Google has reached a settlement with the European Union to end a three-year antitrust investigation. The EU announced this morning that it has obtained “an improved commitments proposal” from the company.
In the proposal, Google guarantees that whenever it promotes its own specialized search services (products, hotels, restaurants, etc.), the services of three rivals “selected through an objective method” will also be displayed in “a way that is clearly visible to users and comparable to the way in which Google displays its own services”. This will apply to existing search features as well as any future ones.
Here are some before/after examples:
“My mission is to protect competition to the benefit of consumers, not competitors,” said EU competition chief Joaquin Almunia. “I believe that the new proposal obtained from Google after long and difficult talks can now address the Commission’s concerns. Without preventing Google from improving its own services, it provides users with real choice between competing services presented in a comparable way; it is then up to them to choose the best alternative. This way, both Google and its rivals will be able and encouraged to innovate and improve their offerings. Turning this proposal into a legally binding obligation for Google would ensure that competitive conditions are both restored quickly and maintained over the next years.”
By ending this probe with a settlement, Google avoids having to pay a $5 billion fine.
As the EU notes, Google had already made “significant” concessions regarding other concerns, like giving content providers an opt-out from the use of their content in Google’s specialized search services without being penalized by the search engine, removing exclusivity requirements related to ads, and removing restrictions on the ability for search ad campaigns to be run on competing platforms.
The commitments are to be supervised by an independent monitoring trustee for five years.
Still, it doesn’t appear that competitors are pleased with the outcome. We haven’t seen an official statement from the FairSearch Coalition regarding the news yet, but it has been tweeting some things indicating it’s less than enthusiastic about the settlement:
— Jennifer Baker (@BrusselsGeek) February 5, 2014
— kostas rossoglou (@kostasrossoglou) February 5, 2014
FairSearch had previously urged the EU to conduct a market test of the latest proposal, like it had done with previous incarnations.
It would appear that the EU is finally satisfied. The proposal offers a lot more than what competitors are getting here in the U.S., and will surely lead to plenty more traffic for rivals like Yelp.
The Commission says it will be informing complainants of the reasons it believes Google’s offer is sound. They’ll then have a chance to make their views known before it makes a final decision on whether or not the commitments are legally binding.
Update: FairSearch has now put out a statement, and as you might have guessed, they’re not happy with the news. In fact, they’re even saying the proposal is worse than doing nothing at all. Here’s the full statement from Thomas Vinje, FairSearch Europe Legal Counsel:
The European Commission has tentatively accepted a proposal by Google which is worse than doing nothing. These proposed commitments have not been subjected to any form of consultation, although it was thanks to market testing of industry participants that the Commission had condemned two previous packages of proposed commitments as fatally flawed.
FairSearch Europe needs to examine this proposal in detail, but our concern is that the proposed commitments lock in discrimination and raise rivals’ costs instead of solving the problem of Google’s anti-competitive practices.
Google now holds a 95 percent market share of search across the European Union and gives preferential treatment to its own services, which damages competition and gives consumers less choice.
The Google proposal requires rivals to pay Google for placement similar to that of Google’s own material, undercutting the ability of other to compete and provide consumer choice. This will be done through an auction mechanism that requires participating companies to hand the vast majority of their profits to Google.
FairSearch’s position is that given the broad impact of such a settlement on consumers, competitors, innovation and Europe’s digital economy, it is vital that the latest package of Google’s proposed commitments be subject to a broad a consultation of stakeholders. Sadly, this does not seem to be the case.
It was thanks to such market testing that the two previous series of Google proposed commitments were demonstrated to be fatally flawed as mechanisms to restore competition to search.
Representing the diverse components of the search market, FairSearch is committed to working with the Commission in any way possible to identify effective solutions that restore competition to the search markets. In the two previous consultations, FairSearch and its members provided concrete evidence that Google’s proposed commitments did not deliver the improvements in competition that they were theoretically designed to achieve. That evidence was gained through actual testing of the proposals, and this third package should be subject to the same broad and concrete vetting by those who understand the industry by participating in it.
Images via EU