Google Inc (GOOG) And The EU Deal


Google Inc (NASDAQ:GOOG) finally reached a deal to resolve the competition issues filed against it with the European Union regulators. It took two years for the search engine giant to settle the complaints of its competitors that it is abusing its dominant position in search and online advertising market.

Google Inc (GOOG) And The EU Deal

Last week, Google Inc (NASDAQ:GOOG) submitted a package of concessions to the European Commission to resolve the antitrust investigation. The commission said the search engine giant’s proposal will undergo a market test to get the feedback of market players including the complainants. The commission indicated contentment with Google’s proposal.

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The full details of the concession submitted by Google Inc (NASDAQ:GOOG) to the EC was not revealed. Based on the report from Wall Street Journal, Google’s algorithm, the mathematical formula used for ranking search results will remain unchanged, and it will be able to continue to display web-search results, but it will label its own services on search results to differentiate it from the services of its rivals.

Some critics believe that the changes proposed by Google Inc (NASDAQ:GOOG) were mostly cosmetic and it will not resolve the major concerns raised by its competitors in Europe, where the search engine giant has more than 90 percent market share.

David Wood, a representative of iComp, a group of complainants including Microsoft Corporation (NASDAQ:MSFT), said that they may not get the proper opportunity to test if Google’s proposal’s will resolve their concerns. He said, “Google has had months, if not years, to test out the impact of these changes. We need to be given proper time to see if they will be effective.”

A lawyer familiar with the settlement commented, “If you label something as being a Google product, that’s a positive label as it’s such a strong brand, and it won’t give people a better chance to find an alternative.”

On the other hand, European Commission spokesperson, Antoine Colombani said,“We will look carefully at the information and comments we receive, and we will take them into account in our assessment of whether the proposals address the Commission’s concerns.”

Some people familiar with the EU process believe that there is a possibility that the deal might be adjusted, but it is unlikely that a formal case would be launched against Google Inc (NASDAQ:GOOG).

Earlier this month, EU Commissioner Joaquin Almunia said, “We … prefer to conclude cases swiftly when this brings the most benefits to the markets . In certain industries – such as high-tech and fast-moving markets – it is important that competition is restored quickly and effectively.”

Edmon Oude Elferink of CMS Derks Star Busmann law firm opined that Almunia is just being pragmatic because of the complexity of the EU probe and the fact that regulators in the United States found that Google did not commit wrongdoing in its core search business.

Elferink opined, “From the legal and strategic point of view, it’s the thing to do. If a case is not clear-cut, going for a hardline approach is risky. The risk of losing face is very serious.”

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