Date:13/04/12

EU to decide next steps in Google antitrust probe

The European Commission, Europe's antitrust regulator, will decide this month on the next steps in its probe into the dominance of search giant Google Inc.-- and some kind of agreement over a change of business practice looks more likely than full-blown legal proceedings against the company, according to lawyers.

"A settlement is an attractive route," said Becket McGrath, a partner at Edwards Wildman who worked at the U.K.'s Office of Fair Trading on cases in the technology sector, who doesn't act for any of the parties involved."Google is very well resourced and the allegations go to the heart of what it does. This would therefore be a hard case for the Commission to fight all the way."

The commission's antitrust office began investigating Google's dominance in online search back in December 2010, after complaints from companies including other search engines that it is abusing its search monopoly to thwart competition by demoting competitors when ranking search results. Position in a Google search result can make or break an online business.

The EU's antitrust chief Joaquin Almunia has said he will decide this month whether the allegations are serious enough to warrant a formal charge against Google, whether to extend the investigation, or whether to drop the case.

There's been good cooperation from all parties, and the commission is closer to knowing "how big" the problems generated by Google's activities are, he told CNBC in a television interview last week.
Google said it has been fully cooperating with the commission since the investigation began.

"Our size and success rightly generate scrutiny, which is why we've worked hard to explain how our business works," a Google spokesman told Dow Jones Newswires."Because there's always room for improvement, we're happy to discuss any concerns the Commission might have."

Google was used for 95% of searches, and 98% of searches made from mobile devices in Europe in the year to March 2012, according to Dublin-based Statcounter.com. Microsoft's Bing, Yahoo and Russia's Yandex scramble for the remainder.

The complaints have come from Microsoft Corp., which has itself been on receiving end of commission investigations for years, as well as from online travel company Expedia review firm Tripadvisor, and at least 14 smaller companies, some of which have links to Microsoft. All these are members of Fairsearch.org, which is lobbying policymakers on the matter. BEUC, a European consumer organisation, has also expressed concern over Google's role as a "gatekeeper to the Internet."

"Google's conduct clearly raises serious issues under EU competition law, and based on long experience with such cases, I would expect the European Commission to deal firmly and effectively with it," Thomas Vinje, Fairsearch.org's European Counsel said.

Allegations include the way Google places its own services, such as Google map results, at the top in search responses, overiding the results found by its search algorithm for other map providers who may find themselves exiled to the third or fifth page -- a virtual Siberia where users will never click on them.

Microsoft accuses its rival of blocking Microsoft search and mobile products from getting full information about online videos on Google-owned YouTube. This makes it harder for Microsoft to deliver video search results as effectively as Google-powered products, it says.

In response, many in the industry say the complainants are grumbling because they're unhappy with their position in search rankings.

"The question is are consumers being harmed, that'd be an interesting debate to have, but the only complaint so far seems to be 'Google's big'," Mike Masnick, chief executive and founder of Techdirt website told Dow Jones Newswires."The complaints are coming from companies who don't like how they rank in Google, and it's not governments' job to remedy that."

Google has said that there are complicated but compelling reasons why complaining sites were "ranked poorly by our algorithms."

Becket McGrath, at Edwards Wildman said the case is a difficult one.
"The tricky thing with Google now is it doesn't want to suffer death by a thousand cuts," he said. If it agrees to a settlement, other companies may decide to jump on that bandwagon and make a host of further demands on the company's business practices, he added.

The case also raises questions about the role of competition law, he says.
"Google is its always tweaking and improving the (search) algorithm and won't want to have to freeze that or disclose it," McGrath said.

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