Rivals Invited to Review Proposed Google Antitrust Settlement

The European Commission said that it had begun so-called market testing to see whether the remedies addressed complaints that Google favors its own products in search results.

The step also signals that Google, having avoided antitrust charges in the United States, has offered concessions that are acceptable to the commission and that would allow the company to avoid a guilty verdict and a huge fine in Europe.

“Now we have concrete proposals on the table which meet the necessary standards for us to submit to the public and to seek feedback on,” said Antoine Colombani, a spokesman for the European Union’s competition commissioner, Joaquín Almunia.

The testing would last a month, and a final settlement — which both sides have been working toward since late 2010 — could be agreed upon after the summer in the best case, Mr. Colombani said.

Google could still face a fine of as much as 10 percent of its global annual sales, which were nearly $50 billion last year, if it broke its promises. But the deal would allow Google to escape the long, expensive antitrust battles that Microsoft fought in Europe over its media player and server software. It paid large fines and agreed to regulatory oversight and changes in products.

A major element of Google’s offer to settle the case is to show links to the Web sites of competitors who offer specialized search services. In cases where Google sells advertising next to results for specific industries like restaurants and hotels, Google would provide a menu of at least three options for non-Google search services.

In addition, Google would label results pointing to its own services — like Google Maps, if they display local businesses — as Google properties and separate them from general search results with a box, though they would still appear in the normal list of results.

Before it reached a deal with the commission, Google was under pressure to make more concessions. A prominent consumer group and groups with links to Microsoft condemned Google for not making sufficient changes, and some companies asked for a longer period of market testing.

Some complained that the new rules would apply only to Google’s national domains because Google users in Europe can also use the company’s global Web site, which ends in .com, rather than .fr in France. Google does not plan to make any of the changes to the site ending in .com, so users in the United States will not see them.

Asked whether the current offer by Google was final, Al Verney, a spokesman for the company, said only, “We continue to work cooperatively with the commission.”

Google’s agreement would be legally binding for five years, and a third party approved by the commission would be put in place to ensure compliance.

During market testing, other companies in the industry will be permitted to comment on the proposal. Google’s rivals, including Microsoft, are expected to submit comments. Any settlement can be appealed to the commission. Some major technology rivals have demanded a longer period of market testing before the commission closes the case.

“Google has taken a year to develop the proposal released today,” said Thomas Vinje, chief lawyer for FairSearch Europe, a group of Google competitors including Microsoft, Nokia and Oracle. “We think it’s only fair that outside experts have more than a month to help the commission market test the long-lasting effects of Google’s proposal on consumers and innovation.”

Mr. Vinje said the changes did not go far enough. “Google’s own screen shots in its proposal shows it seeks approval to continue preferential treatment for its own products,” he said.

Other rivals took an even tougher line, and seemed likely to demand more concessions.

“Instead of promising to end its abusive practices, Google’s proposal seems to offer a halfhearted attempt to dilute their anticompetitive effects by labeling Google’s own services and throwing in some token links to competitors’ services alongside them,” said Shivaun Raff, a co-founder of Foundem, a British comparison-shopping site that was one of the original complainants in the case. “Neither measure will make a dent in Google’s ability to hijack the traffic and revenues of its rivals.”

Claire Cain Miller contributed reporting from San Francisco.

News Analysis: Google Focuses on Privacy After Street View Settlement

This week, though, Google was told what to do. In the culmination of a two-year investigation into whether its Street View violated privacy protections, law-enforcement officials told the company to shape up. Again.

Google has repeatedly redefined how people communicate and acquire knowledge in the 21st century, and it has repeatedly been accused of breaking the rules in the process. The company says it has taken its mistakes in the case to heart and has already changed. Never again, it says, will a midlevel engineer be able to do anything like what one did in Street View: start a program to scoop up data secretly from potentially millions of unencrypted Wi-Fi networks around the world, without his bosses bothering to know.

To make sure of this, a coalition of 38 states has drawn up numerous specific steps for Google to take, ranging from educating its engineers to educating its lawyers. Whatever Google was doing before to improve its privacy controls was not enough, the states say.

“There is no reason to believe they are not going to comply with each and every term in this agreement,” said Matthew F. Fitzsimmons, the Connecticut assistant attorney general who worked on the settlement.

Jill Hazelbaker, a Google spokeswoman, said, “We’ve worked hard to improve our practices.”

Google’s internal compliance will not be directly monitored. But if states feel Google is not upholding its side of the deal, they can bring the matter up to the executive committee that brokered the deal, including the attorneys general of Illinois, Massachusetts and Texas.

Some privacy experts think the program has a fair chance of success.

“This gives me some glimmer of hope that going forward, the culture of Google will include more privacy by design,” said Joseph L. Hall, senior staff technologist at the Center for Democracy and Technology. “Then they could do things in an innovative way on the front end that won’t result in needing to beg for forgiveness later.”

Still, it is difficult to make changes in an extremely successful technology firm. Silicon Valley executives remember all too well the case of Microsoft, which owned the future in the mid-1990s in the way that Google, Facebook and Amazon seem to now. Then the government sued the company and came close to breaking it up. Microsoft’s image, and its momentum, never recovered.

“Google is just as concerned, if not more concerned, about public perception than it is about paying a few fines,” said Ryan Calo, a law professor at the University of Washington who studies privacy issues. “Lay people will take a settlement as being evidence of a mea culpa.”

Larry Page, Google’s co-founder and chief executive, has made it clear that he wants the 31,000-employee company to try to act like a start-up, which means taking risks and doing things quickly. That was the sort of attitude that led to the Street View violation.

“The states are trying to inculcate a culture of privacy, to make it part of the DNA of Google,” said Timothy J. Toohey, a privacy expert at the law firm Snell & Wilmer. “But regulators and attorneys general are not technologists, and it becomes very difficult to follow through.”

Inside Google, the Street View breach was viewed more as a management problem than as a privacy one, according to people briefed on the investigation who were not authorized to speak publicly. The company realized, these people said, that it needed clearer control over what its engineers were doing and tighter restrictions on which engineers could gain access to certain data.

There has also been a realization among Google executives that these privacy penalties do matter, if only because of the reputational risks. They know the company can only sustain so many strikes against it in the public’s point of view, and the problem becomes more acute with each one, said former Google executives who spoke anonymously to preserve business relationships.

Edward Wyatt contributed reporting from Washington.

Verizon to Pay $250 Million to TiVo in Patent Settlement

TiVo has turned to litigation to generate revenue from licensing fees as it struggles with competition from low-cost rivals.

Analysts said the settlement could bode well for a TiVo victory in cases against other companies, including Time Warner Cable and Motorola Mobility, which is now owned by Google. TiVo reached a similar deal in January with AT&T, which agreed to pay $215 million.

TiVo also prevailed in a similar case against Dish Network and EchoStar in May 2011. Verizon declined to comment and referred questions to TiVo.

Regarding the continuing legal cases, “Verizon has set a strong precedent for Motorola to settle,” said Todd Mitchell, an analyst at Brean Murray, Carret, a boutique investment bank.

TiVo sued Time Warner Cable in connection with the Motorola litigation, and Monday’s settlement only improves the company’s position, according to Barton Crocket, an analyst at Lazard Capital Markets.

“It also potentially sets the stage for a similar settlement with Time Warner Cable over the next year or so,” Mr. Crockett said.

Time Warner Cable declined to comment on Monday. Motorola Mobility had no immediate comment.

TiVo said Verizon would initially pay $100 million in cash, and recurring quarterly payments totaling $150.4 million through July 2018.

As part of the deal, the companies were discussing having TiVo boxes carry a new Internet video streaming service that Verizon is developing with Coinstar’s Redbox to compete with Netflix. TiVo’s DVRs already feature video services from Netflix and Amazon.com.

In addition to the guaranteed compensation, Verizon will pay TiVo license fees on a monthly basis through July 2018 for each Verizon DVR subscriber above a certain number.

If Verizon and TiVo pursue “certain commercial initiatives” by Dec. 21, up to $29.4 million of the payments made by Verizon would be subject to a credit of an equal amount, TiVo said.

This appears to refer to a nonexclusive deal for Verizon to offer TiVo boxes to customers, according to Mr. Mitchell of Brean Murray.

The companies also agreed to dismiss all pending litigation between them.

Google and European Commission Move Toward Antitrust Settlement

Europe’s competition commissioner, Joaquín Almunia, had asked Google in May to make concessions in four areas or face formal antitrust charges, which could mean years of costly litigation and hefty penalties if it lost.

“The commission considers Google’s proposals as a good basis for further talks and has now reached a good level of understanding,” said a commission spokesman, Antoine Colombani. He added that meetings on a more technical level would now be held to reach a settlement.

It was unclear what concessions Google had offered. A spokesman in Brussels, Al Verney, said only, “We continue to work cooperatively with the European Commission.”

The commission found after a nearly two-year inquiry that Google might have given its own products an edge over those of others while maintaining that it offered neutral results.

Google’s search engine has a 90 percent market share in many big European markets, compared with less than 70 percent in the United States, where it is also under investigation.

In May, Mr. Almunia took the rare step of going public with his demand that Google change its business practices, an indication that he was looking to settle rather than go through the time-consuming process of filing charges and making a case — after which the remedies won are often irrelevant in the rapidly changing technology industry.

“These fast-moving markets would particularly benefit from a quick resolution of the competition issues identified,” Mr. Almunia said then, calling this preferable to “lengthy proceedings.”

Nicolas Petit, a law professor at the University of Liège in Belgium, said that he did not believe the commission had a strong case against Google, and that this might have contributed to Mr. Almunia’s unusual offer. “It could have been a bluff, like a poker game,” he said.

On the other hand, Mr. Petit said, Google has a reputation for pushing the boundaries of the law and then backing off when it faces legal challenges, as it did when it began scanning books without seeking permission and then agreed to pay $125 million to settle charges of copyright infringement — a deal later rejected by an American judge.

“Its image is extremely important in its success,” Mr. Petit said, “and that’s why they like settlements — because they can be presented as win-win situations for consumers and the company alike.”

The commission’s investigation began after smaller Web businesses complained that Google had downgraded their sites in its search results or discriminated against them in other ways. Microsoft — itself the target of a decade-long antitrust battle with the commission that resulted in fines and penalties of 1.7 billion euros, or $2.06 billion at the current exchange rate — filed a complaint in March 2011.

The four practices Mr. Almunia listed in May included the way Google displayed links to its services differently from links to competitors’ services, and its use of restaurant and travel reviews from competitors’ Web sites.