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Even if Google can settle it faces numerous more antitrust probes on other topics in the EU and U.S.

On Monday, Jonathan Todd, spokesman for the European Commission (EC) -- the European Union's (EU) market regulatory watchdog -- revealed that Google Inc. (GOOG) had reached out to the EC and promised to make serious changes to address allegations made by EU antitrust regulators.

I. EU Receives Google's Last Ditch Pitch

Mr. Todd told Reuters in a statement:

The Commission received a proposal from Google and is assessing it.

Google's spokesperson, Al Verney added:

Our proposal to the European Commission addresses their four areas of concern. We continue to work with the Commission to settle this case.

For Google -- who makes the world's most use mobile operating system, search, and internet advertising platforms -- it's been a bewildering ride with European antitrust regulators.  The company has been probed and threatened by the EU for over three years now.
Google fortified
Google has been warding off antitrust accusations from Microsoft, who runs the smaller rival "bing" search service. [Image Source: Fast Company]

The company can largely thank Microsoft Corp. (MSFT) for its EU antitrust woes.  Microsoft has led two key coalitions -- The FairSearch Coalition, whose members also include Expedia Inc. (EXPE) and TripAdvisor Inc. (TRIP), and ICOMP, whose members also include Foundem, Hot-map, Streetmap, and NexTag -- both of which filed complaints about Google, claiming that Google boosts the ranks of its own services when consumers use its search engine.

While this might sound like smart business, Microsoft alleges it's illegal, and it could be right due to Google's dominant position in the search market and the way EU antitrust laws are structured.

Also, Google is accused of "scraping" or gathering results from its competitors’ services using automated scripts to improve the quality of its own results.  Google does not deny doing some scraping; pointing out that Microsoft does the same.  However, given that scraping is a gray area in current antitrust laws, it is possible that Google could be viewed as committing antitrust abuses when it scrapes smaller competitors.

web scraping
Google has also been accused of abusive scraping [Image Source: Google Images/unknown]

Part of the problem is that in the EU Google has traditionally held a much larger piece of the market.  In the EU Google has held as much as 86 percent of the search market; currently it has around an 80 percent market share, according to Reuters.  This is much higher than in the U.S., where its market share is currently around 67 percent, according to market research firm Comscore.

II. More Antitrust Woes Loom for Google

But whether or not Google has abused its dominant position to further its own services like Gmail, Google Docs, Google Flights, and Google Shopping, it's hard not to feel a bit of sympathy for the chaotic way in which antitrust punishments for Google have been handled in the EU.

After being given a "last chance to settle" in May 2012, Google in Feb. 2013 released a full response, which promised big changes as to how it was scraping and ranking search results.  The EC initially accepted that proposal.  But after Microsoft and others claimed that the punishments weren't severe enough, the EC went back on its approval of the Google settlement and demanded more flesh from Google.

EU books antitrust
 The EU "changed its mind" about Google's settlement offer. [Image Source:]

The EC is a pretty fearsome regulator.  It has nailed Microsoft Corp. (MSFTwith multiple fines totaling around $2.8B USD over Windows antitrust abuses, plus pounded Intel with a $1.45B USD fine for allegations of CPU price fixing.  Its policies have been so aggressive that Apple, Inc. (AAPL) opted to settle in the EU over e-book price fixing accusations, while fighting similar accusations in the U.S.

Google is clearly prepared for the worst.  It has set aside $500M USD to pay for potential antitrust fines in the EU.

To make matters worse for Google, the U.S. debate over Google's search engine tactics has yet again resurfaced.  After probing Google, the U.S. Federal Trade Commission (FTC) agreed to a proposal where Google promised to make minor changes and would not face any fines.  The FTC even defended that decision against criticism by Microsoft and others who felt that the punishments were too light.  But recently the FTC has been rumored to be cooking up a fresh probe examining a new angle -- looking at whether Google's acquisition DoubleClick engaged in anticompetitive tactics in the search market.
Google Android
Google is also accused of using abusive tactics to promote its free Android operating system, which accounts for four out of every five smartphones and two out of every three tablets sold.

Google also faces allegation of abuse in the U.S. and EU of so-called "standards essential patents" (SEPs), which are supposed to be licensed under the "fair, reasonable, and non-discriminatory" (FRAND) rules.  Last, but not least, Google also faces a privacy probe in the EU, in which EC regulators have demanded Google make changes by the end of this month.

Privacy is another major issue Google is being grilled on. [Image Source: Inquistr]

In short, even if Google manages to win over the EU with its settlement proposal and escape fines, it still faces at least two more major topics of antitrust investigation in the EU, U.S., and elsewhere.

Source: Reuters

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RE: The big picture
By deltaend on 9/14/2013 3:24:45 PM , Rating: 3
Oh Tony, Tony, Tony... that was a waste of a perfectly eloquently long explanation. Let's distill Google to the bottom line shall we?

1) Google is a huge and self sustaining ecosystem.
2) Ecosystems survive due to circular and sustaining demand (i.e. we need them and they need us).
3) EU wants money and they will get it, if not from Google than from another successful company. I bet they are just salivating over the possibilities right now.
4) Losers hate the winners which is why so many search companies hate Google. When the tables turn their tune will change.
5) It is more profitable to litigate than it is to compete in an open market. (i.e. the system is broken in this respect).
6) Google doesn't FORCE data out of anyone. Simple META tags setting ROBOTS correctly will stop Google and many other search engines from indexing your site.
7) We have all known how Google works and it's smart business. Since when did smart business become so smart that it has mutated into "anti-competitive" and need to be shot down? This seems like a great mentality to destroy every successful company and support stupid business practices. I say, survival of the fittest and smartest not the stupidest, laziest, and most litigious.
Would it be good if Google uses it's vast search footprint to drive out of business alternative purveyors of data services?
and the obvious answer is yes. Survival of the fittest yields only the best solutions. We don't need the worst solutions surviving because they were given every advantage over better solutions, simply because they were a smaller company. Create something better, let it grow and compete in the open market. If it is worth our attention and our devotion it will get it. If it isn't, it will die and that's a good thing.
9) Your loyalties to Apple are clearly presented. I'm sure you will be singing a different tune when it is Apple's turn on the EU money chopping block and that's just plain hypocritical.

RE: The big picture
By Kiffberet on 9/16/2013 8:07:09 AM , Rating: 2
3) EU wants money and they will get it, if not from Google then from another successful company.

You don't know sh1t.
The EU gets the equivalent of over a trillion dollars each year from it's member states. It doesn't need the loose change from these law suits.

The EU doesn't like companies with market dominance, because they very rarely do good for everyone.

Just because they give software and services away for free, isn't always in everyone's best interest.

RE: The big picture
By Reclaimer77 on 9/16/2013 8:23:22 AM , Rating: 2
Fining companies does little to cure "market dominance" however. Unless you fine them so much they can barely remain profitable.

There's little Google can do at this point, even if it wanted to. People ARE going to choose Google as their default search engine, people choosing Google - willingly - is how they got to where they are today.

The EU is trying to "fix" problems that aren't really problems.

Just because they give software and services away for free, isn't always in everyone's best interest.

Soo they should charge a per-search use fee? Does anyone else do that? Instead of platitudes about peoples best interests, actually go into detail on what you would suggest.

I just have to reject this absurd notion that beating the competition and attaining large market-share is inherently wrong and MUST be stopped by a Government entity.

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

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