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Google makes bid to dodge European antitrust fine

By Toby Sterling

Associated Press

Published: Monday, July 2 2012 2:48 p.m. MDT

Google chairman Eric Schmidt has submitted a proposal to European regulators in Brussels aimed at avoiding a showdown on the some of the Internet search leader's business practices.

The European Competition Commissioner Joaquin Almunia began investigating Google in 2010, and in May of this year warned the company it needed to quickly propose changes to several practices — notably including the way it promotes its own offerings in search results — or face possible fines.

"We have made a proposal to address the four areas the European Commission described as potential concerns," said Al Verney, a Google spokesman in Brussels. "We continue to work cooperatively with the commission."

Almunia's spokesman, Antoine Columbani, confirmed receiving a letter from Schmidt on Monday, but did not disclose details.

It is not clear what changes Google has offered to make. The four areas the Commission criticized were: how Google favors its own services in its search results, how it displays content from other websites, how it manages the ads appearing next to its search results, and how its actions affect marketers' ability to buy ads on rival networks.

If a settlement isn't reached and the European Commission files a case against Google, it will set the stage for a lengthy process that could result in the company being fined up to 10 percent of its annual revenue. In theory that could mean a fine of as much as $3.8 billion, based on Google's revenue last year.

But in a shift of tactics from previous commissioners, Almunia said in May he would prefer to end market abuses as soon as possible, rather than fine misbehavior retroactively, especially in the Internet industry.

"I believe that these fast-moving markets would particularly benefit from a quick resolution of the competition issues identified," he said then. "Restoring competition swiftly to the benefit of users at an early stage is always preferable to lengthy proceedings, although these sometimes become indispensable to competition enforcement."

Microsoft last week lost its final appeal in a decade-long fight against the Commission that cost it well over a billion euros (dollars).

Almunia said Google "has repeatedly expressed to me its willingness to discuss any concerns that the commission might have without having to engage in adversarial proceedings. This is why I am...giving Google an opportunity to offer remedies to address the concerns we have already identified."

Google also faces antitrust investigations in the United States, South Korea and India.

In the U.S., the Federal Trade Commission is looking into whether the company has been unfairly highlighting its own services in its influential search results and rigging its recommendations in a way that drives up online advertising prices.

The FTC recently signaled it is girding for a potential legal battle by hiring a prominent trial lawyer, former Justice Department prosecutor Beth Wilkinson, to assist in its investigation.

Almunia is expected to rule on Google's proposal within several weeks, but no date has yet been set.

AP Technology Writer Michael Liedtke contributed to this story from San Francisco.

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