GO
Loading...

Brussels Takes Tough Stance on Google

Getty Images

Google will be forced to change the way it presents search results in Europe or face antitrust charges for "diverting traffic" to its own services, the EU's competition chief has said, laying out a sharply different approach from his US counterparts.

In contrast to the Federal Trade Commission, which has given the all-clear to Google's search engine, Joaqun Almunia vowed to prevent Google distorting choices for consumers and taking business from rivals.

"We are still investigating, but my conviction is [Google] are diverting traffic," Mr Almunia told the Financial Times, referring to Google's preferential treatment of its own vertical search services.

"They are monetizing this kind of business, the strong position they have in the general search market and this is not only a dominant position, I think – I fear – there is an abuse of this dominant position," Europe's antitrust enforcer said.

(Read More: Google Earth Helps Put North Korea Gulag System on Map)

His words mark a direct ultimatum to Google as talks on a pre-charge settlement enter a critical phase. They offer the most detailed public explanation of

Brussels' concerns and hint at the likely shape of any deal, which would mark the first time Google has bowed to regulatory pressure on its core business.

Mr Almunia said his concern is "the way they present their own services" and that he was "not discussing the algorithm" – the jealously guarded heart of Google's search engine.

This suggests that one element of the solution will be labeling when Google's in-house services – such as maps, airline flight details or shopping comparison information – are artificially given a higher billing than rivals. But other changes are also likely to apply to how Google services are displayed within general search results.

Any European limits on Google could hamper the sweeping ambition that chief executive Larry Page has set for the company to turn itself from a search engine that primarily displays links to other sites into a "knowledge engine" that answers users' questions directly with information plucked from Google's own services.

While Mr Almunia said Google showed a more constructive approach at a crunch meeting in December, he warned that he would be "obliged" to issue formal charges if its proposal – expected this month – is unsatisfactory. Google insists its services are "good for users and good for competition"; it would not be required to admit wrongdoing in any pre-charge settlement.

More From the Financial Times:

Google's opponents will welcome Mr Almunia's tougher line on search than the FTC. Even so, the concessions offered to Brussels are likely to fall short of what Microsoft and other complainants are pressing for. The competition commissioner said he was "not worried" by the threat of legal challenges.

Mr Almunia explained the rare divergence with Washington on Google by the differing legal standards for abuse of dominance, as well as Google's stronger position in Europe, where it handles more than 90 per cent of searches.

(Read More: Google Offers New York City Neighborhood Free WiFi)

EU officials argue that while its objectives – protecting consumer interests – are the same, the legal standard for abuse of dominance is higher in the US, partly because of the greater potential for private damages suits.

On two other areas – Google's unauthorized use of information on rival websites and alleged restrictions on moving ad campaigns to other search engines – Mr Almunia is in agreement with the FTC findings. "Our conditions will not be weaker," he said.

Dismissing the idea the intervention will cause a rift with the US and trigger outrage at a European meddling with a US corporate titan, Mr Almunia said: "I have never received a single message coming from the other side of the Atlantic saying, 'hey, what are you doing?' Everyone knows this is global."

Mr Almunia said a separate and less advanced probe into Google's Android operating system will remain open and outside of the settlement.

He also praised the FTC's settlement with Google limiting the way it enforces patents and said it was "more or less" the kind of solution he was seeking in similar cases.

Contact Business

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More