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Google does something Microsoft never does: Compromise

Google is getting ready to strike a grand bargain with European -- and then maybe American -- regulators to avoid a knock-down, drag-out legal fight.

While Google was putting on a spectacle for developers in -- and above -- San Francisco's Moscone Center last week, more important news was being hatched around a legal table far away from its big I/O confab.

So it was that we learn that Google is now offering a grand bargain to European regulators. In May, the EC's competition chief Joaquin Almunia offered an olive branch to Google as he layed out areas of "concern" that he said involved a potential "abuse" of the company's market power. Now it seems that Google is apparently willing to alter the way that it ranks other sites in its search listings if European regulators drop an investigation into whether Google abused its dominance in search and online advertising.

The actual text of the letter from Google Chairman Eric Schimdt to Almunia remains under wraps, though a spokesman for the company has acknowledged its existence. "We have made a proposal to address the four areas the European Commission described as potential concerns," Google said in a statement e-mailed to CNET and the rest of the world. "We continue to work cooperatively with the Commission."

Read into that what you will, but until now, Google has only bristled at allegations that it offers better rankings for its products compared with those from rivals and thus, thwarts competition. So if Google does alter its algorithms as part of a deal, the suspicion will be that perhaps Google was doing something untoward all along.

And you know what? Google will still come out smelling like a rose.

The company's PR mavens know that the public has the attention span of a Higgs Boson particle. People are more interested in hearing about the next incarnation of Android or when Google will be able to bring a pair of fancy-dancy glasses to consumers. So what if the regulators force Google to eat a slice of humble pie? With one pen stroke on the dotted line, Google will eliminate the prospect of messy and protracted legal confrontations -- on both sides of the pond -- as Google now has to worry about the Federal Trade Commission, which is still sniffing around for evidence that the company has unfairly thrown around its weight.

This was something Microsoft could never bring itself to do.

When the FTC and then the Justice Department began investigating allegations that Microsoft violated antitrust statutes in the mid-1990s, Bill Gates and Steve Ballmer might have cut a deal and avoided the distraction and embarrassment which accompanied -- and followed -- the Microsoft antitrust case. But that wasn't in Microsoft's DNA (immortalized in Ballmer's "heck with Janet Reno' quip) So Microsoft's dynamic duo chose to fight it out. Bad decision. History says that Microsoft won since it avoided the most onerous outcome -- getting broken into two companies by an over-reaching U.S. District judge. But the company was never again the same. Larry Page and Sergey Brin know their history and they have an incentive not to repeat Microsoft's.