EU gives Google the opportunity to resolve anti-trust concerns

21 May 20121 Share

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A statement from the European Commission lists four major concerns regarding the search giant’s competitive dominance and requests that these issues be resolved in a matter of weeks.

Joaquín Almunia, vice president of the European Commission responsible for competition policy, today made a statement providing an update on the anti-trust investigation into Google that has been underway since November 2010.

In response to complaints from a number companies, including Microsoft and TripAdvisor as well as smaller competitors across Europe, the commission launched a large-scale investigation to review Google’s dominant market position.

Four chief concerns

Almunia provided an update where he outlined four chief concerns about Google’s business practices that could constitute abuses of dominance. “Google Inc. has repeatedly expressed to me its willingness to discuss any concerns that the commission might have without having to engage in adversarial proceedings,” said Almunia. “This is why I am today giving Google an opportunity to offer remedies to address the concerns we have already identified.”

First, Almunia noted the links to Google’s own vertical search services alongside every results page. This refers to the links to search by particular type of content or region – options that Google gives in the left-hand sidebar of each search and is a feature that drives traffic away from more specialised search engines.

The second concern addressed the possibility that, in using content from a search competitor, Google could be copying original material from this source (such as user reviews) and that use of content in this way may not be authorised by the source. “In this way they are appropriating the benefits of the investments of competitors,” explained Almunia. “We are worried that this could reduce competitors’ incentives to invest in the creation of original content for the benefit of internet users. This practice may impact, for instance, travel sites or sites providing restaurant guides.”

Thirdly, Almunia considered Google’s dominance when it comes to search advertising, where agreements between Google and partner websites that deliver their advertisements demand exclusivity, which scuppers competitors’ chances of providing these same services.

Finally, Almunia points to the contractual restrictions Google puts on developers to stop them from creating tools that could make transferring a campaign from AdWords to other platforms easier to do.

Google must make changes now to avoid formal proceedings

Almunia has sent these concerns in a letter to Google chairman Eric Schmidt and is offering them the chance to propose solutions for these issues in the coming weeks. Meanwhile, Reuters reports that Google has said it disagrees with Almunia’s conclusions, but is happy to open up discussion on these issues.

Largely, it is in both the commission’s and Google’s best interest that this matter is resolved sooner rather than later. “If Google comes up with an outline of remedies which are capable of addressing our concerns, I will instruct my staff to initiate the discussions in order to finalise a remedies package,” said Almunia, adding that compliance on Google’s part would mean the matter could be resolved by a committee decision, rather than having to go through the pains of formal proceedings.

Google would, undoubtedly, want to avoid the wrath of the European Commission should the situation get that far as they have the power to impose a fine of up to 10pc of the search giant’s global turnover for a breach of EU rules – and this is a right they have exercised in the past.

Competitors also raising concerns about Android

The complainants and other interested third parties will be kept in the loop regarding proceedings in this case, and any final proposal will be market-tested before being made legally binding by the commission.

“I hope that Google seizes this opportunity to swiftly resolve our concerns, for the benefit of competition and innovation in the sector,” said Almunia.

Unfortunately for Google, this is not the only service under scrutiny as fresh complaints regarding the Android operating system are keeping it on the European Commission’s radar, while US authorities are also conducting investigations of their own.

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Elaine Burke is managing editor of Siliconrepublic.com

editorial@siliconrepublic.com