The EU’s competition commissioner, Joaquín Almunia, announced yesterday (5 February) that he had reached a deal with Google, solving a longstanding dispute over alleged abuse of its dominant market position for internet searches. Plaintiffs dismissed the effort, demanding a say before the agreement is confirmed.
Google has agreed to make concessions in how it displays its rivals on Google search pages.
“These alternatives will be attractive: for instance, if Google has a picture to promote its services, which is a key element in attracting users, rival services will also have such a picture,” said Joaquín Almunia, the EU's competition commissioner.
Since November 2010, the European Commission is investigating possible violations of antitrust regulation by Google. For instance, the company promotes results of Google Maps or Google Shopping when users enter a search query on the main Google website, but has warded off rivals from such promo spots on its pages.
Kent Walker, senior vice-president of Google, said: “We will be making significant changes to the way Google operates in Europe. We have been working with the European Commission to address issues they raised and look forward to resolving this matter.”
By agreeing to the concessions, Google avoids several more years of legal wrangling with the Commission, which could have eventually led to a multi-billion euro fine (see background).
As part of the arrangement, Google agreed to a ‘monitoring trustee’, a watchdog to keep a close eye on the internet giant’s practices when promoting services. While the European Commission is responsible for nominating the watchdog, it is unclear who it could be.
The deal also allows Google’s competitors to opt-out. If rivals do not want to feature in the advertised parts of Google’s pages, they will not be demoted in Google’s search results nor via Google’s algorithm determining top searches.
The agreement affects European users, entering the search engine from IP-addresses (which track the location of a computer) within the EU.
European competitors rally against deal
The announcement by the Commission triggered a series of criticisms by stakeholders.
FairSearch Europe, which represents the interests of companies including Microsoft and Tripadvisor, stated that “the proposed commitments lock in discrimination and raise rivals’ costs instead of solving the problem”.
The deal “requires rivals to pay Google for placement similar to that of Google’s own material, undercutting the ability of others to compete and provide consumer choice,” according to FairSearch.
The agreement is partially based on visual elements, which ensure a mix of Google services and rival services in the promoted boxes on search pages. Competitors fear Google will simply build around these restrictions, making the deal obsolete.
Chris Sherwood of the Allegro Group, a rival of Google’s in the Central and East European market, told EURACTIV: “The solutions that the European Commission presented could be out of date in no more than a few weeks.”
Almunia brushed aside those criticisms, saying “the concessions made by Google eliminate those concerns”. The Commission has to send letters of rejection to 18 complaints it received in the investigation. The aim is to defend the concessions, and Almunia stressed that he did no see how he would change his mind. “I know their arguments and these issues are resolved in the proposed concessions.”
A protracted investigation
The European Union started investigating Google’s activities, based on the antitrust regulation, in November 2010. The Commission then reached out to stakeholders in the online shopping market and other online markets.
Two rounds of negotiations preceded this final deal. Last December, Almunia presented a package of changes proposed by Google to the affected European business representatives who rejected it, saying it did not suffice.
The deal will enter into force as soon as it is adopted in a meeting of all 28 commissioners. Stakeholders and rival companies are preparing to rally publicly and lobby privately for the college of commissioners to reject the agreement.
Google has agreed to the deal for a period of five years, starting from the moment it is adopted by the Commission.