Google on verge of antitrust deal with European regulators

A long-running dance between the European Commission and Google (s goog) over antitrust allegations is finally coming to an end amid reports that the two sides have reached an “understanding.”
According to a report by the Financial Times (registration required), Google offered to “make significant changes to its business practices” in order to avoid large fines and drawn out legal proceedings like what behalf Microsoft in the 1990s. The two sides are expected to announce a formal deal in the next few days.
A deal — if it actually does arrive — would finally put a stop to an ongoing drip-drip of rumors and leaks. As GigaOm’s Bobbie Johnson recounted in early July, Google offered up a “settlement letter” right before the expiration of a deadline imposed this spring by the European Commission.
The news comes after a lengthy investigation in which the European Commission had raised questions about four aspects of Google’s business: 1) whether Google favored its own products in search results at the expense of competitors; 2) whether it reproduced content from other websites without permission; 3) whether it used its market share to tell advertisers not to use other search ad services; 4) whether it locked advertisers into its services in a way that didn’t let them move their ad campaigns to rivals.
The stakes are especially high because Google controls up to 90 percent of the European search market compared to around 60 percent in the US.
The FT reported that a breakthrough came after Google agreed that the EC’s proposed remedies would apply not just to computer-based searches but to mobile searches as well. The paper added, however, that regulators would likely continue a separate investigation into whether Google was committing anti-competitive behavior with its Android mobile phones and tabloid operating systems.
Neither side has provided details about how exactly the deal will address the four concerns but an EC spokesman told the New York Times, “The commission considers Google’s proposals as a good basis for further talks and has now reached a good level of understanding.”
In an emailed statement to GigaOM, Google merely said “We continue to work cooperatively with the European Commission.”
The antitrust investigation came after Microsoft and other companies pressed regulators to address what they claimed was Google’s unfair dominance in the market. Google also faces ongoing antitrust investigations in other countries including Korea, India and Britain. Meanwhile, it is also facing lawsuits over its AdWords policies everywhere from France to the United States.
European Commission competition chief Joaquin Almunia has held himself out as a pragmatist who would reach settlements in the technology sector where companies and products often evolve faster than regulators can react to them.
A decision to settle with Google may also be borne of another factor: fines may not work. Despite seemingly massive fines on Microsoft (s msft), there is evidence that the fines had little impact on the company’s financial performance.