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Google Submits Proposal in Bid to Resolve E.U. Antitrust Case
Google Makes Offer in 3-Year European Antitrust Case
(about 7 hours later)
BRUSSELS — E.U. officials said Friday that Google had submitted proposals aimed at ending a three-year antitrust case focused on its hugely popular online search service, but the offer did not prevent rivals from seeking to prolong its legal entanglements.
BRUSSELS — European officials said on Friday that Google had submitted proposals aimed at ending a three-year antitrust case focused on its search service, but the offer did not prevent rivals from seeking to prolong its legal entanglements.
After filing a new complaint against Google this past week, Icomp, an industry group backed by Microsoft, urged European regulators on Friday to approach the company’s proposal with caution.
Neither the company nor European officials were willing on Friday to describe the settlement proposals. But Google has been expected to offer revisions to the way it conducts its search business in Europe to address regulators’ concerns that its activities were unfair to other Web publishers and its online competitors.
The two parties are still negotiating the terms of the proposed settlement, and a final agreement is expected in the coming week, according to a person briefed on the negotiations who spoke on condition of anonymity while the agreement was still under discussion.
Google’s competitors did not take a wait-and-see attitude. After filing a new complaint against Google on Thursday, Icomp, an industry group backed by Microsoft, urged European regulators on Friday to approach the company’s proposal with caution.
“To be seen as a success, any settlement must include specific measures to restore competition and allow other parties to compete effectively on a level playing field,” David Wood, legal counsel for Icomp, said in a statement.
“To be seen as a success, any settlement must include specific measures to restore competition and allow other parties to compete effectively on a level playing field,” David Wood, legal counsel for Icomp, said in a statement.
Michael Weber, chief executive of an online mapping service called hot-map.com, a member of Icomp based in Germany, said he hoped the offer by Google was “enough to restore competition,” but “if not, we will take into account all legal options we have and we won’t hesitate to use them.”
Michael Weber, chief executive of an online mapping service called Hot-map.com and a member of Icomp who is based in Germany, said he hoped Google’s offer would be “enough to restore competition,” but “if not, we will take into account all legal options we have and we won’t hesitate to use them.”
If they remain dissatisfied, critics of Google in Europe can sue the European Commission, the European Union’s executive arm, at the General Court of the European Court of Justice in Luxembourg for failing to push hard enough for an effective solution. Such cases can take years to reach a final judgment.
Icomp’s new antitrust complaint contended that Google was using exclusive agreements to discourage advertisers and publishers from using competing advertising platforms and search services like Bing and Yahoo.
Google managed to reach one settlement Friday. In France, it agreed to pay €60 million, or $82 million, into a fund to help French media develop their presence on the Internet, the president’s office said. Publishers in France had been pushing for Google to pay them licensing fees for the headlines and summaries of articles in its search engines.
If critics of Google in Europe remain dissatisfied, they can sue the European Commission, the European Union’s executive arm, at the General Court of the European Court of Justice in Luxembourg and accuse it of failing to push hard enough for an effective solution. Final judgments in such cases can take years.
The new antitrust complaint by Icomp, filed Thursday, claimed the search giant was using exclusive agreements to discourage advertisers and publishers from using competing advertising platforms and search services like Bing and Yahoo.
Google reached one settlement on Friday. In France, it agreed to pay 60 million euros, or $82 million, into a fund to help French media develop their presence on the Internet. Publishers in France had been pushing for Google to pay them licensing fees for the headlines and summaries of articles in its search engines.
Neither the company nor European officials were willing Friday to describe the settlement proposals. But it had been expected that Google would offer revisions to the way it conducts its online search business in Europe to address regulators’ concerns that the company’s activities were unfair to other Web publishers and its online competitors.
The commission has taken a tougher line with Google than has the United States Federal Trade Commission. The F.T.C. decided in January that Google had not broken antitrust laws after a 19-month inquiry into how the company operated its search engine.
The two parties are still negotiating the terms of the proposed settlement, and a final agreement between Google and the commission is expected in the coming week, according to a person briefed on the negotiations who was not authorized to speak publicly before an agreement was reached.
Joaquín Almunia, the European competition commissioner and the top European antitrust official, has been formally investigating Google since November 2010. He has insisted that Google make changes to the most sensitive area of its business, online search.
The commission has taken a tougher line with Google than the U.S. Federal Trade Commission, which decided in January, after a 19-month inquiry into how the company operated its search engine, that Google had not broken antitrust laws.
If Mr. Almunia ultimately accepts Google’s offer, the company will avoid further investigation. Additional inquiry could lead to a fine of as much as 10 percent of Google’s annual global sales, which came to about $50 billion last year. Google would also avoid a guilty finding, which could restrict its activities in Europe.
Joaquín Almunia, the European competition commissioner and top E.U. antitrust official, has been formally investigating Google since November 2010. He has insisted that Google make changes to the most sensitive area of its business, online search.
“We continue to work cooperatively with the commission,” Al Verney, a spokesman for Google in Brussels, said on Friday.
If Mr. Almunia ultimately accepts Google’s offer, the company will avoid further investigation that could lead to a fine of as much as 10 percent of its annual global sales, which came to about $50 billion last year. Google would also avoid a guilty finding that could restrict its activities in Europe.
Antoine Colombani, a spokesman for Mr. Almunia, said at a news conference on Friday that Google had sent a detailed proposal that the commission was analyzing before taking further steps.
“We continue to work cooperatively with the commission,” Al Verney, a spokesman for Google in Brussels, said Friday.
There is no formal timeline in European antitrust cases, so negotiations could continue.
Antoine Colombani, a spokesman for Mr. Almunia, said at a news conference Friday that Google had sent “a detailed proposal,” which the commission was analyzing before taking further steps.
But there is no formal timeline in European antitrust cases, which means that negotiations could continue.
“I can’t anticipate the timing or the substance of the analysis,” Mr. Colombani said.
“I can’t anticipate the timing or the substance of the analysis,” Mr. Colombani said.
Mr. Almunia could still take a far more confrontational stance with Google by sending the company a statement of objections, which is the European equivalent of formal antitrust charges. But that is something Mr. Almunia has been eager to avoid because he favors nonlitigious solutions to antitrust problems, particularly in the fast-moving technology field, to prevent cases from dragging on for years.
Mr. Almunia could still take a far more confrontational stance with Google by sending the company a statement of objections, the European equivalent of formal antitrust charges. But that is something Mr. Almunia has been eager to avoid because he favors nonlitigious solutions to antitrust problems, particularly in the fast-moving technology field, to prevent cases from dragging on for years.
A European antitrust case against Microsoft eventually resulted in penalties and fines totaling more than $2 billion, but the process lasted about a decade. During that period, a number of competitors complained that they were losing out to Microsoft and warned that the European process was too slow.
The next stage for Mr. Almunia is to assess Google’s offer and decide whether it addresses his concerns sufficiently. Then he will invite another, formal submission from the company, which would be sent to the complainants for review.
Even if Google reaches a satisfactory settlement with the E.U. authorities, it still could face antitrust litigation in national courts.
Claire
Cain Miller contributed reporting from San Francisco.
In September, Foundem, an online comparison-shopping site that first complained to the European authorities in 2009, filed a lawsuit at the Chancery Division of the High Court of Justice in London claiming unspecified damages.
Foundem, also a member of Icomp, said Google had made it hard for consumers to find the site in its search results for about 42 months and had badly damaged Foundem’s business prospects.
Lawyers for Google responded to the claims on Jan. 21 with a 20-page rebuttal describing Foundem as a “poor quality” site that had neglected to use “extensive advertising” employed by more successful rivals.
Google suggested that Foundem had erred by choosing “a business model that depends on its appearing high in free search results.”
The next stage for Mr. Almunia in the case against Google is to assess the latest offer made by the company and then take a final view as to whether it addresses his concerns sufficiently. Then he would invite another, formal submission from the company that would be sent to complainants for review during a period of what is known as market testing.
“We are not at this stage,” said Mr. Colombani, the spokesman, referring to the stage of market testing. “We are in discussions with Google and in the context of these discussions we have just received their proposal.”
In its deal with the F.T.C., Google agreed to make concessions in two areas that coincided with the concerns of European regulators. In one, Google will allow rivals to opt out of allowing the company to “scrape,” or copy, text from their sites. Google was expected to agree to the same terms with European authorities.
But in another area of European concern — whether Google deliberately favors its own products and services in search results — the F.T.C. did not require changes.
The European Consumer Organization, which includes consumer groups from across Europe, called last year for a settlement that would limit Google’s freedom to favor its own services, like maps and shopping sites, in search rankings.
But Google is expected to resist a solution that would tamper with the way it ranks search results that it deems most relevant to consumers. Google also is likely to be wary that any concessions it makes in Europe could lead regulators elsewhere in the world to demand much the same.
Mr. Almunia has also continued to press Google to put fewer restrictions on the way it handles advertisements that are displayed alongside search results when a user types a query in a Web site’s search box, another area of Google’s business that was not addressed by the U.S. settlement.
While Google is the dominant search engine in the United States, it holds even greater sway in Europe, accounting for more than 90 percent of searches in a number of major markets. That is one factor giving the Europeans greater leverage in trying to set rules on how Google ranks competing services.
Another factor is European antitrust law, which has long given competitors more protection than U.S. law provides.
Claire Cain Miller contributed reporting from San Francisco.
