Google and EU online search battle continues

It looked like there was light at the end of the tunnel in the long-running battle between the EU and Google over online searches. The two sides were closing in on a settlement. But now the EU says it wants more concessions from Google in the light of new information.

The European Commission has spent four years delving into the world of Google online searches, building a case that the internet giant is illegally squashing competitors.

The search engine had long looked set to avoid a multibillion-euro fine, thanks to concessions that would change the way its online search results are displayed.

This week, however, the case was back to the drawing board – and potentially headed towards the “adversarial proceedings” that the company has been trying hard to avoid.

“We have received new elements and data from complainants concerning the effectiveness of the latest remedies package,” EU Competition Commissioner Joaquin Almunia said Wednesday during a visit to the United States. “… Some of their arguments seem to be solid enough to be taken into consideration.”

“We now need to see if Google can propose solutions to these issues by improving its offer,” he said, confirming earlier reports that the commission – the European Union’s executive body – would seek new concessions.

Google said it would “continue to work with the European Commission to resolve the concerns they have raised.”

As the EU’s competition watchdog, the commission can slap hefty fines on companies found to be violating the bloc’s rules, but it often also gives them a chance to settle to try to avoid lengthy and costly legal battles.

“Many companies today prefer to settle to limit the damage to their reputation, clean up their operations and go back to business as quickly as possible,” Almunia noted in a speech at Washington’s Georgetown University.

The commission has been investigating Google practices since November 2010 after competitors such as Microsoft complained about the company’s dominance of the internet search engine market. Google has a 90-per-cent share of the general web search market in Europe.

“Though other search engines exist, almost everyone surfs the Internet via Google,” Mario Mariniello of the Brussels-based Bruegel think tank said. “While this has attracted the antitrust authorities’ attention, it also highlights how much users value Google’s service.”

The EU investigation has focused on concerns that the firm is giving its specialized services – such as Google Maps, Google Shopping and Google Places – favourable treatment in the way it displays online search results, hampering competition and user choices.

Almunia said in February that he had been won over by guarantees from Google that it would henceforth display more prominently the services of rivals. But the commissioner swiftly faced headwinds, not only from complainants in the case but also from within the commission.

German publishers were among those putting pressure on Almunia to back away from the settlement, arguing that it does not go far enough in reining in Google’s abuse of its dominant position.
“If this settlement were to happen, it would actually make matters worse,” Christoph Keese, a top official at the German publishing house Axel Springer, argued in May. The company’s chief executive, Mathias Doepfner, has said that Axel Springer is “afraid” of Google’s power.

But Google has also been pushing back with chief executive Eric Schmidt writing on a blog Saturday that it is not true “to say that we are promoting our own products at the expense of the competition.”

“To date, no regulator has objected to Google giving people direct answers to their questions for the simple reason that it is better for users,” he argued.

Andrea Renda of the Centre for European Policy Studies said she believes that Almunia, whose term with the commission is ending next month, went down the wrong road by “trying to make everyone happy.”

“Almunia has invested a lot of political capital in this, and he wants to settle of course before he goes, but it’s tough,” Renda said. “Maybe he’s realized that he was going nowhere with the case and the settlement was simply a sort of Frankenstein – it was a monster.”
Mariniello said that meeting the demands of Google’s competitors “could mean the death of Google’s business model.”

Renda argued that it would be more helpful for the case to run its course all the way to the European Court of Justice, arguing that the “back and forth” has “already damaged significantly European competition law.”

“This would be an opportunity for the Court of Justice to finally say something about competition in cyberspace,” he said, noting that another landmark case involving Microsoft had also ended with a settlement.

“If they settle the case with Google, we will know what Google is obliged to do now, but we would never know what the next Google would be able to do and not do,” he said. “The market needs more certainty.”

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Google and EU online search battle continues