The case followed complaints by Microsoft and others over Google’s treatment of rivals’ web services in its search results. These companies argue that Google favors its own services, which are not clearly marked as such, and also that it unfairly locks advertisers onto its platform and scrapes content from third-party search and comparison sites without consent.

A recent leak outlined the terms of the proposed settlement deal, but here’s the official version:

To address these concerns, Google offers for a period of 5 years to:

(i) – label promoted links to its own specialised search services so that users can distinguish them from natural web search results,
- clearly separate these promoted links from other web search results by clear graphical features (such as a frame), and
- display links to three rival specialised search services close to its own services, in a place that is clearly visible to users,

(ii) – offer all websites the option to opt-out from the use of all their content in Google’s specialised search services, while ensuring that any opt-out does not unduly affect the ranking of those web sites in Google’s general web search results,
- offer all specialised search web sites that focus on product search or local search the option to mark certain categories of information in such a way that such information is not indexed or used by Google,
- provide newspaper publishers with a mechanism allowing them to control on a web page per web page basis the display of their content in Google News,

(iii) no longer include in its agreements with publishers any written or unwritten obligations that would require them to source online search advertisements exclusively from Google, and

(iv) no longer impose obligations that would prevent advertisers from managing search advertising campaigns across competing advertising platforms.

Authorities in the U.S. more-or-less cleared Google over similar complaints, but it’s important to note that Google’s share of the search market there is around 67 percent, whereas in the E.U, it’s around 90 percent. This gives it stronger market power in Europe, and forces the regulators’ hand somewhat (as do local laws).

A Q&A document, which outlines the Commission’s concerns in detail, points out that “it does not seem likely that another web search service will replace [Google] as European users’ web search service of choice.”

“In this context, it is important for the Commission to intervene in order to ensure that Google’s prominent market position in web search does not affect the possibility for other competitors to innovate in neighbouring markets, including in the long-term,” the document states.

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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.

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Speaking to reporters at a Verizon event in New York City, McAdam said the carrier would watch T-Mobile’s new no-contract strategy closely to see how consumers respond. “I’m happy when I see something different tried,” CNET quoted McAdam as saying. “We can react quickly to consumers’ shifting needs.”

Lowell McAdam (right) with Google’s Eric Schmidt

To be honest, you wouldn’t expect McAdam to say anything different. In the past, carriers have expressed dissatisfaction with the subsidy model that dominates the U.S. mobile industry. That model dictates they sell increasingly expensive smartphones at cut-rate prices and thus take a big financial hit when they first sign up a new customer. Eventually they recoup those costs over the course of a two-year contract through higher service fees.

Most carriers have already eliminated subsidies entirely for tablets, and as McAdam points out, they would more than willing to do so for phones, if customers are amendable. That said, Verizon has done quite well for itself with the current system — it has no reason to gunk up the works unless there is some massive shift in consumer sentiment.

There’s a reason why T-Mobile was the carrier to challenge the long-established contract-and-subsidy model: it had nothing to lose. It is the smallest — by a big margin — of the four national operators, and for the last several years it has barely grown. You can call its Un-carrier strategy an act of genius or you can call it an act of desperation, but T-Mobile had to do something and had to do that something quick. McAdam only has to sit back and wait to see if it works. And he’ll likely have to wait a while since many of the customers who might be interested in what T-Mo is selling are still locked into contracts.

So what if T-Mo’s new contract-free plans prove wildly successful? Would other carriers give up on contracts completely? I seriously doubt it. Verizon, AT&T and Sprint may have their issues with the subsidy model, but they also love to the stability of long-term contracts. The last thing they want is a constantly shifting customer base, in which huge numbers of subscribers turn over each quarter. Even if the carriers didn’t have to absorb device subsidies, there are still substantial costs associated with acquiring new customers. They would much rather just lock down the ones they have.

All three carriers offer prepaid services for customers who demand or don’t qualify for postpaid services, and most carriers will sell you a postpaid plan without a contract if you pay for your device upfront. In fact, they benefit considerably if you do so because they’ll charge you the same monthly rates they do for subsidized customers – they get their cake and eat it too.

That’s where I think the other carriers will have the biggest difficulty adjusting to contract-free models. To make that model the work they’ll have to charge lower voice, SMS and data rates to those customers who eschew subsidies. If carriers are no longer recouping the cost of the device, they can’t justify the rates they charge today. Lowering rates is not something they want to do.

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Customers who buy a device from T-Mobile through one of its financing plans (for instance, the iPhone 5 can be had for $100 up front and 24 monthly payments of $20) will still get locked devices. But T-Mobile CMO Mike Sievert said whenever a customer finishes paying off his or her financing plan, T-Mobile will unconditionally unlock the device.

Earlier this month, I wrote that the phone locking was a symptom of the broken subsidy model used by carriers. T-Mobile is now fixing the subsidy system, but it’s not ending the practice of locking. What gives?

Well, the answer is a bit nuanced. Instead of diving headlong into the murky depths of full-cost devices, where customers wind up fronting the costs of a $500 or $600 smartphones on day one, T-Mobile is easing customers into the model with interest-free financing plans.

Though it’s separating the device from service plan – and eliminating the contract in the process – T-Mobile is still on hook for the device cost, and it wants ensure that its customers won’t take their new iPhone or Galaxy S 4 and then bolt to another carrier. As with any loan, customers are still bound by financing contract, but T-Mobile wants extra insurance that they won’t renege.

T-Mobile USA CEO John Legere

At the event on Tuesday, T-Mobile went to lengths to explain that it is against the idea of locking all phones for the mere sake of binding customers to a specific carrier. In fact, T-Mobile hopes to benefit enormously from an unlocked device market, said T-Mobile USA CEO John Legere. He’s hoping AT&T customers will take their out-of-contract and unlocked devices over to T-Mobile, giving them a second life on T-Mobile’s network.

Legere also said that T-Mobile is a strong advocate of device portability — Customers can take an unlocked phone to T-Mobile for a month, and if they’re not happy they can move on to the next carrier. T-Mobile expects to win out in any head-to-head contest with a major carrier over unlocked devices because it won’t be factoring contract subsidies into its pricing plans. “The rate plan is just going to be about the service,” Legere said.

With that philosophy in mind, T-Mobile will unlock any device as soon as the customer’s financial obligation for it is over. If a customer buys a phone up front, T-Mobile will unlock it, Sievert said. If they accelerate their financing agreement and pay the phone off early, then T-Mobile will unlock it, Sievert said. If they return the phone to T-Mobile before the contract ends, T-Mobile will credit their financing agreement with the current market value of the device, Sievert said.

It’s not an ideal situation. There are uses for unlocked phone even if you’re sticking with your service provider – traveling overseas for instance – but I can understand why T-Mobile is imposing the locking practice. Ultimately it seems that if we want to be free of the carrier yoke entirely, we’ll have to start buying our devices outright.

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Ting said Thursday that it would be among the first in line to sell Samsung’s latest and greatest smartphone — which it coyly said is “commonly referred to as the Galaxy S4” — as soon as it is commercially available. (For all of the details of the official S 4 launch Thursday evening starting at 7pm ET (4pm PT), check out my colleague Kevin Tofel’s live blog.)

“In advance of Samsung’s big launch event tomorrow, we’re excited to say that we’ll be able to offer the follow up to the Samsung Galaxy S3, which we’ll call the Samsung Galaxy S 4 unless we’re provided reason to do otherwise,” Tucows Content Development Manager Andrew Moore-Crispin wrote in Tucows’ blog Wednesday. “What’s more, we’ll be able to do so at around the same time as the major carriers; on or at least around the actual launch day.”

That’s quite a coup for Ting, since MVNOs typically have to wait months — if not forever — to become official retailers of the hottest mobile devices. Not only do MVNOs have to court handset vendors that often have cozy relationships with the big carriers, but they also have to get permission from their carrier partners. In Ting’s case, Sprint provides it network access and ultimately it gets to decide whether Ting or any other Sprint MVNO gets to sell the same devices in its portfolio.

In the last year, though, carriers and Sprint in particular have loosened the leashes on their MVNOS, giving them access to goodies like hot devices and new 4G networks they would normally reserve for themselves. Ting became the first LTE MVNO in August, tapping into Sprint’s brand new 4G service shortly after it launched, and it only had to wait to two months before it could sell the Galaxy S3.

Even more recently those market barriers hindering MVNOs fell further. MVNO Solavei got an early drop on U.S. carriers by becoming the first operator to sell the BlackBerry(BBRY) Z10. Ting’s early access to the Galaxy S 4 is another example that MVNOs no longer have to put up with the big carriers’ scraps.

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According to a new report from Chetan Sharma Consulting, data accounted for 44 percent of all U.S. operators’ service revenue in the 4^th quarter, and the rapid transition from dumb phones to smartphones is driving that number upwards. Meanwhile, unlimited talk plans are proliferating even as voice plan pricing is falling. That’s causing average voice revenue per subscriber to drop.

Eventually the rising data line and falling voice line will intersect on the industry’s revenue graph. Sharma plots that meeting point in the 4^th quarter of 2013, at which point operators will start to look more like ISPs than phone companies.

I wouldn’t expect an overnight transformation once they pass that halfway mark, but it’s fair to say carriers will start behaving differently as the economics of the mobile market shift. Operators will most likely attempt to accelerate their gains in data, while de-emphasizing voice even more.

Voice revenues are actually declining faster than data revenues are growing. For every 48 cents in new data revenue operators raked in the fourth quarter, they lost 64 cents in voice revenue, Sharma found. To make up for those losses, they will try to upsell their customers on data plan tiers and — in the case of AT&T and Verizon at least — try to force more of their customers off grandfathered unlimited data plans. They will also try to swing more of their customers toward smartphones and tablets and migrate more subscribers to new LTE networks — both of which will drive more data use.

Carriers won’t have to prod their customers too much. While the 4G-connected tablet market is still slow, smartphones accounted for 84 percent of fourth quarter handset sales in the U.S. In just two years, Verizon has moved 21.6 million subscribers over to its LTE network. Simultaneously the typical consumer’s hunger for mobile data is only increasing.

“The smartphone data consumption at some operators is averaging close to 1 GB/mo,” Sharma wrote in the report. “Some devices are averaging close to 2 GB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.”

The swift decline in average voice revenue per subscriber will matter less and less to operators as data takes over, as voice will account for far less of their overall revenue. In fact, you’ll probably see a complete shift in the way operators treat voice and data in their pricing plans from what we saw five years ago. When voice and SMS were king and queen, operators had variety and sophistication in their pricing tiers, while data plans were a commodity — for an additional $15 to $30 a month you got as much as you wanted.

Now voice and SMS have become the commodity, increasingly available only in unlimited packages, while data plans have become more and more granular. Verizon and AT&T have taken the ultimate step toward commoditizing voice and SMS, making them unlimited-use features standard in their family plans, just like voicemail. I suspect that this trend will not only continue, but voice prices will drop further as carriers put all of their chips into selling data.

We won’t just see more and increasingly larger data tiers, but operators will begin creating specialty plans to differentiate between different types of data, just as they created nights-and-weekends and friends-and-family plans in the boomtown days of voice. Customers will be able to buy plans that give them unlimited access to IP communications services or social networking. They could choose to pay extra fees each month to access faster speeds than their neighbors.

If there is a way to slice and dice data into an appealing tiered plan, operators will figure out how to do it. Once they pass that halfway mark, there’s no looking back. They will become mobile ISPs with voice businesses on the side.

Eclipse photo courtesy of Shutterstock user Igor Kovalchuk; Buffet image courtesy of Flickr user Wesley Fryer

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So far the T-Metro deal has sailed past regulatory obstacles. The U.S. Department of Justice declined to initiate any antitrust review last week. The deal’s biggest remaining hurdle is a vote by MetroPCS shareholders on April 12. The MetroPCS board has already unanimously approved the deal, but institutional shareholders are opposing it, trying to hold out for a better terms.

The lack of a full commission review and vote is sure to earn the ire of the Communications Workers of America, which anticipated the FCC’s move earlier this week and tried to stop it. The “full Commission has voted on much smaller transactions, including the $72 million Guam Cellular/DoCoMo Guam transaction and the $2.8 billion AT&T/Dobson deal,” CWA said in a statement Monday. “There is no reason that the full Commission should not fully evaluate and assess all the elements of this $30 billion deal.”

Considering the deal would merge the country’s fourth and fifth largest carriers, you’d think the deal with merit the commission’s full attention. But in its declaratory ruling, the FCC’s Wireless Telecommunications Bureau staff said that the benefits of the deal for competition and the public interest were numerous:

… we find that the transaction is not likely to result generally in competitive or other public interest harms. In addition, to the extent there may be some possible competitive harms in selected geographic areas, we find that these possible competitive harms are outweighed by certain public interest benefits likely to result from the proposed transaction. Such benefits include the facilitation of Long Term Evolution (“LTE”) deployment, the expansion of the MetroPCS brand into new geographical markets, the development of a more robust, national network, improved quality of service, and the strengthening of the fourth largest nationwide service provider’s ability to compete in the mobile broadband services market.

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That’s one major hurdle overcome to closing the deal, which would make T-Metro a publically traded company majority owned by DT, though it still faces regulatory scrutiny from the Federal Communications Commission as well as vote from Metro stockholders.

The DOJ’s tacit blessing, however, isn’t a trivial matter. The Justice Department has become much more actively involved in U.S. telecom deals ever since it joined forces with the FCC to kill AT&T-Mo in 2011. Since then it has thrown up a roadblock to Sprint’s mammoth deal with Softbank, citing national security issues. It also played a big role is shaping Verizon’s spectrum acquisition and partnership with the cable providers, though it eventually let that deal slide through despite its potential impact on broadband competition.

The fact that T-Metro’s paperwork passed through the DOJ’s offices without a word is a good sign that the deal will surmount its remaining regulatory hurdles without a hitch. While the DOJ has frowned on consolidation among the Big 4 U.S. operators, this deal would combine the smallest nationwide operator with the biggest regional operator and put T-Mobile in a much stronger spectrum position. Since AT&T-Mo, regulators have been, first and foremost, concerned with maintaining the four-operator equilibrium at the top of the mobile market.

The combined spectrum of T-Mobile USA and MetroPCS as compiled by Mosaik

MetroPCS has set a vote for on the deal on April 12. The hedge funds opposing the deals want MetroPCS to negotiate better terms with DT – creating either a less debt-laden final company or giving Metro shareholders a better payout – but so far they only represent a little more than 10 percent of the voting shares of the company. But DT seemed worried enough about their influence to issue a warning Wednesday to those stockholders.

“The MetroPCS board unanimously recommends that stockholders vote their shares FOR all of the proposals relating to the proposed combination with T-Mobile,” DT said in a statement. “The failure to vote or an abstention has the same effect as a vote against the proposed combination.  If stockholders vote against the proposed combination, there is no assurance that MetroPCS will be able to deliver the same or better stockholder value.”

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T-Mobile has said it plans to offer shared data pools to its business customers, and on Friday Sprint officially began selling buckets of communal data to its small business customers. The plans are only available through its business sales channels and support a maximum of 30 LTE smartphones, tablets and data modems. Like AT&T and Verizon, Sprint is charging a monthly per-device fee, for instance $40 for a smartphone with unlimited talk and text included. The pricing of the data plans themselves start at $140 a month for 20 GB split between up to 10 devices. At the high end is a 60 GB / $320 plan supporting up 30 lines.

Sprint is also offering a set of shared plans targeting data-only tablets and modems — an interesting use case brought on by the BYOD trend. As employees make their personal smartphones their business handsets, companies may opt to make the tablet or a wirelessly connected laptop the only mobile work tool available to their employees. Sprint is charging $10 a month to connect a tablet, $20 to connect a modem, and offering shared data plans starting at $60 for 10 GB and topping out at 60 GB for $320.

Since last summer Sprint’s mantra has been “Say no to sharing data,” and it has launched advertising and web campaigns that attempted to show how consumers could save money by adopting its individual unlimited plans. Both Sprint and T-Mobile have maintained that not only do subscribers get a better deal with their unlimited plans, but also THAT the lack of A cap makes everything so much simpler.

Why the change of heart when it comes to business plans then? Likely, Sprint and T-Mobile are realizing that the same arguments that work with consumers aren’t going to work with businesses. Small companies value simplicity as well, but they’re willing to take on some complexity if it means saving some cash each month. And on account with 20 or 30 devices, those savings could be substantial.

Buying two unlimited plans at $30 a month for unlimited data might make sense for a family of two, but paying $500 to $600 a month to attach 20 smartphones to the unlimited spigot makes little sense if you can buy an enormous bucket of gigabytes for half the cost. Keep in mind, as well, that neither T-Mobile or Sprint offer unlimited plans for tablets or modems, so any business owner connecting anything besides smartphones would have had to manage caps under the old pricing plans anyway.

I don’t think Sprint and T-Mobile are swallowing the data-sharing pill just yet. For them unlimited is still a key differentiator in the consumer market, but they are likely very concerned that Verizon and AT&T will steal their business customers with these new shared pricing models. That has forced them to respond in kind.

In Sprint’s case at least, it isn’t just responding, it’s attacking. Sprint’s new plans undercut Verizon’s recently launched small business tiers. For instance, Verizon is charging $375 a month for 50 GB of shared data between, while Sprint is offering 60 GB for $350. Sprint and T-Mobile may be forced to play the data share game, but it looks like they’re going to maintain their reputations for offering cheaper service.

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When Amazon introduced its new service, there were cries that it would put Zencoder, another cloud transcoding provider, out of business with low pricing. I think this concern is overblown, because Zencoder solidly beats AWS on a number of key dimensions besides price that are important to its customers (more on that below).

Similarly, Sendgrid, a cloud-based email delivery provider, went up against Amazon after the company introduced its transactional email service in January 2011. Well, it’s been three years and not only is Sendgrid still in business, it’s thriving. It counts companies like Pinterest and Foursquare as customers, and it raised a further $21 million even after some had pronounced it dead. (Note: My company,  Screenlight, is a paying customer of Zencoder and Sendgrid, but we have no other financial or advisory relationship; I chose them for this piece only because they’re examples with which I’m intimately familiar.)

There are plenty of other pain points in the cloud where developers have staked a claim that may tempt Amazon. The question then is what can a company do when suddenly matched up against an 800-pound gorilla? Here’s a look at the successful strategies employed by Zencoder and Sendgrid.

Give your target customer better options

Elastic Transcoder is a fairly representative example of how AWS launches a new service: It starts with a bare-bones offering that appeals to a broad base of customers in different industries. Amazon then rounds it out and adapts the service based on customer feedback.

You can win by knowing exactly who your target customer is (it may not be the typical AWS customer) and delivering the full suite of features that they value. By that I don’t mean a laundry list of features, but rather the key features that they need and are willing to pay for. All of the things you learned through customer development and talking with your customers will pay off here. You understand your customer’s problems better than anyone else, right?

In Zencoder’s case, it offers a much richer feature set than AWS Elastic Transcoder (ie, HLS streaming support, closed captioning, live-streaming and so-on). All of these features are likely of high enough value to Zencoder customers that it’s somewhat protected from price-based competition. For customers to switch to Amazon, they have to be willing to give up these core features to save money. For many companies that makes it a non-starter.

Likewise, Sendgrid continues to differentiate its service from AWS SES by offering far more features (dedicated IP addressees, advanced tracking and deliverability features, advanced API features , etc). All of this is backed by phone, email, chat, and forum support. For basic, low-cost, highly scalable email-sending, AWS may work for a lot of customers. But for those with more advanced deliverability needs (and a willingness to pay), Sendgrid is one of several superior options.

Create a better user experience

With Amazon, a new service like Elastic Transcoder is just another API that is offered alongside many others. With AWS, support is a paid-service offering. When customers are getting started or are experiencing problems, their only recourse is to pore over the documentation and dig through forums.

By contrast, companies like Zencoder and Sendgrid offer premium support services. In my experience with both companies, there has always been a real human ready to help answer a question or solve a pressing problem. Thus to differentiate your business, you need to offer the care and attention that Amazon simply can’t lavish on a single service.

The opportunity to differentiate through customer experience goes well beyond offering support when things go wrong. Every touch point offers an opportunity. For example, as someone goes through the sales funnel, there is room to provide videos and clear marketing material that educates customers  and outpaces the static efforts of Amazon. Likewise, the customer on-boarding process can be addressed with timely emails and outreach that helps resolve common stumbling blocks when getting started. (For ideas around this, check out Customer.io.)

Design of the user interface provides another powerful differentiator, and since most customers interact with infrastructure services through an API, it’s particularly important. Here Zencoder does an excellent job with a clean and well-documented API that includes a request builder that simplifies integration and testing.

Price based on value – and communicate it

Price is only one of the 4P’s. The only way to sustainably differentiate your service based on price is if you are the lowest cost provider: When you are competing against your infrastructure provider, that’s not going to happen.

In a response to a discussion on Hacker News about entry level prices that were 50 percent lower than Zencoder’s, CEO John Dahl made a great point by explaining why 50 percent lower prices don’t necessarily translate to 50 percent more value.

He’s absolutely right. Whether AWS is 1/2 or 1/10 the price per unit of your service, your potential customers need to know that Amazon vs. You is an apples-to-oranges comparison. Furthermore, they need to clearly understand why your oranges taste better and deserve a higher price.

In some industries, particularly perfectly competitive ones, price is the dominant attribute that matters to customers. However, in most other markets, there are additional value drivers for your customers. The key to competing against AWS is to ensure that your value proposition delivers against these attributes, and is priced accordingly. When Amazon shows up, instead of panicking, slashing prices and getting into a price war you’re bound to lose – accelerate innovation and double down on the customer experience.

Chris Potter is co-founder of cloud-based video collaboration and sharing service Screenlight. Follow him on Twitter @potta.

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