Google will be forced to change the way its search results are presented in Europe or face antitrust charges for "diverting traffic" to its own services, The Financial Times reported the European Union's antitrust chief as saying.
The EU's competition commissioner, Joaquin Almunia, told the newspaper in an interview published on Friday that he intends to prevent Google from allegedly distorting choices for consumers and taking business from rivals.
"We are still investigating, but my conviction is are diverting traffic," the newspaper quoted him as saying, referring to Google's preferential treatment of its own vertical search services.
"They are monetizing this kind of business, the strong position they have in the general search market and this is not only a dominant position, I think I fear there is an abuse of this dominant position," he said.
The EU issued Google an ultimatum on December 18, giving it a month to come up with detailed proposals to resolved a two-year investigation into complaints that it used its power to block rivals such as Microsoft.
Google has been the center of a two-year investigation by the EU based on complaints that Google unfairly favored its services over its rivals in search results and that it may have copied material from travel and restaurant websites without permission.
Almunia told the newspaper that his concern was "the way they present their own services" and that he was "not discussing the algorithm" the top-secret formula behind Google's search engine.
The FT said this suggested one facet of the solution would be labeling when Google's in-house services such as shopping comparison information - are artificially given higher billing than rivals, although other changes would likely apply to how Google services are displayed within general search engines.
He also said that while Google showed a more constructive approach at a meeting in December, he warned that he would be "obliged" to issue formal charges if its proposal was unsatisfactory.
Google spokesman Al Verney said: "We continue to work cooperatively with the commission."
Divergence from US
Almunia's spokesman confirmed the quotes in the FT but said they did not add a new position on behalf of the European Commission.
"He was highlighting that we think the preferential treatment may lead to diversion of traffic, which we consider anticompetitive. That's a basic concern we have as we explained last May," the spokesman, Antoine Colombani, told Reuters.
The EU's stance on Google marks a sharply different approach to that of U.S regulators, who last week ended their investigation into the company and concluded that it had not manipulated its Web search results to hurt rivals, a verdict which disappointed its rivals.
Almunia told the FT that the EU's rare divergence with the U.S. was due to the differing legal standards for abuse of dominance, as well as Google's stronger position in Europe where it handles more than 90 percent of searches.
He also dismissed the idea that an intervention would cause a rift with the US and trigger outrage at a European meddling with a US corporate giant.
He said, "I have never received a single message coming from the other side of the Atlantic saying, 'hey, what are you doing?' Everyone knows this is global."
Almunia said a separate a less advanced probe into Google's Android's operating system will remain open and outside the settlement.
© Thomson Reuters 2012