Brussels is moving towards a regulatory showdown with Google by claiming that it unfairly manipulates its position as the world's biggest internet search engine and is threatening to punish Google with sanctions if it is does not change the way it present its search results in Europe.
Google has been involved in a long-running row over whether it has changed its search results to give preferential treatment to links to its own services, at the expense of those from competitors. Last week US regulators gave Google the all-clear, but Joaquin Almunia, the EU head of competition, has made it clear that despite there being no evidence he believes Google are diverting traffic for their own advantage and that this behaviour constitutes an abuse of their dominant position.
Eric Schmidt met with Mr Almunia shortly before Christmas to discuss the issue and possible resolutions, following which it is believed that a feasible concession from Google could be to clearly mark links to its own services such as news and shopping comparison which are artificially given a higher billing than rivals in the unsponsored 'natural' results (if found to have manipulated the search results), rather than change the codes that determine how results are presented. This could mark the first time that the US group has bowed to regulatory pressure to change its core search business.
By contrast, the US Federal Trade Commission (FTC) cleared the search giant of any wrongdoing last week after a 19 month long investigation and ruled that recent changes to its algorithms benefited the consumer as opposed to harming competition. Google's rivals reacted angrily to the FTC judgment with Microsoft branding it "weak" and "unusual" and calling on Brussels to take a firmer stance.
If the case moved to the courts and the EC showed that Google had broken EU antitrust laws through the abuse of a dominant position, Google could be fined 10% of its worldwide revenues, which for 2011 amounts to €2.9bn (£2.3bn). Microsoft, which fell foul of Brussels regulators over the preferential treatment it gave to its own Internet Explorer browser within Windows software, has been fined €1bn but is still being pursued for not complying with requests to offer users a choice of browsers as the default for their PC.