Google in Deal to Settle Europe’s Antitrust Case

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 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 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 would come nearly four years after he opened his case. 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.

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.

“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.

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.

“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.”

Google’s competitors on Tuesday raised immediate concerns about the proposed European settlement.

“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.

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 Europeans.

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

Article source: http://www.nytimes.com/2013/10/02/business/international/google-europe-antitrust-settlement-deal.html