Google's search proposals 'not just a moneyspinner', says Europe's competition chief

Will Google's European antitrust proposals give it the right to run an 'extortion racket'?
Written by Liam Tung, Contributing Writer

Europe's competition chief has defended Google's antitrust search concessions, claiming they won't allow the company to earn additional revenue from rivals.

Europe's long-running negotiations with Google over the terms of a proposed settlement to address antitrust questions around its search business on the continent could become a legally binding agreement by the end of summer, according to Reuters.

In 2010, the European Commission opened an investigation into Google after accusations the company discriminated against its rivals' specialised search products. In February of this year, Google agreed to a five-year deal to include links to three rivals whenever it promoted its own specialised search services, such as local search for products or shopping. Currently, and until the agreement becomes legally binding, Google doesn't indicate when it promotes its own services.

While the concessions were enough for the commission to drop its investigation into Google, some didn't think the concessions went far enough.

Mathias Döpfner, CEO of German publishing house Axel Springer, said in April the agreement amounted to a right to extort rivals. His concerns stem from the auction that rivals will bid in to appear next to Google's own listings. They will pay at least three eurocents to bid for a spot on those pages. 

"The Commission is seriously proposing that the infrastructure-dominating search engine Google be allowed to continue to discriminate against its competitors in the placement of search results critical to success," he wrote in an open letter to Google's chairman Eric Schmidt.

"As 'compensation', however, a new advertising window will be set up at the beginning of the search list, in which those companies who are discriminated against will be able to buy a place on the list. This is not a compromise. This is an officially EU-sanctioned introduction of the business model that in less honourable circles is referred to as protection money — ie, if you don’t want me to kill you, you have to pay me."

Speaking at a conference in Switzerland yesterday, antitrust commissioner Joaquin Almunia defended the package, saying the issue of payment had been "misrepresented".

"Under the proposals, instead of just selling this space to its own customers, Google would have to give a part of it to its competitors," Almunia said. "To be selected, Google's rivals would compete in an auction which would be strictly reserved to providers of specialised search services."

Whether the proposal becomes a legally binding still hinges on feedback on the proposals from rivals that brought the complaint to the commission — including Microsoft, and more than a dozen other specialised search companies.

"We are in contact with complainants and will soon start to send them letters explaining why we consider that the concessions we have obtained can swiftly allay the competition concerns we have raised in this investigation," Almunia sais. "We will carefully look at what complainants say before deciding whether to make Google's proposals legally binding."

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