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From Antitrust Law Daily, April 25, 2013

EC Proposes Commitments to Resolve Investigation into Google Search Practices

By Jeffrey May, J.D.

Today, the European Commission (EC) announced the terms of a proposed settlement that could resolve competition concerns over Google, Inc.'s conduct in the markets for web search, online search advertising, and online search advertising intermediation in Europe. Google's commitments will now be subject to a one-month market test. Based on the feedback received, the EC could make the commitments legally binding on Google.

According to the EC, Google's dominance is demonstrated by its market shares in web search well above 90% in most European countries. The EC has been investigating whether Google has abused that dominance.

It has identified four competition concerns in the fields of specialized search services (i.e. services allowing users to search for specific categories of information such as restaurants, hotels or products), and online search advertising:

(1) Google’s web search results favor its own specialized web search services, such as Google News, Google Shopping, and Google Places, as compared to links to competing specialized web search services, potentially making more relevant results less visible to users;

(2) Google uses without consent original content from third party web sites in its own specialized web search services with the potential of reducing competitors' incentives to invest in the creation of original content for the benefit of Internet users;

(3) Google's contracts with third party web sites or publishers, such as newspapers, contain exclusivity agreements requiring the publishers to obtain all or most of their online search advertisements from Google, thereby reducing the choice of online search advertisements they can offer to users of their web sites; and

(4) Google restricts the transfer of online search advertising campaigns away from Google's Adwords to rival search advertising platforms and the management of such campaigns across Google's Adwords and rival search advertising platforms.

To address these concerns, Google has agreed over the next five years to the following:

(1) to label and clearly separate promoted links to its own specialized search services so that users can distinguish them from natural web search results and to display links to three rival specialized search services close to its own services, in a place that is clearly visible to users;

(2) to allow websites to opt-out from the use of all their content in Google's specialized search services, without impacting the ranking of those web sites in Google's general web search results, and to provide specialized search services with a method for marking information that cannot be indexed or used by Google, and to provide newspaper publishers with some degree of control with respect to the display of their content in Google News;

(3) to refrain from requiring publishers to source online search advertisements exclusively from Google; and

(4) to refrain from imposing obligations that would prevent advertisers from managing search advertising campaigns across competing advertising platforms.

These commitments would apply only to Google's conduct in Europe. A settlement on these terms would only resolve concerns with respect to the four specific issues noted. The EC is continuing to examine other allegations brought to its attention. Google's Android related business practices are part of those issues, it was noted.

FTC Investigation

The EC announcement comes three months after the FTC closed its investigation into alleged "search bias" by Google without taking action. The FTC had expressed some of the same concerns raised by the EC.

In a January 3 closing statement, the FTC noted concerns that Google: (1) unfairly "scraped" content of competing websites, passed this content off as its own, and then threatened to delist these rivals entirely from Google’s search results when they protested; and (2) placed unreasonable restrictions on the ability of advertisers to simultaneously advertise on Google and competing search engines.

Google voluntarily agreed to refrain from this conduct in the future. In addition, it agreed to provide a mechanism to allow websites to opt out of being displayed in Google’s vertical search results but remain in Google’s organic search results and to give online advertisers more flexibility to simultaneously manage ad campaigns on Google’s AdWords platform and on rival ad platforms. Because the commitments with the FTC are voluntary, the agency is not able to seek civil penalties for a violation as it would if the agreement was part of an FTC consent order.

The EC explained that it sought binding commitments from Google even though the FTC declined to take action, because the "factual and legal environments are different in the US and Europe."

FairSearch Reaction to Market Test

FairSearch, a group representing online search and technology businesses, such as software company Microsoft and travel search website Kayak, issued a statement in advance of the EC's announcement. The group called on the EC to market test the commitments for three months "to ensure that interested parties have enough time to carefully provide the European Commission with their expertise on the effectiveness of Google’s proposal." The group said its members planned to "study the effects of Google’s proposal, and call on Google to release any test results it has provided the [European] Commission to show how its proposal will fix the abuses of dominance the Commission’s own investigation revealed."

The text of the proposed commitments will be published on the website of the Directorate-General for Competition at: http://ec.europa.eu/competition/index_en.html.

Companies: Google, Inc.

MainStory: TopStory Antitrust

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