Google reaches deal with EU to avoid $5 billion fine

Turns out anti-trust laws can tame even the toughest of tech giants.

On Wednesday, Google agreed to amend its search-engine tactics in the European Union to allow for more favorable search results by its competitors. The move meant Google avoided a $5 billion fine.

For the past three years, the European Commission has investigated Google under suspicion that the site was favoring its search results over competitors.

Under its new proposal, Google will now have to show three competitors’ search results in the similar way it shows its own when promoting specialized search services (such as shopping or hotels). It also must clearly label search results that come from its own services in order to ensure customers know what is sponsored content.

“A shopping search for a gas grill, for example, would yield two boxes of the same size and position at the top of the search results page, one showing three ‘Google shopping results’ and immediately to the left of it three results labeled ‘Alternatives,’ ” according to Bloomberg Businessweek, citing an example provided by the EU Commission.

According to comScore, a consultant group, Google has a 75 percent share of the European search market.

This is Google’s third proposal to the EU to solve this issue. The first two were deemed inadequate, but did make some concessions, according to a EU Commission press release, including:

• Giving content providers the option to opt-out of Google’s specialized search engines without penalty from Google
• Remove exclusivity requirements in agreements with publishers for search advertisement provisions
• Remove restrictions on search advertising campaigns running on competing search advertising platforms

However, the EU Commission deemed the concessions acceptable before checking with competitors, which has upset Google's rivals.

"A settlement without third party review is a massive failure," says Microsoft-backed Initiative for a Competitive Online Marketplace in a statement. "Hard data from market tests proved that the previous settlement would not work – we need time and opportunity to ensure full technical assessment of how effective the proposed remedies would be."

However, Joaquín Almunia, commission vice president of competition policy, says the EU commission deemed the changes adequate and didn’t see the need to seek outside guidance.

"My mission is to protect competition to the benefit of consumers, not competitors,” he says in a statement. “Without preventing Google from improving its own services, [the proposal] provides users with real choice between competing services presented in a comparable way; it is then up to them to choose the best alternative. This way, both Google and its rivals will be able and encouraged to innovate and improve their offerings."

A similar investigation by the US Federal Trade Commission took place last year, but it was dropped before charges were filed.

This isn’t the end of the legal road for Google, however. Mr. Almunia says the investigation of Google’s Android software (which lobbying groups have accused of directing traffic to Google products) is ongoing.