EU threatens Google with legal action if it doesn't improve unfair search policies

Google has not done enough to address concerns that it is filtering out the competition in search results, the EU's competition chief has said.

The Internet giant currently holds a 90 per cent hold on the European search market. The European Commission believes that this has allowed the company to unfairly promote their own products, services and advertising ahead of those of its competitors.

Google had sent the commission a number of ideas on how they could address the issues, such as placing boxes around promotional shopping products and other paid-for links offered in results, as well as those from Google services such as YouTube and Maps.

However, the competition chief Joaquin Almunia said that the proposals received last year were "not enough to overcome our concerns." He added that a letter has now been sent to Google chairman Eric Schmidt, asking the company "to present better proposals."

Google's ideas were made public in April when they were "road tested" by Fairsearch, a group made up of Google competitors including Microsoft, Nokia and TripAdvisor, as well as a number of smaller British, French and German companies.

They universally rejected the proposals and concluded that the suggestions would make the results more prominent, only serving to give the company greater dominance.

"It is clear that mere labelling is not any kind of solution to the competition concerns that have been identified. Google should implement the same ranking policy to all websites," Microsoft said in April.

Research commissioned by the group and carried out by two American academics on 1,888 UK web users, found that one in five clicked on Google's commercial services, compared to one in 200 on those of rivals.

The study concluded that "Google [services] benefit from better placement, richer graphics and better visuals than it permits competitors."

A Google spokesman said its proposal "clearly addresses" the concerns of the EU authorities, adding "We continue to work with the commission to settle this case."

If the dispute is not settled, the European Commission could take legal action and, if it is ruled to be breaking competition rules, fine Google up to 10 per cent of its annual revenue.