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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The 27 countries agreed on the rule change on Wednesday, according to the European Commission, which is behind the proposed revision of a 2003 directive on public sector information. If the European Parliament adds its stamp of approval, national governments will then transpose the changes into their laws sometime in the next 18 months or so.

According to Neelie Kroes, the digital agenda commissioner, the European Parliament will sign off on the change soon:

Breaking … #EU member states have agreed to updated #OpenData rules. Big culture change coming, #EP to sign off in coming weeks.

— Neelie Kroes (@NeelieKroesEU) April 10, 2013

The change will give developers, businesses and citizens the right to get their hands on public data at low cost or for free. They will also be able to use data from museums, libraries and archives for the first time. Public sector bodies will only be able to charge marginal costs for sharing their data, and will also have to be more transparent about their charges. They will also be encouraged to make their data available in machine-readable formats.

According to a webpage setting out the Commission’s hopes on the matter, the data in question will cover digital maps, weather data and road congestion data, as well as information on companies and court proceedings:

“Most of Public Sector Information raw data could be re-used or integrated into new products and services, which we use on a daily basis, such as car navigation systems, smartphone apps with weather forecasts, information services for companies integrating information from various sources, such as statistical data with economic forecasts, company register data and other publicly available information.”

Some European countries, such as the UK, already have established open data initiatives (and so, of course, does the U.S.).

Sources close to the negotiations tell me that agreement was reached on the basis that cultural institutions in particular could charge a bit more than originally planned for handing out their data. Some governments had apparently been hoping to be able to charge a lot more for their institutions’ data, but were convinced that they would get more money in the form of taxation from the businesses that would spring up around open data, the sources noted.

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The EU said the merger doesn’t threaten competition. In a press release, the European Commission said of its investigation:

“The Commission assessed the impact of the transaction on the upstream markets for the acquisition of authors’ rights for English language books in the European Economic Area (EEA) and worldwide, and on the downstream markets for the sale of English language books to dealers in the EEA, in particular in the UK and Ireland. The Commission found that on both types of markets the new entity Penguin Random House will continue to face competition from several large and numerous small and medium sized publishers. As regards the sale of English language books, the merged entity will furthermore face a concentrated retail base, such as supermarkets for print books and large online retailers for ebooks, like Amazon. In addition, the Commission’s investigation revealed no evidence that the transaction would lead to risks of coordination among publishers in relation to the acquisition of authors’ rights and the sale of English language books to dealers.”

As I reported last month, Random House and Penguin announced their merger last October and the U.S. Department of Justice approved it in February, followed by Australia and New Zealand. Random House’s parent company Bertelsmann would own 53 percent of the combined company, and Penguin parent company Pearson would hold 47 percent. Random House Penguin’s goal is to enter emerging markets and expand its digital business.

The merger awaits approval by Canada and China.

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“I don’t want to say this, but … we are panicking a bit,” said Colette Maloney, head of European Commission’s smart cities and sustainability unit, during the Green Grid Forum in Santa Clara, Calif., on Wednesday. “We are way off target.” The commission aims to see its member countries cut their energy use by 20 percent — compared to the 2005 levels — by 2020, and the European Union has only hit a 13 percent reduction.

To meet its 2020 target, the commission is counting on the information and communication technology industry to do its part, and is focusing attention on data centers in particular, given that data centers account for about 25 to 30 percent of the energy use by the IT industry, Maloney said.

CTO, Verne Global, Tate Cantrell and Eirikur Hrafnsson, Founder GreenQloud at Structure Europe 2012

Not only that, the number of data centers will likely mushroom if the idea of “smart cities” becomes a reality. The term is really about the use of technology to help people use and manage resources – from water and power to transportation and communication systems – much more efficiently (see  this GigaOm Pro report, subscription required, called “Key technologies for the future of the smart city”). Using sensors to collect data and computers to analyze and disseminate them will be a big part of running a smart city, and that will require the construction of more data centers.

Figuring out how to measure and analyze energy savings and what data is acceptable to use for those calculations are among the big challenges for making data centers more efficient, Maloney said. And getting at least the majority of the IT industry to agree to a set of methods and data won’t be easy. The commission has been working with many companies and trade associations, but they haven’t reached a happy compromise yet. Implementing those standards once they are set will pose a new challenge, she noted.

Some of the standard-setting industry organizations are looking to adopt rules for promoting energy savings. The Green Grid, an IT industry association, came up with PUE (Power Usage Effectiveness) to gauge the energy efficiency of data centers. Companies such as Google have promoted the use of PUE, which has some notable limitations.­­ EBay has a new metric for the MPG of a data center, too.

Maloney said PUE is useful, but the commission is looking at other metrics as well, especially since it wants to promote new business opportunities while achieving its energy savings target. Some of the opportunities it hopes to promote will involve making and selling efficient equipment and related services, but what constitutes green products and services has yet to be clearly defined.

In the mean time, the commission is funding research projects, such as Fit4Green and All4Green, that will come up with new ways to run data centers more efficiently. Later this year, the commission plans to call for research proposals on building and running green data centers in smart cities, Maloney said.

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The short answer is no. The longer answer is that Europe — for many reasons — is a much more fragmented (perhaps fractious) market than the US — or North America for that matter. Here’s why it would be hard for one infrastructure player — even Amazon — to dominate the European Cloud.

Data protection sitch remains fuzzy

If the European Commission is able to unify the varied data protection mandates across the 27 European (EU) countries as promised, public cloud adoption would probably speed up. Many companies are just deferring cloud decisions — or adopting private cloud that would let them keep their data local — because they don’t know how these laws would affect them now or in the future.

The EC cloud computing report, issued last week, does recommend that the various governments come up with a comprehensive plan on data protection, the goal being a “single set of rules at the EU level and a one-stop shop for enforcement.”

But, no actual convergence of those laws is expected till 2014 or 2015. In the mean time a technology advisor with the UK’s Information Commissioner’s Office (ICO) last week reiterated that companies remain accountable for handling customer data regardless of where it’s deployed. In a statement, Simon Rice said:

“As a business, you are responsible for keeping your data safe. You can outsource some of the processing of that data, as happens with cloud computing, but how that data is used and protected remains your responsibility.

It would be naïve for an organisation to take the attitude that these guidelines are too much effort to simply store some data in a different place. Where personal information is involved, the stakes are high and the ICO has already demonstrated it will act firmly against those who don’t meet data protection laws”

The perception is that if businesses outsource their data to a “certified” cloud provider (more on that in a second), they will be exempt from penalties if there is a breech. Rice seemed anxious to remind companies that the buck will still stop with them. (ZDnet and SCMagazine.UK have good roundups on this data protection dustup.)

The EU report also recommended that cloud providers be “certified” as trustworthy to handle consumer data. That prompted blowback from Liam Maxwell, the UK’s deputy CIO. He slammed the EC’s certification plan because it will restrict the number of cloud providers.

Maxwell called this a “tremendously retrograde step” that would “enable the oligopoly that has driven IT for many years to police the cloud,” according to itpro.co.uk.

Beyond data protection, Europe is still Europe

Even if data protection laws get totally sorted out, Europe remains fragmented by language, by currency (only 17 of the 27 European Union countries are in the Eurozone) and by culture. The relative homogeneity of the US was a factor that let Amazon get so big so fast, European IT pros said.

Amazon runs its European cloud operations out of Dublin and support for Amazon Web Services is available only in English (and Japanese) although a spokeswoman pointed out that the AWS site itself is available in German, Spanish, French, Japanese, Portuguese and Korean.  In addition, Amazon takes payment only in U.S. dollars.

While many Europeans speak English, that’s not a foregone conclusion. And it just seems polite for a company doing business in a region to take the local currency.

Tech culture differences

Steve Hughes, principal cloud evangelist for Colt Technology Services, a global IT provider based in London, said three factors contributed to Amazon’s success stateside.

First, Amazon was an Internet-only company that was able to exploit its scale in a one market (e-commerce) to another (public cloud infrastructure). Second, the US has a large  developer and early adopter market that flocked to Amazon’s easy-to-spin-up compute instances. And third, Amazon faced tech competitors that were more concerned with protecting existing revenue streams than jumping into the cloud. It is still riding that first-to-market advantage.

“That combination of factors coming together at the same time doesn’t really exist in Europe,” Hughes said.

Still some in the market expect that a few key IaaS players will emerge over time. “There will probably be consolidation because of sheer economics,” said Carl Theobald, CEO of Avangate, an Amsterdam-based provider of e-commerce payment and transactional services. There will be a few big players that provide a higher level of service at scale — there won’t be hundreds but there won’t be just one, he said.

Nationalism is not dead

There’s also a healthy dose of protectionism both in local governments and the national telcos that could  work against an outside power like Amazon encroaching on their turf. Both Deutsche Telekom and France Telecom have lobbied for national clouds, for example, arguing that European countries need to protect citizens’ data from subpoenas or seizure under the 9/11-inspired  U.S. Patriot Act. If customer information resides in a data center run by a US cloud provider like Amazon, Microsoft or Google, the thinking is that those companies would have to turn it over to US authorities.

Some European cloud and hosting vendors actually advertise their non-compliance with the U.S. Patriot Act.

Given all these forces at work, it will be hard for any one player to achieve Amazon-like cloud status in Europe. Still, after all this several sources I talked to  said if any company could beat the odds, it would be — you guessed it — Amazon itself.

The traction cloud computing gets in Europe and the hurdles to its adoption will be discussed at GigaOM’s Structure: Europe later this month.

Feature photo courtesy of Shutterstock user koya979; Brussels photo courtesy of Flickr user DamienHR; Paris photo courtesy of Shutterstock user Iakov Kalinin

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In many ways, this call to action, which also talks up green energy initiatives such as the use of a new  ”3-C microchip”, echoes the US’ cloud-first initiative, unveiled two years ago. The goal there was to push government agencies to adopt cloud computing to make government more responsive and efficient.

As expected, the EC report touches on the hot topic of the region’s diverse data protection laws, noting that this “patchwork of different rules”  across countries impedes broad cloud adoption. The commission will work with the European Network and Information Security Agency (ENISA) and other bodies to develop EU-wide voluntary certification schemes in the area of cloud computing (including data protection) and establish a list of such schemes by 2014.

In a statement accompanying the news release , EC vice president Neelie Kroes – who is also the bloc’s digital agenda commissioner – said:

“Cloud computing is a game-changer for our economy. Without EU action, we will stay stuck in national fortresses and miss out on billions in economic gains. We must achieve critical mass and a single set of rules across Europe. We must tackle the perceived risks of cloud computing head-on.”

Four key action items of the plan published on Thursday are:

• Cutting through the jungle of technical standards so that cloud users get interoperability, data portability and reversibility; necessary standards should be identified by 2013;
• Support for EU-wide certification schemes for trustworthy cloud providers;
• Development of model ‘safe and fair’ contract terms for cloud computing contracts including Service Level Agreements;
• A European Cloud Partnership with member states and industry to harness the public sector’s buying power (20% of all IT spending) to shape the European cloud market, boost the chances for European cloud providers to grow to achieve a competitive scale, and deliver cheaper and better eGovernment.

The report’s GDP growth estimate differs from one that had leaked in advance. According to Thursday’s release, the EC expects a net gain of  €160 billion by 2020 — or a total gain of nearly €600 billion between 2015 and 2020″if the full EU cloud strategy is in place. Without that, economic gains would be two-thirds less.”

The earlier, leaked figure estimated the plan would generate additional €900 billion in additional GDP by 2020. And, according to the report, “in terms of overall job numbers, we expect to see 3.8 million jobs generated following full implementation of the strategy, against 1.3 million if the regulatory and other policy barriers are not tackled.”

As GigaOM has reported, many cloud providers want clarity around European data protection laws, but hold out little hope for fast action, given complexities of getting the 27 nations to agree on a single plan.  It looks like their concerns were well founded and many are proceeding under the assumption that they’ll need to have presence in each of the major countries to ensure that private personally identifying information (PII) of individuals stays local as mandated by the strictest of the European laws.

This topic of European cloud adoption and data protection laws will be discussed in more detail at GigaOM’s Structure Europe conference in Amsterdam in October.

The full EC report is here.

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The money quote (so to speak):

Governments and industry should invest €45 billion in cloud computing by 2020 as part of an EU strategy to generate an estimated €900 billion in GDP and an additional 3.8 million jobs by the end of the decade.

Those are pretty impressive numbers especially given the rocky economic situation in Europe.  The current overall EC GDP is about €12.6 trillion. The EC press office could not be reached for comment.

Last January, Kroes brought together local public agencies and private companies in a €10 million European Cloud Partnership to lay groundwork for moving government agencies’ IT systems to the cloud.

Cloud computing adoption varies across Europe but is generally seen lagging that in US although  it’s hard to make sweeping generalizations across 27 EC member countries. The UK, for example,  has already moved much of its citizen-facing government services to cloud with its government cloud effort.

European cloud spending and adoption trends will be among the hot topics discussed at GigaOM’s Structure Europe conference in Amsterdam next month.

Photo courtesy of  Flickr user DamienHR

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Like the Department of Justice in the United States, the European Commission, which began its formal antitrust investigation last December, accused Apple and publishers of colluding to fix ebook prices. While ebook sales made up 15 percent of trade book sales in the US in 2011, and — according to this report from yesterday — 12.9 percent of UK book sales for the first six months of 2012, ebooks are still a tiny sliver of total book sales in other European countries.

The EC reports in its Official Journal (PDF) that “by jointly switching the sale of ebooks from a wholesale model to an agency model with the same key terms on a global basis, the Four Publishers and Apple engaged in a concerted practice with the object of raising retail prices of ebooks in the EEA [European Economic Area, which includes the 27 countries in the European Union plus Iceland, Norway and Liechtenstein],” breaching EEA competition rules.

The EC also calls attention to most-favored nation clauses (MFNs) in Apple’s Agency agreements: “to avoid lower revenues and margins for their ebooks on the iBookstore, the publishers had to pressure other major e-book retailers offering ebooks to their consumers in the EEA to adopt the agency model.”

The Commission notes that Apple and the settling publishers don’t agree with its assessment but have agreed to settle anyway. Macmillan’s parent company Holtzbrinck, which is settling in the EU but not in the United States, said in a statement to The Bookseller, “From the outset, the Holtzbrinck group has strongly denied all charges of collusion in relation to its ebook businesses. That said, we believe it is in the best interests of our European business to proceed towards a settlement and have agreed to this set of draft principles, ready for a period of market consultation.”

Here are the terms of the proposed agreement, which largely mirror those in the ebook settlement in the United States:

• Apple, Simon & Schuster, HarperCollins, Hachette and Macmillan will terminate their agency agreements. Penguin, which is not included in the settlement (the EC is “still investigationg [its] conduct”), also has the option to terminate its agency agreement with Apple; if it doesn’t, Apple will “terminate the agreement in line with the conditions laid down therein.”
• Other retailers, like Amazon, will also have the option to end their agency agreements with the four publishers; if they don’t, the publishers will end them according to the contract terms.
• For two years, the publishers “will not restrict, limit or impede ebook retailers’ ability to set, alter or reduce retail prices for ebooks and/or to offer discounts or promotions.”
• There is some protection for ebook prices under agency agreements, however: “The aggregate value of the price discounts or promotions offered by any retailer should not exceed the aggregate amount equal to the total commissions the publisher pays to that retailer over a 12-month period in connection with the sale of its ebooks to consumers.” In the United States, publishers have the right to negotiate such a clause with retailers. In the EU, however, it appears that the clause is a requirement (i.e., a retailer can’t say no).
• Apple and the four publishers can’t enter ebook contracts with MFN clauses for five years, and “Apple will inform any publisher with which it has an ebook agency agreement that it will not enforce a retail price MFN clause in any such agreement for a period of five years.”

Consumers have a month (starting today) to comment on the proposed settlement. They can send comments “under reference number COMP/39.847/E-BOOKS, either by e-mail (COMP-GREFFE-ANTITRUST@ec.europa.eu), by fax (+32 22950128) or by post, to the following address: European Commission Directorate-General for Competition Antitrust Registry, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË.”

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Every seven years, the European Union revises its budget and sets aside a certain amount for research and development. The next of these ‘frameworks’ will come into play from 2014-2020, and €8.1 billion ($9.9 billion) of the €10.8 billion R&D total went on offer on Monday.

But what sorts of research areas are getting this lovely moolah? In among the billions for ‘oceans of the future’ and healthcare research, there’s also €1.5 billion for ICT and a chunky €365 million for “technologies that will transform urban areas into sustainable ‘smart cities and communities’”.

As is usually the case with EU funding of this kind, the idea is to stimulate private sector investment too — for its €8.1 billion, the European Commission expects to see an extra €6 billion show up from private sources.

Here’s what research, innovation and science commissioner Máire Geoghegan-Quinn had to say:

“Knowledge is the currency of the global economy. If Europe wants to continue to compete in the 21st century, we must support the research and innovation that will generate growth and jobs, now and in the future. The high level of competition for EU funding makes sure that taxpayers’ money goes to the best projects that tackle issues that concern all of us.”

The money for creating ‘smart cities’ is of particular interest. We’re talking greentech, smart meters, connected cars and other devices. We know this is a hot area because the private sector, in the form of Intel et al, is already deep into researching this stuff.

So are public funds necessary for this?

They will certainly help, but there’s more to it than that. For one thing, there’s an interesting debate to be had about the sort of things that tend to get funded through the venture capital system, where long-term (and uncertain) R&D may look less attractive than a quick-returning e-commerce app.

Also, I have no intention of getting political here (that way lies pain for mere tech journalists), but it’s clear that this all forms part of a continental stimulus strategy:

“There will be no solution to the crisis without growth,” an EC Q&A reads. “There is evidence to suggest that, in general, member states that traditionally invested more in R&D and education weathered the recent economic turmoil better. Investments in R&D and education increase the chances to smooth the adverse impact of the crisis while building a basis from which to bounce back quicker when recovery takes hold.”

Whatever the motivation, there’s a lot of cash up for grabs. By early next year, two ‘future emerging technologies’ projects will have been chosen, getting €100 million funding in their first year. The likely candidates for that slice will “go beyond traditional ICT research and link up with specialists in other fields like health-, material- and neuro-sciences and neuro-robotics”, says the EC.

Frankly, speaking as a geek, as long as someone’s funding that kind of research, I’m just happy to look forward to the results.

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