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.

EU Wants Changes in Google Privacy Policy to Stop

First appeared on Reuters

A group of European regulators has written to Google Inc calling on it to halt the introduction of its new privacy policy, saying it needs to investigate whether the proposals sufficiently protect users' personal data.

Google said in January it was simplifying its privacy regulations, consolidating 60 guidelines into a single policy that will function across all its services, including YouTube, Gmail and Google+, its social network site.

The Article 29 Working Party, an independent body that brings together data protection authorities from each of the EU's 27 countries and the EU's executive European Commission, said it needed to examine Google's plans more thoroughly before the search group's policy comes into effect on March 1.

"Given the wide range of services you offer, and the popularity of these services, changes in your privacy policy may affect many citizens in most or all of the EU member states," the group wrote to Google Chief Executive Larry Page on Feb. 2.

"We wish to check the possible consequences for the protection of the personal data of these citizens in a coordinated way," it said, explaining that France's data protection authority would be in charge of the investigation.

"In light of the above, we call for a pause in the interests of ensuring that there can be no misunderstanding about Google's commitments to information rights of their users and EU citizens, until we have completed our analysis."

The European commissioner in charge of data protection, Viviane Reding, welcomed the move, saying it was a necessary to establish that EU data rules were being firmly applied.

"The Commission therefore calls on Europe's data protection authorities to ensure that EU law is fully complied with in Google's new privacy policy," she said in a statement.

Google said the raising of concerns came as a surprise.

"We briefed most of the members of the working party in the weeks leading up to our announcement," said Al Verney, Google's spokesman in Brussels.

"None of them expressed substantial concerns at the time, but of course we're happy to speak with any data protection authority that has questions."

Google's director of public policy has explained the new policy as a commitment to simplicity, with the company trying to explain its guidelines far more concisely.

"We're explaining our privacy commitments to users of those products in 85 percent fewer words," Pablo Chavez wrote on his blog on Jan. 31.

The new policy explains what information Google collects from the millions of people who use its services every day, why the information is collected, how it is used and what choices are then offered to limit how it is accessed and updated.

While Google is not obliged to wait for the conclusion of the Article 29 Working Group's investigation before adopting its new policy, the company has tended in the past to be as cooperative as possible with European authorities.

The move by the EU regulators comes days after the European Commission set out legislative plans to overhaul its 17-year-old data protection rules, putting in place much more stringent policies on the protection of individual's data.

Under the new rules, internet companies such as Google, Facebook and Yahoo would have to ask users whether they can store and sell their data to other businesses, such as advertisers, which is source of almost all their income.

Internet users can also ask for their data to be deleted from websites for good, the so-called "right to be forgotten."

Separately, Google remains the subject of an inquiry by both the EU's competition authority and the U.S. Federal Trade Commission into how the company ranks its search results. The inquiries are based in part on complaints from French rivals.

The FTC expanded its probe on Jan. 13 to include Google's social networking site Google+.

Google Worries About New Data-Handling Privacy Laws

First appeared in USA Today

They may be battling each other tooth-and-nail to win over online advertisers. But Google and Facebook are on the same side when it comes to opposing new data-handling privacy laws fast-gelling in Europe and the U.S.

On Wednesday, the European Union formally proposed strict rules that could restrict much of the systematic tracking and profiling Google and Facebook routinely do of Internet users, as part of delivering targeted ads to them.

If Europe's new rules are implemented as expected in 2013, the tech rivals could face hefty fines, up to 2% of annual revenue, for any violations. In Google's case that translates into a maximum penalty of $800 million.

On Tuesday, Facebook Chief Operating Officer Sheryl Sandberg delivered a statistics-filled speech at a tech conference in Munich outlining how Europe's proposed rules are very likely to stymie the global economy.

Sandberg called for a "regulatory environment that promotes innovation and economic growth."

Google spokesman Chris Gaither echoed Sandberg's argument. He says the search giant "supports simplifying privacy rules in Europe to both protect consumers online and stimulate economic growth."

Meanwhile, refinements announced this week by Google and Facebook, about how each tracks and profiles Internet users, added heat to the domestic debate over the need for new data privacy rules here in the U.S.

Google signaled that it will begin cross-referencing user data compiled from its most popular services, including search, Google Apps, Gmail and YouTube. The stickler: Users won't be permitted to "opt out" of having their Google activities correlated.

"Google is taking that option away," says P.J. McNealy, analyst at Digital World Research. Younger Internet users may not care much, he says. But Google patrons who are "more cautious or conservative with their personal data" may "cringe," McNealy says.

Meanwhile, the non-profit group SafeGov, which monitors security issues for federal, state and local government agencies, is alarmed that Google's new policy could put workers who use Google Applications for Government, a paid service, at heightened risk.

"Google should not be data-mining information in e-mails, text messages, searches and documents that workers are putting into Google services," says Jeff Gould, SafeGov security analyst. "It's a matter of not making government workers unnecessarily exposed to hackers and to inadvertent disclosures of information."

Google Vice President Amit Singh says Google's new privacy policy for consumer data is superceded by data privacy provisions in contracts with government agencies and other organization who use the paid version of Google Apps.

"As always, Google will maintain our enterprise customers' data in compliance with the confidentiality and security obligations provided to their domain," says Singh.

But Gould checked the city of Los Angeles' contract with Google and found that the data-privacy provision referred back to Google's policy for consumers. "They didn't think through the consequences for government users," Gould says.

Meanwhile, Google is busy fielding inquiries from a handful of politicians who've proposed legislation that would restrict online tracking and establish rules for data privacy.

"Amazingly, we still don't have a law that sets the rules of the road for fair information practices that everyone collecting, using, and distributing people's personal information must adhere to," says John Kerry, D- Mass.

Kerry and Sen John McCain, R-Ariz., continue to work for passage of the Commercial Privacy Bill of Rights. "Until Congress acts, Google and the rest of its competitors will continue to set that standard themselves. "

Rep. Ed Markey, D-Mass., notes that "Googling is like breathing for millions of kids and teens - they can't live without it." Markey, who has also been critical of Facebook's tracking practices, is calling on the Federal Trade Commison to review Google's new no-opt-out policy.

"Consumers - not corporations - should have control over their own personal information, especially for children and teens," says Markey.

Facebook is drawing more scrutiny too. It is making mandatory a new, glitzier user interface, called Timeline, that chronologically displays a member's preferences, contacts and online activities.

Facebook says Timeline does not present any new information nor alter any privacy settings.

Even so, SafeGov analyst Gould, for one, is concerned. "If you take the new Google policy and combine it with Facebook Timeline, the danger of hacking attacks for government users is multiplied by ten," he says.

More intensive tracking and profiling by the tech rivals puts richer data in cyberscammers' hands.

Gould worries about the all-too-common scenario where an intruder e-mails a government worker pretending to be an acquaintance. "They can put information in an e-mail which they can get from your Facebook Timeline, and trick you into downloading a piece of spyware," he says.

Heightened cross-referencing of an individual worker's Google Search Company, Gmail and YouTube activities poses similar risks, he says.

EU hands Microsoft a record fine of $1.3 billion



SEATTLE — Microsoft on Wednesday bore the brunt of Europe's desire to send out a message that it expects big corporations to respond to antitrust sanctions in a timely, contrite manner.

The European Commission fined Microsoft a record $1.3 billion, adding to a $357 million fine handed down in July 2006.

Both fines stem from Microsoft's slow compliance with sanctions in an antitrust case that originated in 2004. Microsoft for years had used delaying tactics and vigorously pursued appeals. But last fall the software giant reversed strategies, saying it wanted to put the case to rest.

It has since taken several steps to address a lingering dispute over an order to make it easier for rival software applications to tie into its Windows operating system, which runs 90% of the world's PCs and many corporate servers.

But the record fine underscores the commission's skepticism. "Talk is cheap," said Competition Commissioner Neelie Kroes. "Flouting the rules is expensive."

Microsoft's actions have stifled innovation and affected millions of people around the world, Kroes said. She called the latest fine "a reasonable response to a series of quite unreasonable actions."

Microsoft issued a statement saying the issues for which it was fined have been resolved. It could appeal the fine. But doing so would mean reverting to the confrontational legal strategy it is trying to make a break from, says Ted Henneberry, a London-based antitrust attorney at Heller Ehrman. "Both parties are trying to put this behind them and move on," he says.

The sticking issue: Regulators say the adjustments the company made in 2006 and 2007 in the royalty rates and terms set forth for tying rival programs into Windows fell short.

Last week, in a move Microsoft says was not related to the antitrust tussle, the company announced another round of adjustments to royalties and usage terms for tying into Windows as well as Office, its suite of clerical software. But the commission followed through and levied the record fine anyway.

Henneberry says the commissioners wished to let it be known that they "take offense because Microsoft didn't come up with these rates soon enough to please us." He called the fine "grossly disproportionate."

Separately, the commission must approve Microsoft's proposed takeover of Yahoo. Henneberry says the merger should be reviewed as a completely separate matter. "The merger does not involve conduct in the marketplace," he says. "The commission will have to look at the merger on the merits. It won't be, 'We don't like what you've done in the past, Microsoft.' "

By Byron Acohido, USA TODAY
Contributing: The Associated Press