Google deal with EU regulates search results – report

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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.

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