Google escapes finding of wrongdoing in global antitrust case

Google has agreed to a settlement with European competition regulators that leaves the company with a few bruises, yet victorious over all — and would end half a decade of wrangles with antitrust authorities across the globe.

Under the settlement, which awaits formal approval by the European Commission, Google escaped a fine and a finding of wrongdoing. And it protected its crown jewel — its secret algorithm — from oversight by regulators, and avoided a court battle or potential consequences like a $5 billion fine or a ruling to make major changes to its company structure or its products.

The investigation focused on whether Google abused its dominant position in the European search market, where it has about 90 percent market share, versus two-thirds in the United States.

“The basic pronouncement is Google’s not an illegal business,” said Tim Wu, a professor of antitrust law at Columbia who worked on the United States Federal Trade Commission’s antitrust case against Google, which concluded that Google had not violated antitrust law. “Their main business goes full speed ahead. Obviously what some of Google’s competitors would have liked was much more aggressive.”

The deal’s limited scope, however, did not stop Joaquín Almunia, the European Union’s competition commissioner, from hailing it as a major success.

“No other antitrust body has secured such concessions from Google,” Mr. Almunia, a Spanish policy maker, told reporters on Wednesday. ‘The agreement is far-reaching and creates a level playing field across Europe.”

The decision would force Google to give its rivals more prominence in specialized search results, like those for shopping, travel and local business reviews. The result would be a search engine that looks significantly different in Europe than it does in the United States. It is the latest effort by European officials to police the activities of the American tech giants that have come to dominate the digital world, including stepped-up scrutiny after revelations from Edward J. Snowden about United States government surveillance.

“We will be making significant changes to the way Google operates in Europe,” Kent Walker, Google’s general counsel, said in a statement. “We have been working with the European Commission to address issues they raised and look forward to resolving this matter.”

Most noticeably, Google said it would display results from at least three competitors each time it shows its own results for specialized searches related to things like shopping, restaurants and travel. In some cases, competitors will pay when people click on these results. The deal would last for five years and apply to any new search products Google introduces in Europe. Google also said it would make two changes similar to those requested by the F.T.C. It would allow rivals like Yelp to forbid Google from using their content in its specialized search services, yet avoid being penalized for that in Google’s normal search rankings. And it would eliminate some restrictions that have prevented advertisers from moving their ads to other companies’ services.

Since the investigation began in 2010, Google has expanded well beyond web search to new businesses including wearable computing and mobile software. All those other activities are beyond the reach of Wednesday’s settlement, illustrating how difficult it is to create effective rules of engagement for regulating Internet businesses.

“Google is no longer just a search company,” said Daniel Knapp, director of advertising research at the advisory firm IHS in London. “These concessions won’t have a material impact on Google.”

The main provisions of Google’s antitrust settlement with the European Commission:
  • Google will display results from at least three competitors every time it shows its own results for specialized searches related to things like products, restaurants and travel.
  • Competitors will pay Google each time someone clicks on certain types of results shown next to the search giant’s own results; the process will be overseen by an independent monitor paid for by Google. Currently, rivals do not show up in Google’s specialized search results.
  • Content providers like Yelp will be given the option of not having their content included in Google’s specialized search services. Those that opt out will not be penalized in Google’s normal search rankings.
  • The search giant will remove conditions that have made it difficult for advertisers to move campaigns to rival sites, and allow sites that use Google’s search tool to show ads from other services.
  • The deal lasts for five years and affects any search and promoted-product services that Google introduces in Europe.

The European Commission has gone further than the F.T.C. in extracting concessions from Google in large part because European antitrust law gives more priority to protecting competing companies. United States antitrust doctrine gives dominant companies more freedom if they can prove they are creating a better product for consumers, which was a central factor in the F.T.C.’s decision to close its case without charges.

“It underscores how if you want to complain about a dominant firm’s behavior, you go to Brussels, not Washington,” said an international antitrust specialist who would speak only on the condition of anonymity.

Still, Google competitors said they felt the proposed remedies hardly provided them protection.

“Almunia risks having the wool pulled over his eyes by Google,” said David Wood, legal counsel for Icomp, a trade group representing Microsoft and other Internet companies. “We do not believe Google has any intention of holding themselves to account on these proposals.”

Rivals complained that Mr. Almunia said he would not offer another formal period for rivals to weigh in on the plan, known as market testing. He rejected two previous proposals from Google after feedback from opponents.

“Market testing of Google’s last two proposals identified serious and widespread concerns about the damage they would have done,” Bradford L. Smith, Microsoft’s general counsel, said in a statement. “If these new proposals are materially better than those that have already been rejected, then they should be broadly market tested.”

That leaves Google’s opponents with one option, which is to take the European Commission to court.

“If I receive strong arguments that oblige changes to my decision, I am always ready. I am flexible,” Mr. Almunia said. “I don’t see why, from now on, I would change my mind based on the proposals Google has put forward.”

Regulators for the European Union and some member countries are still scrutinizing several of Google’s other business practices. They include privacy complaints about Google’s mapping services, tax disputes related to the company’s European operations and an antitrust investigation by the European Commission into the Android operating system.

While Google initially balked at giving rivals more prominence in promoted search results, it was eager to avoid the protracted legal troubles that plagued Microsoft after European antitrust officials opened a competition investigation into its practices in the early 1990s. Mr. Almunia, who will step down from his post this year, had given Google until the end of January to submit a more satisfactory proposal, which it did, or face regulatory proceedings. He met regularly with Google’s senior executives, including having a discussion with the firm’s chairman, Eric E. Schmidt, at the recent World Economic Forum in Davos, Switzerland, to work out the final deal.

On Tuesday, Google awarded Mr. Schmidt, who is handling governmental relations like the antitrust investigations, a $106 million bonus.

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