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E.U. Deal Could Mean a Victory for Google Google in Deal to Settle Europe’s Antitrust Case
(35 minutes later)
BRUSSELS — Google is looking three times lucky.BRUSSELS — Google is looking three times lucky.
The search giant escaped serious antitrust action in the United States early this year, and in April it dodged a hefty penalty in Europe. The tech giant escaped serious antitrust action in the United States early this year, and in April it dodged a hefty penalty in Europe.
The third piece of good fortune — from Google’s standpoint, at least — came on Tuesday.The third piece of good fortune — from Google’s standpoint, at least — came on Tuesday.
The European Union’s antitrust chief, Joaquín Almunia, announced that he had tentatively reached a deal he could live with that would require Google to give higher visibility to competitors’ listings on its Web search service. Once Mr. Almunia gives the company’s rivals one more chance to comment on the settlement, he said, he intends to have the final deal in place by next spring. The European Union’s antitrust chief, Joaquín Almunia, announced that in his inquiry into Google’s search practices, he had tentatively reached a deal he could live with — one requiring Google to give higher visibility to competitors’ listings on Web search queries. After the company’s rivals comment on the settlement, Mr. Almunia said, he intends to have the final deal in place by next spring.
The European deal would go much further than a settlement early this year with the U.S. Federal Trade Commission, which required only minor concessions from Google. The European settlement would allow Google to avoid a potential fine of up to $5 billion and a finding of wrongdoing that could limit its activities in the future. The European deal would go much further than a settlement early this year with the Federal Trade Commission, which required only minor concessions from Google. It would also allow Google to avoid a potential fine of up to $5 billion and a finding of wrongdoing that could limit its future activities.
And yet, the deal with Mr. Almunia, if completed in the spring, would come nearly four years after he opened his investigation. During that time the company’s business model — and all its various ways of making its billions of dollars — changed considerably. And yet, the deal with Mr. Almunia would come nearly four years after he opened his investigation. During that time the company’s business model — and all its various ways of making its billions of dollars — changed considerably. To some experts, that suggests that Google could end up winning a protracted waiting game.
For some experts, there are serious doubts about whether Mr. Almunia has achieved a substantial victory for European consumers — or if Google will end up winning a protracted waiting game. Not covered by the investigation and tentative settlement, for example, are all the ways that Google can mine and monetize data from services like Gmail and maps that are separate from its search engine but integrally linked to it. Not covered by the investigation and tentative settlement, for example, are Google’s methods for mining and making money on data from services like Gmail and maps that are separate from its search engine but integrally linked to it. But much of the digital world has moved to mobile phones, where Google and its competitors face different issues.
The latest deal “appears to be a major success for European enforcers when you compare them to how timorous their American counterparts have been with Google,” said Nicolas Petit, a professor of competition law and economics at the University of Liège in Belgium. “But can you really talk of success when the resolution of the case comes four years down the line? “By the time this decision comes down, the world will have moved on,” said Luke M. Froeb, who teaches competition policy at the Owen Graduate School of Management at Vanderbilt University and formerly worked on antitrust at the F.T.C.
“In the digital economy, that’s an eternity,” he said. Nicolas Petit, a professor of competition law and economics at the University of Liège in Belgium, said the latest deal “appears to be a major success for European enforcers when you compare them to how timorous their American counterparts have been.
Google’s competitors on Tuesday raised immediate concerns about the proposed settlement. “But can you really talk of success when the resolution of the case comes four years down the line?” he added. “In the digital economy, that’s an eternity.”
“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. Google’s competitors on Tuesday raised immediate concerns about the proposed European settlement.
Mr. Almunia met briefly last Friday in New York with Eric Schmidt, Google’s executive chairman, to take stock of the negotiations on a deal, according to one person with direct knowledge of the meeting and who spoke only on condition of anonymity because the meeting was not meant to be public. Discussions between lawyers and officials at Google, and officials at the European Commission then continued until late on Monday, commission officials 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 other companies that have complained about Google to European authorities.
Other competitors who have in the past complained about Google’s behavior to regulators said the time had come and gone for a decision in Europe to make a big difference. 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 had erected. These competitors spoke on the 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.
The antitrust case, which the European Commission formally opened in November 2010, revolves around claims that Google has abused its dominance in Internet search and advertising 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.
Mr. Almunia met briefly last Friday in New York with Eric E. Schmidt, Google’s executive chairman, to take stock of the negotiations on a deal, according to one person with direct knowledge of the meeting and who spoke only on the condition of anonymity because the meeting was not meant to be public. Discussions between lawyers and officials at Google, and commission officials, then continued until late on Monday, commission officials said.
Mr. Almunia said Tuesday that he “cannot describe the details” of the latest offer by Google, and the company said it would not release them yet, either.Mr. Almunia said 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 that 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.But in the area of search, Mr. Almunia said that 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.
Google on Tuesday portrayed its latest offer as something it agreed to only under considerable pressure from the European authorities. Google on Tuesday portrayed its latest offer as something it agreed to only under considerable pressure from the Europeans.
The 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. “While competition online is thriving, we’ve made the difficult decision to agree to their requirements in the interests of reaching a settlement.” The commission had “insisted on further, significant changes to the way we display search results,” Kent Walker, Google’s general counsel, said in a statement. “While competition online is thriving, we’ve made the difficult decision to agree to their requirements in the interests of reaching a settlement.”
Yet since the European Commission’s investigation began in November 2010, Google has expanded a number of its Web services like cloud data — or storing information like calendars and address books on online servers that can be accessed by any computer or cellphone connected to the Internet — as well as improving the way it sells lucrative advertising to potential customers. As a result, industry analysts said any settlement with the European authorities would be unlikely to topple the American tech giant from its dominant position in Europeans’ use of the Internet. Yet since the commission’s investigation began, Google has expanded a number of its Web services like cloud data, as well as improving its advertising products. As a result, industry analysts said any European settlement would be unlikely to threaten the company’s dominance in Europe.
“There’s a fundamental misconception over how Google operates as a company,” said Daniel Knapp, director of advertising research at the consultancy IHS Screen Digest in London. “It’s moved away from a pure search business model,” he said. “There’s a fundamental misconception over how Google operates,” said Daniel Knapp, director of advertising research at the consultant IHS Screen Digest in London. “It’s moved away from a pure search business model,” he said.
Rivals like Microsoft also offer similar data and advertising products, though Google’s leading market position has helped the tech giant mine the data collected from its other services to gain a better understanding of how consumers use the Internet, which helps Google improve the underlying algorithms that underpin its search engine. Google’s leading market position has helped the tech giant mine the data collected from its other services, like Gmail, to gain a better understanding of how consumers use the Internet, which helps Google improve the underlying algorithms that underpin its search engine.
By incorporating the huge amount of user data that it collects into its other products, like when it uses a consumer’s information from its free Gmail e-mailing service to provide more individually tailored advertising when that person uses Google’s search engine, the company has cemented its presence in Internet search, according to analysts, as it can offer better results than companies without access to the same information. “Search can no longer be seen as an isolated activity,” said Ed Barton, a director at the consultant Strategy Analytics in London. “All of Google’s other services form part of a wider platform. That’s where it gets its advantage.”
“Search can no longer be seen as an isolated activity,” said Ed Barton, a director at the consultancy Strategy Analytics in London. “All of Google’s other services form part of a wider platform. That’s where it gets its advantage.” In April, Mr. Almunia began so-called market testing of the company’s first offer to settle the case. By July, Mr. Almunia had rejected that deal, which would not have required the company to change its search algorithm.
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. Mr. Almunia underlined on Tuesday that he was not seeking to regulate “a specific algorithm.”
In April of this year, Mr. Almunia began so-called market testing to see whether the remedies in the company’s first offer addressed complaints that Google favors its own products in search results. But by July, Mr. Almunia had rejected that deal 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. Almunia underlined on Tuesday that he was not seeking to regulate “a specific algorithm” or prevent the company from improving its services.
Yet, from a strictly legal perspective, the battlefield looks more level for the main parties: Mr. Almunia, Google and key rivals like Microsoft that complained in the case.
Under the proposed settlement, Mr. Almunia and, to some degree, Microsoft could claim to have forced Google for the first time to accept binding legal commitments on its search business, said Emanuela Lecchi, a partner at the law firm Watson, Farley & Williams in London.Under the proposed settlement, Mr. Almunia and, to some degree, Microsoft could claim to have forced Google for the first time to accept binding legal commitments on its search business, said Emanuela Lecchi, a partner at the law firm Watson, Farley & Williams in London.
And even though Google “appears to get away with light touch requirements,” the company also may “be concerned that this should not become a paradigm for intervention in other jurisdictions,” Ms. Lecchi said.And even though Google “appears to get away with light touch requirements,” the company also may “be concerned that this should not become a paradigm for intervention in other jurisdictions,” Ms. Lecchi said.
As for consumers, they “probably do not lose out,” she said.As for consumers, they “probably do not lose out,” she said.
Mr. Almunia also suggested on Tuesday that some of the concessions he had extracted from Google would apply to the world of 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.” Mr. Almunia also suggested on Tuesday that some of the concessions he had extracted from Google would apply to mobile devices. He said he was still investigating a separate complaint about Google’s Android operating system for mobile devices that was filed this year by a group of Google’s competitors.
Mr. Almunia said he was still investigating a separate complaint about Google’s Android operating system for mobile devices that was filed this year by Fairsearch Europe, a group of Google’s competitors, including the mobile phone maker Nokia and the software titan Microsoft, and by other companies, like Oracle.

James Kanter reported from Brussels and Mark Scott from London. Claire Cain Miller contributed reporting from New York.

Mr. Almunia, speaking at meeting of digital companies and lobbyists at the European Parliament in Brussels, that 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. But he has tried along to settle the case, rather than become bogged down in potentially lengthy litigation that would delay things even further. And he insisted on Tuesday that, “The settlement route remains the best choice.”

Mark Scott reported from London. Claire Cain Miller contributed reporting from New York.