Antitrust deal leaves Google undamaged

Agreement opens door for search rivals, but it's doubtful it will matter

Google's agreement to end its three-year antitrust dispute with the European Union gives the company's search rivals a boost, but it's probably not enough to make a dent in Google's search engine dominance.

On Wednesday, the European Commission announced that Google agreed to give comparable display to rival search services, settling a EU antitrust case that began in November, 2010. The case was launched after competitors accused Google of purposefully limiting the visibility of rival search engines and websites in its own search results.

This week's agreement comes a little more than a year after the U.S. Federal Trade Commission reached an agreement with Google after a lengthy antitrust investigation of its own.

In the FTC case, Google agreed to change some of its business practices and escaped the government scrape without a fine. Industry analysts characterized the FTC agreement as the antitrust equivalent of a good talking-to.

In its deal with the EU, Google agreed to give more prominent display to rival links and images in its search results. The option to "hide" or switch off rival links also was removed.

In another aspect of the antitrust case, rivals accused Google of imposing contractual restrictions that kept advertisers from moving their online campaigns to rival search engines. Google had already pledged to stop the practice before this week's deal was announced.

"I think it probably can be looked at as a win for Google," said Scott Strawn, IDC's Google analyst. "There's no fine associated with it and that could have been billions of dollars. Google has a lot of cash so it could have absorbed a hit like that, but it wouldn't have been a good thing. And look at the reactions of the other [rival] parties involved. They're not very happy about the ruling."

The EU agreement means Google not only avoided a fine or a deepened, and possibly embarrassing, legal battle, but it also gets rid of the distraction of dealing with long antitrust issue.

"I would assume this is something they would prefer not to grow into a larger distraction," said Whit Andrews, an analyst with Gartner. "They do not want to spend their time thinking about how much of their effort they'll end up burning on this issue. They don't want to have meetings about it. They don't want to be known for it. They want to be out there coming up with new media models."

However, even more than getting rid of a distraction, Andrews said Google has to be happy to come out from under the EU's spotlight without any major damage to its reputation with everyday users.

"I think we can see that [Google's search rivals] are aware of the fact that they have failed to create a situation where Google's popularity is being eroded," said Andrews. "They want the world to turn against Google. And that hasn't happened. Microsoft's memory of being an untrusted vendor is vivid. That was the climate Microsoft faced. They want Google to face the same thing."

Google's rivals, such as Microsoft with its Bing search engine, haven't pushed for antitrust action because they want financial redress, Andrews said. They want to tarnish Google's image and give its users a reason to try a different search engine, a different smartphone or a different cloud-based set of office apps.

"[Google's competitors] want to get across the message to Google's users that [Google is] not to be trusted," he added. "If they can create an environment of mistrust, then they impact Google directly... But Google does not face a dislike or suspicion from the vast majority of its user base. And any distrust is generally eroded by Google's excellent performance in search results."

So if the EU case didn't deal Google a financial blow or affect its image, does it hurt Google at all?

The agreement gives Google's search rivals more prominent display on the company's search results pages. That change opens the door for rivals Microsoft's Bing and Yahoo's search to squeeze through.

The question is whether that's enough of an opening to help rivals make a dent in Google's 90% market share dominance in Europe. The answer from most analysts is: Probably not.

"A search engine like Google or Bing or any of the others are essentially directing traffic through the Web, Strawn noted. "If you provide the ability for a rival to click through to their website, it has the potential to impact the business because it changes the flow... If you put a rival's logo or link on your page, you're opening up a door through which traffic, that you would have monetized, will be monetized by a competitor instead. Will it affect them monetarily? Of course, but it's all about magnitude."

He added that since Google has a grip on 90% of search share in Europe, there's little for the company to do but slip in dominance.

"This won't help Google," said Strawn. "It has the potential for having an impact on market share. But based on what they're describing here, I'm not sure it's enough to meaningfully move the dial... The devil is in the details. We'll have to wait and see how the changes are implemented."

Patrick Moorhead, an analyst with Moor Insights & Strategy, said the EU agreement opens a door for Yahoo and Bing, but both companies need to up their game if they have any hope of stepping through it.

"Bing and Yahoo need to up their product and marketing game now that they have an opening. Otherwise, it will be for naught," he added. "This definitely slows Google down, but given their lead, I don't think it will have a long-lasting effect."

The antitrust action, added Gartner's Andrews, doesn't change the fact that that the word "Google" still means "how you find stuff."

This article, Antitrust deal leaves Google undamaged , was originally published at Computerworld.com.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com.

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