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Europe Likely to Be Harder on Google Over Search

January 4, 2013 by Leave a Comment

Few expect the European antitrust watchdog to be as lenient.

The Federal Trade Commission ruled Thursday that Google had not broken antitrust laws, after a 19-month inquiry into how it operates its search engine. But the European Commission, which is pursuing assertions that the company rigs results to favor its own businesses, operates according to 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 E.U. 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,” said Michael Jennings, a spokesman for the European Commission in Brussels.

Faced with nearly $4 billion in possible penalties and restrictions on its business in Europe, Google in July submitted proposals 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, Al Verney, declined to comment on the content of the company’s proposals to Mr. Almunia but said it would “continue to work cooperatively with the European Commission.”

The Google case underscores a basic difference between the European and U.S. approaches to monopoly power. American antitrust regulators tend to focus on whether a company’s dominance is harmful to consumers; the European system seeks to maintain competitors in the market. Mr. Almunia 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.,” said Jacques Lafitte, 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.”

Mr. Lafitte 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 U.S. Justice Department in October 2001, he noted, only to be slapped with nearly €1.6 billion, or $2.1 billion, in E.U. fines and penalties from 2004 to 2008.

Google learned from Microsoft’s mistakes, engaging in discussions with both the U.S. and European authorities to reach a deal rather than fighting a desperate legal action. That approach appears to have paid off: Last month, after a meeting with Eric E. Schmidt, Google’s executive chairman, Mr. Almunia 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 concern European regulators. In one, it will allow rivals to opt out of allowing Google to “scrape,” or copy, text from their sites. It is probable that Google will 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.

Mr. Almunia has also demanded that Google put fewer restrictions on advertising distribution deals, an area that his U.S. counterparts did not explore.

The company will make a detailed set of proposed remedies in January, after which the European Commission will 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 U.S. trade commission 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.”

Article source: http://www.nytimes.com/2013/01/05/technology/europe-likely-to-be-harder-on-google-over-search.html?partner=rss&emc=rss

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France, for a Moment, Becomes Focus of Digital Optimism

December 11, 2011 by Leave a Comment

PARIS — Eric E. Schmidt of Google and President Nicolas Sarkozy of France acted like old friends. Karl Lagerfeld, the head designer at Chanel, introduced a new fashion brand, available online only. The Ting Tings gave a private concert at the Louvre for a gathering of the global digerati.

For a few days last week, it seemed that France had stopped worrying and learned to love the Internet.

Mr. Schmidt, the executive chairman of Google, demonstrated Silicon Valley’s proficiency at multitasking, shuttling between Brussels, where he met with European Commission antitrust regulators, and Paris, where he opened the U.S. Internet giant’s new headquarters for southern Europe, the Middle East and Africa.

Google’s move, from nondescript quarters into a palatial building that once served as the headquarters for a French railroad, is the most visible sign of the company’s campaign to woo Mr. Sarkozy and other French politicians, who have often complained about the disruptive effects of the company’s technology.

All that, Mr. Sarkozy said last week, is “the past.”

“Why am I here?” he said during a talk with Mr. Schmidt to mark the opening of the site. “Why, as president, have I come to Google? It’s a big deal. It wasn’t easy. But I greatly admire American vitality. I have been criticized enough.”

The good feelings, at least as they were expressed publicly, seemed to be mutual, with a beaming Mr. Schmidt declaring at one Paris appearance: “We love France.”

According to Mr. Schmidt, the bonhomie extended to Brussels, where he met with Joaquín Almunia, vice president of the European Commission. Mr. Almunia is leading an antitrust investigation of Google, looking into complaints that the company has abused its dominant position in the Internet search market. Far from being adversarial, Mr. Schmidt said, the tone of the talks was “very pleasant.”

Since the investigation was opened last year, Google has stepped up its efforts to demonstrate its contributions to the French, as well as the European, economy. The new Paris headquarters, acquired at a reported cost of €100 million, or $134 million, will house a new international cultural institute and a research and development center in its 10,000 square meters, or 110,000 square feet.

Mr. Schmidt wasted few opportunities to point out that, at a time when the European economy is being dragged down by a debt crisis, the technology industry is one of the few potential sources of growth. Google has said it is in the process of hiring dozens of people in France, where it already has more than 300 employees, and hundreds more across Europe.

Mr. Schmidt also found time to drop by LeWeb, a technology conference that took place in a suburb of Paris, where the atmosphere was similarly upbeat. At various times, the stage was taken over by dancers, a magician and even a man who had run the Tokyo marathon with a Rube Goldberg-style device that helped him carry four iPhones, a laptop computer and other technology, all of which enabled him to broadcast the entire race live over the Internet, from multiple angles.

Mr. Lagerfeld, the fashion designer, also disclosed a love for technology — or, at least, for the accessorizing potential of certain kinds of gadgets. In an appearance at LeWeb, he said he had no time for e-mail, but added that he owns dozens of iPhones, iPads and iPods.

Natalie Massenet, founder of the online retailer Net-A-Porter, said her company planned to introduce a new fashion brand in partnership with Mr. Lagerfeld. The brand, called Karl, will become available in January, she said.

Much of LeWeb seemed to be devoted to extolling the potential of “social local mobile” technology — known as SoLoMo. Examples include services like Foursquare, a mobile application that can help people round up their friends on bar crawls.

George Colony, chief executive of Forrester Research, went so far as to declare that the World Wide Web, as used on a PC running a browser, was a “dying technology.” Mobile applications, running on smartphones and other devices, are the future, he said. If there was a familiar ring to this idea, it may have been because many of the presenters at LeWeb — and a not insignificant portion of the audience — had flown in from Silicon Valley, where the “death of the Web” is already an old chestnut.

Many of the presenters made no secret of their purpose at LeWeb: to try to raise funds. While venture capitalists in the Valley might have heard their pitches before, there were at least a few European moneybags in attendance, too.

Niklas Zennstrom, a co-founder of Skype, picked up on a comment by Mr. Schmidt, who had said at LeWeb that he thought it would be good if a rival to Silicon Valley might emerge elsewhere in the world. Mr. Zennstrom, a Swede, said that more than half of the investments by the venture capital firm he runs, Atomico, were in Europe, though he added that he was looking elsewhere, too.

“Every day, the likelihood of great companies coming from other places around the world is increasing,” he said. “If you look ahead five years, the growth won’t be in Europe or the United States, but in emerging markets.”

Liz Alderman contributed reporting.

Article source: http://www.nytimes.com/2011/12/12/technology/12iht-leweb12.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Antitrust Cry From Microsoft

March 31, 2011 by Leave a Comment

Microsoft plans to file a formal antitrust complaint on Thursday in Brussels against Google, its first against another company. Microsoft hopes that the action may prod officials in Europe to take action and that the evidence gathered may also lead officials in the United States to do the same.

In Europe, Microsoft is joining a chorus of complaints, but until now they have come mainly from small Internet companies saying that Google’s search engine unfairly promotes its own products, like Google Product Search, a price comparison site, over rival offerings.

The Internet and smartphones are the markets where energy, investment and soaring stock prices reside. Microsoft, still immensely wealthy, is pouring billions into these fast-growing fields, especially Internet search. Yet the champion of the PC era trails well behind Google.

“The company that was the 800-pound gorilla is now resorting to antitrust, where it is always the case that the also-rans sue the winners,” said Michael A. Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management who has studied Microsoft.

The Microsoft complaint, Professor Cusumano notes, is also a reminder of the comparative speed with which fortunes can shift in fast-moving technology markets. “It doesn’t happen instantly, but it does happen faster than in most industries,” Professor Cusumano said. “It took Google about a decade to really turn the tables on Microsoft.”

For years, the swaggering giant of personal computer software battled competitors and antitrust regulators in America and abroad, parrying their claims that it had bullied rivals and abused its market muscle. In the United States, it suffered rulings against it and in 2001 reached a settlement that prohibited Microsoft from certain strong-arm tactics. In Europe, Microsoft absorbed setbacks and record fines from regulators and judges.

Still, irony has no place in antitrust doctrine. Microsoft’s complaint must be weighed on the merits, as part of a wide-ranging antitrust investigation of Google, begun last year and led by Europe’s competition commissioner, Joaquín Almunia.

The litany of particulars in Microsoft’s complaint, the company’s lawyers say, includes claims of anticompetitive practices by Google in search, online advertising and smartphone software. But a central theme, Microsoft says, is that Google unfairly hinders the ability of search competitors — and Microsoft’s Bing is almost the only one left — from examining and indexing information that Google controls, like its big video service YouTube.

Such restraints, Microsoft contends, undermine competition — and thus pose a threat to consumer choice and better prices for online advertisers.

When told of the Microsoft claims, Adam Kovacevich, a Google spokesman, denied that the company had done anything wrong and said its practices did not deny Microsoft access to Google technology and content.

Though it is making an antitrust claim, Microsoft is also claiming a bit of hypocrisy on Google’s part. In an interview, Bradford L. Smith, Microsoft’s general counsel, cited Google’s stated mission to “organize the world’s information and make it universally accessible and useful.”

“That is a laudable goal,” Mr. Smith said. “But it appears Google’s practice is to prevent others from doing the same thing. That is unlawful and it raises serious antitrust issues.”

Google’s strategy, he adds, seems to be to “wall off content so that it cannot be crawled and searched by competing companies.”

In smartphones — sources of increasing volumes of search traffic — Microsoft says Google is withholding technical information needed to let phones using Windows Phone 7 software have a rich, full-featured application for YouTube. That technical information, Microsoft says, is available not only in Google’s Android software but also Apple iPhones, as part of a deal dating back to when Google’s chief executive, Eric E. Schmidt, was on the Apple board. (He resigned in 2009, after the Federal Trade Commission raised questions about the arrangement.)

Mr. Kovacevich said that about two years ago, the company decided to make an improved version of YouTube available for all mobile devices instead of tailoring it to each company on smartphone applications, as it did earlier with Apple.

Microsoft also contends that Google has set up what amount to technical roadblocks so that Microsoft’s Bing search service cannot examine and index up to half of the videos on YouTube.

Another Microsoft claim focuses on Google’s ad contracts. Its contracts prohibit advertisers and online agencies from using third-party software that could instantly compare results and move advertisers’ data from one ad platform to another — from Google’s Adwords to Microsoft’s Adcenter, for example.

Article source: http://feeds.nytimes.com/click.phdo?i=c7408713451c5584a31e84492249ed6f

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