Europe Likely to Be Harder on Google Over Search

originally appeared in The New York Times:


By some accounts, the United States let Google off the hook when it found that the technology giant had not abused its dominance in the Internet search market.

Few expect the European antitrust watchdog to be as lenient.

The Federal Trade Commission ruled on Thursday that Google had not broken antitrust laws, after a 19-month inquiry into how it operated its search engine. But the European Commission, which is pursuing claims that the company rigs results to favor its own businesses, operates under a different standard.

The agreement with the American authorities, analysts and competition lawyers say, is unlikely to alter the demands of European regulators, led by the competition commissioner, Joaquín Almunia.

We have taken note of the F.T.C. decision, but we don’t see that it has any direct implications for our investigation, for our discussions with Google, which are ongoing, according to a spokesman for the European Commission in Brussels.

Faced with nearly $4 billion in possible penalties and restrictions on its business in Europe, Google submitted proposals in July to remedy the concerns of the European Commission, which covered four areas. In its deal with the F.T.C., Google made concessions in two of those areas but was not required to do so in the rest.

A Google spokesman declined to comment on the content of the company’s proposals to Mr. Almunia but said the company would continue to work cooperatively with the European Commission.

The Google case underscores a basic difference between the approaches to monopoly power in Europe and the United States. American antitrust regulators tend to focus on whether a company’s dominance harms consumers; the European system seeks to keep competitors in the market. The Google spokesman has vowed to restore competition to the Internet search business in Europe.

History shows that competition law is applied to monopoly power more stringently in the E.U. than in the U.S., according to the head of the competition practice at Avisa Partners, a consultancy in Brussels, who brought one of the original complaints against Google. Whether the E.U. is right or not is a different question.

He has some expertise in the matter. He is the former head of corporate affairs at Microsoft Europe and watched as that company did battle with regulators over its dominant computer operating system. Microsoft won a lenient settlement with the Justice Department in October 2001, he said, only to be slapped with nearly 1.6 billion euros, or $2.1 billion, in fines and penalties from the European Union from 2004 to 2008.

Google learned from Microsoft’s mistakes. It worked with authorities in both the United States and Europe to reach a deal rather than fight a desperate legal action. That approach appears to have paid off: last month, after a meeting with Eric E. Schmidt, Google’s executive chairman, the head of the competition practice said that the sides had substantially reduced our differences.

In its deal with the F.T.C., Google agreed to make concessions in two areas that concerned European regulators. In one, it will allow rivals to opt out of allowing Google to “scrape,” or copy, text from their sites. Google will probably offer the same concession to European authorities.

But in a second area of European concern — whether Google deliberately favors its own content in search results — the F.T.C. did not require changes.

The head of the competition practice has also demanded that Google put fewer restrictions on advertising distribution deals, an area his American counterparts did not explore.

The company will make a detailed set of proposed remedies in January. The European Commission will then allow the complainants to review them in a period of what is known as “market testing.” Antitrust lawyers say a final denouement could arrive by spring, depending on how hostile Google’s rivals are to the proposed remedies.

FairSearch, an alliance of Google rivals, accused the F.T.C. of rushing its decision. It said in a statement that closing the F.T.C. investigation with only voluntary commitments from Google is disappointing and premature.

The outcome in Europe may also be affected by Google’s dominance there. Google’s share of the United States search market was 67 percent in November, according to comScore, a digital analytics company, while its share in Europe was 83 percent that month.