EU regulators won’t be as lenient as FTC with Google
If the FTC let Google off the hook by finding that the technology giant had not abused its dominance, few expect the European antitrust watchdog to be as lenient.
The New York Times
SAN FRANCISCO — By some accounts, the United States let Google off the hook by finding 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 (FTC) 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 the company rigs results to favor its own businesses, operates according to a different standard.
The agreement with the U.S. authorities, analysts and competition lawyers say, is unlikely to alter the demands of European regulators, led by the EU competition commissioner, Joaquin Almunia.
“We have taken note of the FTC 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 FTC, 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 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. 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 EU 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 EU is right or not is a different question.”
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 euros, or $2.1 billion, in EU 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 Schmidt, Google’s executive chairman, Almunia said the sides had “substantially reduced our differences.”
In its deal with the FTC, 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 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 FTC did not require changes.
Almunia has also demanded Google put fewer restrictions on advertising-distribution deals, an area 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 resolution 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 FTC investigation “with only voluntary commitments from Google is disappointing and premature.”