Bloomberg News

Google-EU Deal Wouldn’t Target Global Solution, Almunia Says

April 17, 2013

Google Inc. (GOOG:US)’s competitors, clamoring for the European Union to press the search company to make global changes, face disappointment after the bloc’s antitrust chief said any settlement would focus on Europe.

While confined to Google’s competition issues there, any accord to end the EU’s antitrust probe that started in 2010 must stand the test of time and be impossible to circumvent, Joaquin Almunia said. Google this month submitted an offer to the Brussels-based European Commission that would create more distinction in Internet searches between its own services and those of its competitors, according to a person familiar with the talks.

“The U.S. and the EU have different systems and, on top of that, Google has a very different market position in the U.S., where its competitors have a market share of around 30 percent,” Almunia said in response to written questions. “In Europe, Google’s market share is more than 90 percent.”

Rivals, such as Microsoft Corp. (MSFT:US), want the EU to extract changes after the U.S. closed a 20-month investigation into whether Mountain View, California-based Google unfairly promoted its own services in search results. The Federal Trade Commission in January concluded that Google was motivated more by wanting to improve its search results than by a desire to stifle competition.

‘Ineffective’ Remedy

Although the EU commission’s jurisdiction is limited to the European Economic Area, it can order remedies that reach beyond Europe if the disputed conduct has an anti-competitive effect within the region, Thomas Vinje, a Brussels lawyer for the FairSearch Coalition, a group of technology companies including Microsoft, Expedia Inc. (EXPE:US) and Nokia Oyj. (NOK1V) The EEA encompasses the 27-nation EU plus Iceland, Norway and Liechtenstein.

“One can argue that an effective remedy here must be global because a remedy limited to Europe would be ineffective in eliminating the anti-competitive effects of Google’s conduct in Europe,” Vinje said by e-mail.

“I believe Google actually could territorially limit its compliance,” said Vinje. “It -- or its systems -- usually know where a search result is being served, and it can limit the serving of remedy-compliant results to those delivered in the EEA.”

The company “continues to work cooperatively with the European Commission,” said Al Verney, a Brussels-based spokesman for Google.

Justice Department

Assistant Attorney General William Baer, the head of the U.S. Justice Department’s antitrust division, said yesterday at a Senate hearing he didn’t rule out the department starting another probe of Google’s business practices if new allegations emerge. The antitrust division and the FTC have split investigations of Google for the past two years.

In the EU, Almunia has urged Google to address four points, including allegations that the company promotes its own specialist search services, copies rivals’ travel and restaurant reviews, and has agreements with websites and software developers that stifle competition in the advertising industry.

The EU commissioner said he’s preparing to seek responses to Google’s recently submitted remedies from rivals and consumers. This so-called market test “should happen shortly” and will provide “extremely valuable” information, he said.

Google’s Proposals

“In our analysis of Google’s proposals we will look very carefully at the opinions expressed during the market test, including of course the opinions of the complainants,” said Almunia. “The market players are well placed to know what possible solutions to our concerns could work in practice and what cannot work, so their opinion will be extremely helpful.

“Therefore, we are not yet at the end of the process, but at the beginning of a new stage in our investigation,” said Almunia.

Early indications are that Google’s offer may draw criticism from its competitors once it is circulated for comment and published in the EU’s Official Journal.

“If what has been proposed is labeling or a modified form of labeling, frankly that’s a non-starter,” David Wood, a lawyer for Brussels-based industry group ICOMP, which includes Microsoft and and Foundem, said on April 15. “We haven’t seen the proposals and the commission hasn’t explained them to us. We’re in the dark.” he said.

Almunia said he hopes a settlement will be possible to allow for “quick solutions to the competition problems we have identified.”

“On the other hand, as I have always said, if such an outcome is not possible I will decide to go back to the normal antitrust procedure,” he said in his e-mailed response.

“Don’t worry, our Google investigation continues,” Almunia said on his Twitter account yesterday, in answer to a user that suggested he had let the company off the hook.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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