April 26, 2024

You are here: Home / Archives for antitrust investigation

In European Antitrust Fight, Google Needs to Appease Competitors

July 17, 2013 by Leave a Comment

The European Commission on Wednesday formally said for the first time that Google’s proposal for addressing antitrust concerns did not go far enough, and demanded that it come up with more far-reaching remedies or potentially face a fine of up to $5 billion.

It was a significant setback for Google, which in April struck a deal with the commission to settle its three-year antitrust investigation by making certain changes in the way it displays answers to search inquiries. But the deal was contingent on feedback from Google’s rivals. The commission determined that the proposal was inadequate, and said the company needed to do more to address rivals’ concerns.

The about-face followed an outcry from Google competitors during the market testing phase of the inquiry, in which the commission asked for feedback on the proposal.

“What they discovered in the market test was that overwhelmingly, everyone said the settlement was inadequate and doesn’t solve the problem,” said a person with knowledge about the feedback competitors gave the commission, but who spoke anonymously because the filings were not public.

Joaquín Almunia, the European Union competition commissioner, said at a news conference, “I concluded that the proposals that Google sent to us months ago are not enough to overcome our concerns.” He said he had written to Eric E. Schmidt, Google’s executive chairman, “asking Google to present better proposals.”

A Google spokesman, Al Verney, said on Wednesday that it would “continue to work” with the commission to settle the case. He added that Google was confident that its earlier proposal “clearly addresses” the commission’s concerns.

Mr. Almunia did not give Google a deadline for presenting a new set of concessions, according to a person with direct knowledge of Mr. Almunia’s letter who spoke anonymously. So the case, which both sides had hoped to close this year, could continue for several months or more.

The main issue is the way Google, which, according to comScore, handles 86 percent of Web searches in Europe, orders its search results. Regulators have been investigating whether Google favors its own services — like travel, local business, mapping and shopping — over those of competitors. Regulators have also examined whether it disadvantaged competitors by including material from other Web sites in search results and whether its advertising business complied with European antitrust law.

Google managed to avoid antitrust charges in the United States, where it has two-thirds market share, after a two-year investigation of similar issues. Google has faced a more hard-line approach in Europe, where critics have accused the antitrust authorities of relying too much on outside complaints from competitors rather than on evidence of consumer harm. That is somewhat of a sore point for European officials, who insist they share the same goals as the Americans when it comes to consumers.

In April, Google proposed to change its search results to clearly label results from some of its own properties, like Google Plus Local, and in some cases to show links from rival search engines. It also proposed giving competitors more control over how it used information from their sites in its vertical search results and making it easier for small businesses to transport their ad campaigns to other search engines.

The proposal was the first time Google had agreed to legally binding changes to its search results, and went much further than the minor concessions it made to the Federal Trade Commission in its inquiry.

Still, the proposal would not have required Google to change the algorithm that produces its search results. Also, if it had been accepted, Google would have escaped a possible fine of about 10 percent of its annual global revenue of about $50 billion and a formal finding of wrongdoing that could limit its ability to expand in Europe.

James Kanter reported from Brussels, and Claire Cain Miller from San Francisco.

Article source: http://www.nytimes.com/2013/07/18/technology/europe-wants-more-concessions-from-google.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Google and Europe Reach Deal on Search Results

April 14, 2013 by Leave a Comment

After a two-year inquiry, the European Commission has accepted Google’s proposed settlement, according to two people briefed on the agreement who spoke anonymously because the proposal was not yet public.

Google will not have to change the algorithm that produces its search results, the people said. Under the proposal, Google agrees to clearly label search results from its own properties, like Google Plus Local or Google News, and in some cases to show links from rival search engines.

The changes will not be widely seen for at least a month, while rivals and others in the industry can weigh in on the plan, in a process called market testing.

The biggest change has to do with search results related to topics like shopping and flights, a field known as vertical search. Google has been pushing into these areas, prompting complaints from competitors like Yelp and TripAdvisor who worry that Google will favor its own results over theirs.

If the proposal is approved after market testing, the European Commission will have succeeded in demanding far more stringent concessions from Google than did United States regulators, who in January closed a two-year antitrust investigation after finding that Google had not violated antitrust statutes. Google agreed to make some minor changes related to search advertising, but avoided a formal consent decree or litigation.

A Google spokesman, Al Verney, declined to comment beyond repeating Google’s statement that it continued “to work cooperatively with the European Commission.” Antoine Colombani, a commission spokesman, did not respond to requests for comment on Sunday.

Europe opened its antitrust inquiry in 2010. It has focused on whether Google unfairly took advantage of its market dominance by favoring links to its own services, whether it disadvantaged competitors by including material from other Web sites in search results and whether its advertising business complied with European antitrust law.

The investigation came about because of competitors like Microsoft and Foundem, a British comparison-shopping site, which complained about the way Google conducted its search and advertising businesses.

In Europe, the agreement would be legally binding for five years, and a third party would ensure compliance, the people briefed on the proposal said. Google could face a fine of as much as 10 percent of its global annual sales for failing to keep its promises.

If it abides by the agreement, though, Google will avoid fines and a formal finding of wrongdoing. Google will also escape the lengthy and expensive antitrust battles that Microsoft faced in Europe over its media player and server software.

Herbert Hovenkamp, a professor of antitrust law at the University of Iowa, said the penalty faced by Google was light. “The ‘no fine’ conclusion is a pretty important one,” said Mr. Hovenkamp, who has in the past been a paid adviser to Google. “The question you have to ask is: Is labeling going to change any consumer behavior? And if the answer is no, then it’s not going to do any good for Microsoft Bing or for any rival search engines.”

Last month, 11 complainants to the European Commission, including Expedia and TripAdvisor, sent a letter to the commission expressing concern that it was not prepared to penalize Google enough. “Google’s search manipulation practices lay waste to entire classes of competitors in every sector where Google chooses to deploy them,” the letter said.

About 86 percent of all online searches in Europe are conducted using Google, according to the Web analyst comScore. In the United States, it has about two-thirds of the market.

Under the terms of the settlement, the details of which were first reported by the Financial Times, search results would look slightly different in Europe than elsewhere.

In areas where Google does not make money from search results, like weather or news, the company will label the results as Google-owned properties. In areas where Google sells ads, like local business reviews, it will show links to at least three competitors. In areas in which all search results are paid ads, like shopping, Google will auction links to rivals.

Google will also give Web sites the ability to prevent their content from being included in its vertical search properties, while allowing them to stay in general search results. Yelp, for instance, had complained that Google used its content for its own local search engine but that Google would not stop unless Yelp bowed out of Google altogether. Competitors could also choose to block as much as 10 percent of the content on their Web sites from Google; Yelp, for instance, could block Google from lifting business hours from its listings.

Google would also make it easier for small businesses to transport their ad campaigns to other search engines, in a deal similar to one it made with the Federal Trade Commission in January.

Some of Google’s rivals already appear focused on a new case concerning its behavior on mobile platforms. Microsoft is part of a coalition of companies that recently filed a new complaint with the European Commission about Google’s Android operating system for mobile devices.

James Kanter contributed reporting.

Article source: http://www.nytimes.com/2013/04/15/technology/google-and-europe-reach-deal-on-search-results.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Microsoft Battles Google by Hiring Political Brawler Mark Penn

December 15, 2012 by Leave a Comment

SEATTLE — Mark Penn made a name for himself in Washington by bulldozing enemies of the Clintons. Now he spends his days trying to do the same to Google, on behalf of its archrival Microsoft.

Since Mr. Penn was put in charge of “strategic and special projects” at Microsoft in August, much of his job has involved efforts to trip up Google, which Microsoft has failed to dislodge from its perch atop the lucrative Internet search market.

Drawing on his background in polling, data crunching and campaigning, Mr. Penn created a holiday commercial that has been running during Monday Night Football and other shows, in which Microsoft criticizes Google for polluting the quality of its shopping search results with advertisements. “Don’t get scroogled,” it warns. His other projects include a blind taste test, Coke-versus-Pepsi style, of search results from Google and Microsoft’s Bing.

The campaigns by Mr. Penn, 58, a longtime political operative known for his brusque personality and scorched-earth tactics, are part of a broader effort at Microsoft to give its marketing the nimbleness of a political campaign, where a candidate can turn an opponent’s gaffe into a damaging commercial within hours. They are also a sign of the company’s mounting frustration with Google after losing billions of dollars a year on its search efforts, while losing ground to Google in the browser and smartphones markets and other areas.

Microsoft has long attacked Google from the shadows, whispering to regulators, journalists and anyone else who would listen that Google was a privacy-violating, anticompetitive bully. The fruits of its recent work in this area could come next week, when the Federal Trade Commission is expected to announce the results of its antitrust investigation of Google, a case that echoes Microsoft’s own antitrust suit in the 1990s. A similar investigation by the European Union is also wrapping up. A bad outcome for Google in either one would be a victory for Microsoft.

But Microsoft, based in Redmond, Wash., has realized that it cannot rely only on regulators to scrutinize Google — which is where Mr. Penn comes in. He is increasing the urgency of Microsoft’s efforts and focusing on their more public side.

In an interview, Mr. Penn said companies underestimated the importance of policy issues like privacy to consumers, as opposed to politicians and regulators. “It’s not about whether they can get them through Washington,” he said. “It’s whether they can get them through Main Street.”

Jill Hazelbaker, a Google spokeswoman, declined to comment on Microsoft’s actions specifically, but said that while Google also employed lobbyists and marketers, “our focus is on Google and the positive impact our industry has on society, not the competition.”

In Washington, Mr. Penn is a lightning rod. He developed a relationship with the Clintons as a pollster during President Bill Clinton’s 1996 re-election campaign, when he helped identify the value of “soccer moms” and other niche voter groups.

As chief strategist for Hillary Clinton’s unsuccessful 2008 campaign for president, he conceived the “3 a.m.” commercial that raised doubts about whether Barack Obama, then a senator, was ready for the Oval Office. Mr. Penn argued in an essay he wrote for Time magazine in May that “negative ads are, by and large, good for our democracy.”

But his approach has ended up souring many of his professional relationships. He left Mrs. Clinton’s campaign after an uproar about his consulting work for the government of Colombia, which was seeking the passage of a trade treaty with the United States that Mrs. Clinton, then a senator, opposed.

“Google should be prepared for everything but the kitchen sink thrown at them,” said a former colleague who worked closely with Mr. Penn in politics and spoke on condition of anonymity. “Actually, they should be prepared for the kitchen sink to be thrown at them, too.”

Hiring Mr. Penn demonstrates how seriously Microsoft is taking this fight, said Michael A. Cusumano, a business professor at M.I.T. who co-wrote a book about Microsoft’s browser war.

“They’re pulling out all the stops to do whatever they can to halt Google’s advance, just as their competition did to them,” Professor Cusumano said. “I suppose that if Microsoft can actually put a doubt in people’s mind that Google isn’t unbiased and has become some kind of evil empire, they might very well get results.”

Nick Wingfield reported from Seattle and Claire Cain Miller from San Francisco.

Article source: http://www.nytimes.com/2012/12/15/technology/microsoft-battles-google-by-hiring-political-brawler-mark-penn.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,