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In Europe, Challenges for Google

Google has a problem in China. But it may have bigger headaches in Europe.

On issues as varied as privacy, copyright protection and the dominance of Google’s Internet search engine, the company is clashing with lawmakers, regulators and consumer advocates. And the fights are escalating across Western Europe.

The stakes are high — potentially higher for Google than anything that happens in China — because Google’s operations in Europe are so much larger and more lucrative. In Britain alone, Google has roughly 10 times its estimated sales in China. Across most of the Continent, Google is by far the most popular search engine, with a substantially larger market share over its rivals than it has over those in the United States.

Google’s border-straddling scale and its brash ambitions raise alarms with some European politicians.

CNBC.com

The government of Prime Minister Silvio Berlusconi of Italy has proposed a law making online video services like YouTube liable for invasions of privacy, violations of copyright and other transgressions that occur in user-generated content. Meanwhile Google is contesting a copyright lawsuit from Mediaset, Mr. Berlusconi’s family company, which is the largest commercial television broadcaster in the country.

“It’s a full-scale battle against Google in Italy,” said Paolo Brini, a spokesman based in Perugia for ScambioEtico, a group that campaigns for civil liberties online.

In Germany, the minister of justice, Sabine Leutheusser-Schnarrenberger, complained recently about Google’s instinct for “pressing ahead” and its “megalomania.” She said the company was tearing down privacy protections.

“On the whole, I see a giant monopoly developing, largely unnoticed, similar to Microsoft,” she said in an interview with the magazine Der Spiegel. A spokesman later clarified that she had not meant to express an opinion on antitrust matters, which are outside her jurisdiction.

Google says that ordinary Europeans do not have similar fears. It says the complaints are from competitors like Microsoft and media companies whose longtime business models are threatened by technological change.

“We love being in Europe, and we have many users across many countries who enjoy our products,” the company, which threatened last month to withdraw from China in response to an attack on its computer systems, said in a statement. “Our popularity means some people will complain. The important thing for us is to do the right thing, and that means not locking our users into our products and working well with our partners.”

Google’s most immediate challenges may be in Italy. This month, a decision is expected in a trial in Milan, where four Google executives were charged with defamation and privacy violations in a case involving videos posted on a Google Web site that showed the bullying of a boy with autism.

The company says a guilty verdict might require it to edit content on YouTube before it is posted, which it says, would be incompatible with the open spirit of the Internet, as well as European Union guidelines.

Prosecutors say Google was too slow to remove the video.

On another front, Italian authorities last summer raided the company’s offices in Milan, opening an investigation of Google News, which displays excerpts from online news articles. Italian publishers contend that Google News violates their copyrights, but say they cannot remove their articles from the service without slipping in Google’s search rankings, which would cost them ad revenue. Google says there is no such link between Google News and the search engine.

German newspaper and magazine publishers have complained to their government, saying that all of their Web sites together earn only about 100 million euros a year from advertising, while Google generates an estimated 1.2 billion euros from search advertising in Germany.

The federal anticartel agency is gathering information, but has not yet decided whether to open a formal investigation.

German publishers have persuaded the government of Chancellor Angela Merkel to support a new kind of copyright protecting journalistic content on the Web. Analysts say the measure, which has not yet been introduced, could require Web companies like Google to buy special licenses to cite content published elsewhere.

Attitudes toward Google in Germany have been colored by a heated debate over privacy. Several German towns and cities have moved to block Google from taking pictures of storefronts and homes for its Street View service, which links street-level pictures to maps — though not yet in Germany.

While Street View has been popular in some European countries, Swiss data protection authorities recently sued Google to try to press it to increase privacy protections.

The European Commission in Brussels has pushed Google and other American Internet companies to shorten the period for which they retain consumer data.

But Google has largely avoided run-ins with the commission’s powerful competition arm, which has struck fear in American boardrooms because of its dogged pursuit of antitrust cases against Microsoft, Intel and other American multinational companies.

With a new commission set to take office, rivals of Google, including Microsoft , are stepping up their lobbying efforts, highlighting the strength of Google’s position in Europe.

“Whenever you have a company that has more than a 90 percent market share in a key market, it is inevitable that people will have questions to ask,” Brad Smith, Microsoft’s general counsel, told reporters in Brussels last week. “We say that with some experience.”

According to comScore, a research firm, Google handles 80 percent of European Web searches — compared with 65 percent in the United States.

Yahoo with 17 percent, and Bing, from Microsoft, with 11 percent, offer modest competition in the United States, but they are nearly nonexistent in Europe, with less then 2 percent each, according to comScore.

Commission officials have said that a dominant market share is insufficient cause for an antitrust case; there must be evidence that a company is abusing this position to stifle competition. Analysts say the dearth of homegrown rivals to Google could also undermine any move to take regulatory action against the company.

“Brussels may not want to pick a fight with Google,” said C. Evan Stewart, an antitrust expert at the law firm of Zuckerman Spaeder, “because there is no one to reward if they win.”

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