Google Proposes EU Antitrust Concessions

Google executives reportedly are proposing changes to the way the company runs its search engine in hopes of staving off formal charges by European antitrust regulators.

Google Chairman Eric Schmidt has sent a letter to the European Union’s antitrust head, Competition Commissioner Joaquin Almunia, that outlines steps the massive web company would be willing to take to address concerns that EU investigators have regarding Google’s dominant position in search, including claims that it favours its own search results over others.

Unfair advantage

Almunia in May had given Google officials until early July to address that and other concerns, including the use of material from other search engines in its results and its dominance in web advertising, all of which investigators have said put competitors at an unfair advantage.

In a statement to media outlets on 2 July, Google spokesman Al Verney said that the company has “made a proposal to address the four areas the European Commission described as potential concerns. We continue to work cooperatively with the Commission.”

A spokesperson for Almunia told reporters that Almunia had received a letter from Schmidt regarding concessions aimed at ending the investigation. No one from the European Commission (EC), the antitrust arm of the EU or Google would elaborate on the proposals.

Google officials are under investigation in Europe, the United States and elsewhere regarding its search engine, which holds more than 60 percent of the search market, with Microsoft’s Bing being a distant second. Competitors have claimed that Google works its search algorithms to favour its own products and results over those of others, giving it an unfair advantage in search and web advertising.

Nextag allegations

In a 7 June opinion piece on The Wall Street Journal’s website, Jeffrey Katz, chief executive of online comparative shopping site Nextag and former chief executive of online travel site Orbitz, said that where once running a Google search would result in the most relevant results, that has changed as Google has grown larger.

Now “the most prominent results are displayed because companies paid Google for that privilege”, Katz wrote. “In addition, Google often uses its prime real estate to promote its own (often less relevant and inferior) products and services, prohibiting companies from buying its best advertisements.”

“[A]s a result, it has shifted from a true search site into a commerce site – a commerce site whose search algorithm favours products and services from Google and those from companies able to spend the most on advertising.”

Amit Singhal, senior vice president of engineering, disputed Katz’s claims in a blog post the next day.

“While we’re always happy to have feedback about how we can improve, it’s more useful if that feedback is based on facts,” Singhal wrote, saying that Katz “makes several claims that are wrong – or suggests that Google start doing things that we already do”.

However, regulators in both the United States and abroad have similar concerns. Almunia in May put Google on notice: address the concerns or risk seeing formal charges filed. That came a month after the US Federal Trade Commission (FTC) announced it had hired Beth Wilkinson – a former federal prosecutor best known for directing the case against Oklahoma City bomber Timothy McVeigh and his accomplice, Terry Nichols – to head its investigation of Google.

Review process

In Europe, officials with the FairSearch coalition said they wanted to be part of the review process for the proposals Google has sent Almunia.

“The FairSearch coalition looks forward to engaging with the European Commission and Vice President Joaquin Almunia as interested third parties provide feedback on appropriate remedies to restore a competitive marketplace,” Thomas Vinje, EU counsel to FairSearch, said in a 2 July statement. “We hope the proposals reflect a greater willingness to end Google’s anti-competitive behaviour than has its consistent rejection of the concerns that Mr. Almunia identified after collecting evidence for nearly two years.”

FairSearch is a coalition of 17 online companies – including TripAdvisor, Kayak, Microsoft, HotWire, Expedia and Travelocity – that claim Google is using its dominant search market position to unfairly stifle competition and harm consumers.

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