Claire Cain Miller contributed reporting from San Francisco.