Google Offers to Change Search Page to Settle EU Probe

Google Inc. (GOOG) offered to change the way it operates its search page by “clearly” distinguishing its own search services from those of rivals for five years in a bid to settle an antitrust investigation by the European Union.

The owner of the world’s largest search engine offered to label Google-branded search services and show links “to three rival specialized search services close to its own” ones as part of a series of commitments to end the almost three-year-old probe, the EU said in a statement.

EU Competition Commissioner Joaquin Almunia has sought a deal with Google to end the antitrust case without imposing fines, while competitors such as Microsoft Corp. (MSFT) and TripAdvisor Inc. (TRIP) have urged regulators to force Google to change its practices. The European Commission has said Google is dominant in Web search and search advertising in Europe and that the Mountain View, California-based company may harm competition.

“Google’s proposed commitments appear to fall short of ending the preferential treatment at the heart of the commission’s case based on formal complaints from 17 companies,” said Thomas Vinje, a Brussels lawyer for the FairSearch Coalition, which represents technology companies including Microsoft, Expedia Inc. (EXPE) and Nokia Oyj. (NOK1V) “Google’s own screen shots” in its proposal show “it seeks approval to continue preferential treatment for its own products.”

Photographer: David Paul Morris/Bloomberg

The commission has said that Google is dominant in web search and search advertising in Europe and that the Mountain View, California-based company may be hampering competition. Close

The commission has said that Google is dominant in web search and search advertising in... Read More

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Photographer: David Paul Morris/Bloomberg

The commission has said that Google is dominant in web search and search advertising in Europe and that the Mountain View, California-based company may be hampering competition.

Market Test

Rivals, users and companies in the same market will have a month to give feedback to the Brussels-based antitrust regulator on Google’s planned changes. Almunia has said a settlement may be clinched “after the summer vacations” if the company’s offer is deemed acceptable.

“We continue to work cooperatively with the European Commission,” Al Verney, a Brussels based spokesman for Google, said in an e-mail.

Google fell 0.3 percent to $810.80 at 12:28 p.m. in New York trading.

Google’s remedies seek to address allegations that the company promotes its own specialist search services, such as Google News and Google Finance, copies rivals’ travel and restaurant reviews, and has agreements with websites and software developers that stifle competition in the advertising industry. The EU probe also includes any search services Google may develop in the future.

Google offered to “clearly separate” promoted links from other Web search results by “clear graphical features,” the commission said. The remedies would also allow specialized search websites “to mark certain categories of information in such a way that such information is not indexed or used by Google.”

Search Algorithm

“I don’t think this is a particularly significant gesture,” said Ed Barton, an analyst at Strategy Analytics, in an e-mailed response to questions. “It doesn’t impose any changes on Google’s core search algorithm, which is the most important aspect, just the presentation of the results.”

Google said nothing in its plans, dated April 3 and published today, “should be construed as establishing a violation of EU competition.”

The commission said it will study the feedback to assess “whether the commitments may need to be improved to adequately” address competition concerns.

‘Empirical Analysis’

“We will need to carry out empirical analysis of the changes,” David Wood, a lawyer for Brussels-based industry group ICOMP, which includes Microsoft and Foundem, a U.K. shopping comparison website, said by e-mail. It’s “necessary for us to understand exactly how the planned changes will be implemented and, crucially, to see what they will look like.”

A European consumer group said the proposals would do little to prevent Google from “manipulating search results and discriminating against competing services.”

“It may even shepherd consumers towards clicking on Google services now highlighted in a frame,” Monique Goyens, director general of European consumers’ association BEUC, said in a statement.

Google’s foes are seeking a tougher outcome from the EU probe after the U.S. closed a similar investigation without taking any action. The Federal Trade Commission in January concluded that Google was motivated more by wanting to improve its search results than by a desire to stifle competition.

Market Share

Google’s web search has a greater effect on competition in Europe, where it has more than 90 percent of the market, than in the U.S., the EU said.

If the EU accepts Google’s offer, the remedies would become legally binding. A trustee would advise the commission on monitoring Google’s implementation of the changes. Companies can be fined as much as 10 percent of their annual revenue if they break the terms of a legally binding settlement.

The commission said today it will “thoroughly” examine other complaints brought to it, to decide “whether or not a further investigation of those issues is warranted.”

To contact the reporter on this story: Stephanie Bodoni in Brussels at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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