5 Comments

Summary:

The details of a long-awaited deal between Google and the EU are finally out. The agreement requires Google to list three competitors in certain types of search listings, and to agree to other, wide-ranging conditions.

Google
photo: google

In a sweeping proposed deal with European antitrust regulators, Google has agreed to increase the prominence of links to competitors like Yelp and TripAdvisor in its search listings, and to clearly label in-house services such as Zagat. The agreement also sets out restrictions on how Google sells advertising and how it treats third party content like news articles and restaurant reviews.

The long-awaited deal is significant because it concludes a multi-year investigation by EU competition authorities, and because it is the first time that Google has bent to government demands over how it presents its search results. The details of the five-year deal, which has yet to be formally announced, were reported on Saturday by the Financial Times.

The terms of the deal

According to the FT, Google’s obligations vary depending on the nature of the search results. The most onerous conditions relate to listings like travel or restaurants where Google has a clear financial interest. In these cases, the company must identify any search listings that are Google-owned, and also provide at least three links to competing search engines. For other Google-related listings that do not produce direct revenue — weather or news, for instance — the company must provide a label.

The labeling will involve markers like boxes, separate page placement and “hover links.” A third party will monitor for compliance with these and other parts of the agreement.

The deal also requires Google to honor requests from news agencies and other sites not to “scrape” their content for use in its search listings, and to provide assurances that it won’t punish these sites by deleting them from the search listings altogether.

The agreement also addresses Google’s advertising practices by preventing it from imposing exclusive ad deals on its partners, and by making it easier for those partners to switch their ad campaigns to rivals like Microsoft and Yahoo.

The FT has a detailed account of the obligations here.

A victory for the EU, the public or Google?

When the deal is formally announced by EU regulators, we can expect to see considerable spin from Google and its competitors about what it really means.

At this stage, it’s clear that the deal represents the largest regulatory imposition to date over Google’s search business, which is still the core of the company and its prime money maker. This amounts to a victory for the EU and its high-profile competition commissioner, Joaquín Almunia.

While Google will hardly be celebrating the regulations, the company could have fared far worse. The five-year deal, which is legally binding, means Google avoids the sort of heavy fines and bitter regulatory battles that ensnared arch-rival Microsoft for well over a decade.

Europeans consumers, meanwhile, are likely to continue using Google as they have done so far. Despite repeated accusation by groups and companies tied to Microsoft that Google manipulates its search results, there is little actual evidence that the company blatantly puts its thumb on the scale.

The agreement may, however, serve to give Google critics some peace of mind by providing legal assurances that their worst fears won’t come true. And, as the deal is not finalized, critics and others will have time to comment on its provisions.

A different outcome from America

One of the most noticeable features of the deal is how much it differs from the outcome of a similar investigation carried out by America’s Federal Trade Commission.

In a January report, the FTC concluded a two-year antitrust inquiry by announcing that Google had done nothing wrong in the field of search. While the FTC did extract a pledge the company related to patent abuse, this was more a face-saving measure for the FTC than a burden on Google. (Here’s a plain English summary of the US investigation).

Different laws in the US and EU explain the divergent outcomes. American antitrust laws, for instance, focus on harm to consumers not competitors — a different line of inquiry to what happens in Europe. America also has more robust speech laws. Google argued strenuously that its search results are protected by the First Amendment; the FTC likely folded its cards rather than risk losing a court case over the question.

Google also controls a higher share of the search market in Europe than it does in the U.S. — more than 90 percent, compared with around 67 percent.

According to a source familiar with the investigations, Google was also more willing to settle in Europe because a legally binding EU commitment  does not expose the company to civil lawsuits.

  1. While I can understand that a search engine should be generally an open and fair resource, I find the EU’s tactics to be akin to a shakedown artist. They do nothing, and demand everything from you. Do this or you could find yourself in trouble.

    The EU likes to fine US companies, is it for their national debt crisis, for their bailouts? Are they truly trying to create a level playing field or since they lack real tech innovations are they simply trying to bully their to a seat at the table?

    Share
    1. Matthis Drolet Monday, April 15, 2013

      I have to disagree. Firstly, this law is less about stopping current bad practices and preventing these from coming about in the first place. If Google has not been manipulating the market to its advantage yet, then these laws cause them very little problems. At the same time, these laws make it less likely that such practices could develop into the future. Of course there may always be other ways around these laws, but I find it important for a government to make its position clear. Google can now work within these guidelines instead of wondering what the EU may or may not attack them on in the future. There are issues with such regulations, as there always are, but I believe the positive sides outweigh the negative.

      In terms of more frequently attacking NA companies, I think that is a cheap jab that just barely relates to real evidence. Have there been some such situations in the past? Sure. Is that the main motivating factor in such regulations and fines (as with Microsoft)? I don’t see it. The EU has different ideals than NA in general (compare to Canada as well), and often American companies expand into the EU without changing their policies appropriately. This is not with illegal intent, but simply a matter of knowledge and adaptation. The only way to reduce problems in such situations are clear regulations by governing bodies, which the EU has now done. “Do this or you could find yourself in trouble” is what all laws are about… isn’t it??

      Share
    2. ‘National’ debtcrisis? First of all, the EU is not a nation, or even a federation (like the United States), but a collection of nation states trying to implement a single market.

      Second, if you truly believe there is a real lack of tech innovations you are sadly misinformed. e-Ink is not a tech innovation? Did Werner von Braun not send you to the moon? Just minor examples, but if you check your facts you will find out many technologies in use today (not saying all) were first developed in countries like the United Kingdom, Germany and other European countries. And yes, the U.S. has many more inventors, in all likelihood but also quite a few more tax dollars and a larger population. Technology is developed everywhere in the world, but whether or not it can be succesfully marketed commercially entirely depends on circumstance. The U.S. has 320 million people. Pretty easy user base if it’s partly regulated in a federal way where most people speak the same language and the same currency and most of all, consider themselves ‘one nation’.

      The whole point is, you’re comparing apples (the nation of the United States of America) and oranges (a bunch of European nations trying to work together to improve their economic prospects), and they are quite different from one another.

      The EU, because it was born of economic necessity and NOT because its citizens want to be ‘united’, focusses its regulation mainly on competition between companies (which makes sense — if one is allowed to corner the market in such a dominant way there is no competition, one has so much monopolizing power that any competition will just be bought or suppressed, which is usually not in consumers’ best interests, and not in the industry’s best interest — monopoly stifles competition, and in turn, innovation).

      I do agree however, that the EU’s time would be better spent creating a ‘real’ single market by eliminating the ridiculous roaming costs alltogether. One market, free movement of goods, services, and people and trade also means roaming charges seem rather artificial, as if a provider would have to pay import taxes/export taxes (which it doesn’t).

      It seems unnatural that if a global provider like Vodafone owns pieces of infrastructure across countries, that its users would have to pay roaming charges to use it. The same subscription rates and calling rates for all people within a single market for any one single global provider makes much more sense to me.

      Share
  2. BrandWeb Direct Sunday, April 14, 2013

    Thanks Roberts, really it’s a great deal of Europe Google search result..

    Share
  3. William Dowell Tuesday, April 16, 2013

    Is it possible, as an eu citizen, to opt out of this ? I’m not too sure I want other services highlighted and labels all over my search results.

    Share

Comments have been disabled for this post