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Google must change search practices to escape punishment for abusing position of market dominance, EU regulator says

Google has been given a "matter of weeks" to propose changes to its search practices after the EU's Competition Commissioner said the company had infringed on competition laws.22 May 2012

Joaquín Almunia raised for concerns about four business practices that Google has engaged that he said "may be considered as abuses of dominance." He said he was giving Google the chance to "offer remedies" to address the issues because the company had shown repeated "willingness to discuss any concerns that the [European] Commission might have without having to engage in adversarial proceedings."

When displaying results within its "general search results", Google may be providing "preferential treatment" to links for "its own vertical search services" in comparison to links to similar services operated by rivals, Almunia said. 'Vertical search services' are focused on topic-specific search engines.

Almunia also said that he is concerned that Google may be using content from rivals' vertical search services on its competing services without "prior authorisation" to do so. "In this way they are appropriating the benefits of the investments of competitors," he said. "We are worried that this could reduce competitors' incentives to invest in the creation of original content for the benefit of internet users. This practice may impact for instance travel sites or sites providing restaurant guides."

Agreements formed by Google over "search advertisements" may also have unfairly restricted competition, the Commissioner said. 'Search advertisements' are ads that appear alongside results for terms that are searched for by users.

"Our third concern relates to agreements between Google and partners on the websites of which Google delivers search advertisements," Almunia said. "The agreements result in de facto exclusivity requiring them to obtain all or most of their requirements of search advertisements from Google, thus shutting out competing providers of search advertising intermediation services. This potentially impacts advertising services purchased for example by online stores, online magazines or broadcasters."

Google may also have acted unfairly to prevent advertising campaigns being linked through 'AdWords', Almunia said.

"We are concerned that Google imposes contractual restrictions on software developers which prevent them from offering tools that allow the seamless transfer of search advertising campaigns across AdWords and other platforms for search advertising," he said.

The European Commission will finalise a "remedies package" if Google proposes acceptable alterations to its business practices to address its concerns, Almunia said. If its suggested amendments are not acceptable the Commission could impose a fine and its own "remedies" on the company, he added.

Google said it rejected the Commission's findings but were "happy to discuss any concerns" the regulator has.

"Competition on the web has increased dramatically in the last two years since the Commission started looking at this and the competitive pressures Google faces are tremendous," Google spokesman Al Verney said, according to a report by the BBC.

The Commission launched its investigation into Google in November 2010. It looked at whether Google was manipulating search results to put competitor search companies at a disadvantage and whether it has unfairly placed restrictions on advertisers.

A number of companies have complained that Google has abused its position of market dominance in the area of internet search.

An appearance near the top of Google's 'natural' search rankings or its paid-for contextual adverts is a lifeline for many companies because of the near-total dominance that the company has in the European search engine market. It lists sites and services according to its own secret ranking system.

Google's rivals in the search market have urged the Commission to ensure the market becomes more competitive.

"In principle, news that Google has been instructed to propose remedies is welcome," David Wood, counsel for industry body the Initiative for a Competitive Online Marketplace (ICOMP) said. "This implies that the Commission has found that Google’s behaviour constituted an abuse of its dominant position in the online search market."

"For a number of years we have voiced our concerns that Google’s conduct violates European competition law. Google’s behaviour has caused significant harm to numerous businesses across the online ecosystem stifling innovation, competition and to the ultimate detriment of consumers and the European economy."

"It is vital that the terms of any agreed settlement include measures to quickly redress the harm caused to European businesses and consumers and are sufficiently robust to ensure that such harm is not repeated. We trust that this will prove to be the case and a competitive online market place will be restored," he said.

Companies including Microsoft and Foundem back ICOMP. Both are among those to have raised objections with how Google treats results for their services.

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