Google Auction NDA Seen as Way to Keep Rivals From Talking to EU

(Bloomberg) -- Google requires rivals to sign a non-disclosure agreement to take part in an auction that will decide which search providers are listed as alternatives on Android smartphones.

Competitors say the move is a further example of strong-arming by the Alphabet Inc. unit and could make it difficult for them to provide feedback to the European Union about Google's practices.

Google is giving its competitors until Aug. 13 to fill out and submit the NDA, which would bind both parties to protect confidential information for a period of five years after it is disclosed.

“A party may disclose to the other party information that the discloser considers confidential,” Google says in the non-disclosure agreement seen by Bloomberg. “Recipient must use a reasonable degree of care to protect confidential information and to prevent any unauthorized use or disclosure of confidential information.”

Google said in an emailed statement that the NDA is not designed to prevent participants from responding to inquiries from the European Commission, the bloc's antitrust body. It said an NDA is standard in many auctions and it's designed to protect sensitive information.

In the NDA form, Google doesn't specify whether the agreement would only pertain to information related to the auction, saying only the agreement is designed to “facilitate technical discussions concerning existing or future product development efforts by the parties.”

Google announced on Friday that starting next year it would prompt users to make a choice between Google and three other rival options as their default search provider on Android phones in Europe. It said it would decide by auction which alternative providers to include in a given country.

The company invited search providers to join the auction, putting forward a price they are willing to pay each time a user selects them from the choice screen. In the event that fewer than three eligible search providers meet the bid threshold, Google said it would fill any remaining slots randomly from a pool of eligible providers.

The changes by Google are aimed at fending off additional antitrust scrutiny. The European Commission last year fined Google 4.3 billion euros ($4.8 billion) for strong-arming device makers into pre-installing its Google search and Chrome browser, giving it a leg up because users are unlikely to look for alternatives if a default is already preloaded. The EU ordered Google to change that behavior and threatened additional fines if it failed to comply.

Following Friday's announcement, competitors criticized Google's plans, arguing it would only further harm competition.

“The auction diverts to Google money that providers would use to innovate and compete,” said Thomas Vinje, a counsel and spokesman for FairSearch, a group of Google rivals and a complainant in the Android competition case.

Christian Kroll, the CEO of Ecosia GmbH, a Berlin-based search engine that uses profits to plant trees, said he's “still considering” the situation, “but I wouldn't say that it's very likely that we'd actually join such an auction because I think it's highly unfair.”

“This offer is rather insulting,” he said. “As a monopolist, Google is asking its competitors to pay them money.”

In its blog post announcing the changes, Google said an auction is “a fair and objective method to determine which search providers are included in the choice screen.” It also said the revenue from the auction would help it to invest in developing and maintaining the Android platform, which is open-source.

The EU said it would closely monitor the implementation of the mechanism and would listen to relevant feedback from the market. A spokeswoman said Tuesday it had no comment on Google's decision to require competitors to sign an NDA.

Signing a non-disclosure agreement could complicate matters if a competitor wished to provide feedback to the EU. Paris-based search engine Qwant said it would refuse to sign the agreement so it could continue to participate in a court case related to Google's appeal of the commission decision.

“Such a confidentiality agreement has no other possible justification than the desire to silence its competitors,” Qwant said in an emailed statement. “This, again, is an unacceptable abuse of its dominant position.”

To contact the reporter on this story: Natalia Drozdiak in Brussels at ndrozdiak1@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Nate Lanxon

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