EU offers Google last chance in antitrust case

BRUSSELS Mon May 21, 2012 3:55pm EDT

People walk past a logo next to the main entrance of the Google building in Zurich March 9, 2011. REUTERS/Arnd Wiegmann

People walk past a logo next to the main entrance of the Google building in Zurich March 9, 2011.

Credit: Reuters/Arnd Wiegmann

BRUSSELS (Reuters) - The European Union's antitrust chief on Monday ratcheted up the pressure on Google, giving it a matter of weeks to settle an investigation into allegations of anti-competitive behavior and avoid formal charges and a possible fine.

Even if Google, the world's most popular search engine, offers concessions to resolve the issue, it will still be under the EU spotlight after fresh complaints about its Android mobile software, the top operating system for Internet-enabled smartphones.

The European Commission launched an investigation into Google in November 2010 after competitors, including Microsoft, accused the company of manipulating search results to promote its own advertising services while demoting those of rivals.

EU Competition Commissioner Joaquin Almunia said regulators were as eager as Google to avoid lengthy proceedings due to rapid developments in the technology industry and that if remedies were offered by Google within the coming weeks, the antitrust investigation could be brought to a close.

"I believe that these fast-moving markets would particularly benefit from a quick resolution of the competition issues identified. Restoring competition swiftly to the benefit of users at an early stage is always better than lengthy proceedings," Almunia told a news briefing.

"Google has repeatedly expressed to me its willingness to discuss any concerns that the Commission might have without having to engage in adversarial proceedings. This is why today I'm giving Google an opportunity to offer remedies to address concerns that we have identified," he said.

Almunia said he had sent a letter to Eric Schmidt, Google's executive chairman, with a deadline for a response.

"In this letter, I offer Google the possibility to come up in a matter of weeks with first proposals of remedies to address each of these points," he said.

Google said it disagreed with the Commission's conclusions but that it was happy to discuss the issues further. It controls 86 percent of the European search market, according to online data tracking service comScore.

In the United States, the Federal Trade Commission is also looking into allegations that Google distorts its search results to steer people to its related businesses, like Google Places. The agency recently hired a big name litigator, Beth Wilkinson, to lead its probe.

The FTC is expected to come to a decision this summer on whether Google broke the law. Google is also the leader in U.S. searches, at 66 percent, according to comScore.

LAST CHANCE TO SETTLE?

Almunia is offering Google a last chance before issuing formal charges, said David Wood, a lawyer for lobbying group ICOMP, whose members include Microsoft, British price comparison site Foundem and German online mapping company Hotmaps, all three complainants in the EU case.

"This is effectively the Commission demanding remedies. Failing that there will be a statement of objections (EU charge sheet)," he said.

If Google can come up with remedies that the Commission finds acceptable following a market test, the Commission could then end the 18-month-long investigation without fining the company, Almunia said.

The Commission has 16 complaints against Google before it, with the latest grievances coming from several online travel agencies, including TripAdvisor, Opodo and eDreams.

The majority of complaints are from small competitors across Europe.

Almunia said other investigations into Google unrelated to the antitrust issue would continue.

"We continue the investigations on other issues, on other complaints we received recently, for instance all those complaints referring to Android or some complaints referring for instance to the way travel agencies are dealt by the Google search engine," he said.

He declined to provide details on the Android investigation. Android-equipped smartphones compete with Apple's iPhone and other systems.

The Commission can fine companies up to 10 percent of their global revenue for breaching EU rules and has in the past handed down multimillion-euro fines to Microsoft and Intel, among others.

In Washington, two lawmakers who specialize in antitrust urged Google to reach a settlement with European regulators.

Senators Herb Kohl and Mike Lee, who are respectively the Democratic chairman and top Republican on the Judiciary Committee's antitrust subcommittee, said they were "hopeful that Google would be a willing partner with the EU's Competition Commissioner.

"We continue to urge the FTC to investigate (Google) and to ensure a competitive search market where consumers can fairly pick the winners and losers in our online economy," the lawmakers said.

(Additional reporting by Diane Bartz; Editing by Mark Potter and Steve Orlofsky)

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