Google bows to EU demands; will alter face, give clear links

Internet giant Google Inc has for the first time agreed to legally binding constraints on how it presents search results, according to a draft agreement with the EU's top competition authority.

It is preparing changes to its dominant search system to satisfy EU anti-trust authorities, the Financial Times reported from Brussels on Saturday, citing people familiar with the deal.

The US-based Google will revamp its results page to include prominent links to rival search engines and clearer signposts for its own in-house services.

In a five-year accord with Brussels, it has promised to make users "clearly aware" when promoting its own search services in specialised areas such as restaurants, finance and shopping.

The settlement marks the final act of a sprawling and contentious three-year investigation – involving US and EU authorities – that was triggered by complaints from Google's rivals, such as Microsoft.

Joaquin Almunia, the EU competition commissioner, extracted much bigger concessions than Washington, which gave Google's search business a clean bill of health in December.

Almunia told the New York Times on Tuesday that Google had to clearly differentiate its services from others, but stressed that the company would not have to change the key underlying algorithms, which drive the product.

But complainants, who can comment on the settlement before its adoption, will still be dismayed by many of its provisions. Groups such as Expedia, TripAdvisor and Microsoft have lobbied the EU to serve formal charges rather than sign a voluntary settlement that allows Google to entrench its dominance.

Once formally agreed, Google will also avoid both a hefty antitrust fine and the kind of transatlantic regulatory assault that hobbled Microsoft for almost a decade.

It is the first time Google has yielded to antitrust pressure on its core search business, which handles almost 90 per cent of queries in Europe.

Under the terms of the draft deal, formally submitted this week, Google will label its own specialist search services and provide ''visible'' links to rival search engines.

As a result, there will be a noticeable difference in the Google results page that will be enforced across Europe. A trustee will monitor compliance.

The stringency of the agreement's terms depends on whether Google makes money from a particular search service. Google's in-house news results, for example, merely need to be labelled and separated. But restaurant results – which link to a page with adverts – require more noticeable separation and three prominent links to rival search engines.

In Google's shopping service, where retailers pay to place products, links to rival shopping comparison websites will be auctioned.

Google's prized search algorithm will not be affected by the settlement. While the EU probe found problems with the way Google promoted its own services, it did not conclude that the US group deliberately demoted those of its competitors – a key concern of many complainants.

In a measure that goes further than the voluntary terms agreed with the US Federal Trade Commission, Google has also promised to set up a tool for sites to remove up to 10 per cent of a site's content from vertical search.

Other provisions will end exclusivity requirements for sites that embed Google search on their website and make it easier for small business advertisers to move their campaigns from Google to other search engines.