Antitrust commissioner Joaquin Almunia says search giant's proposals 'are not enough to overcome our concerns', bringing legal dispute closer

Google received another warning on Wednesday that it is edging closer to a legal showdown with the European Commission over the way it displays search results.

The search giant, which has about 90% of the European market, was told by the antitrust head of the European Commission that it must come up with new ideas for its presentation of search results to allay concerns that it is stifling competition.

More than a year after Google first offered its suggestions for tweaking how it shows results to the EC, and two months after they were made public, Joaquin Almunia of the EC's antitrust arm said that "I concluded that proposals that Google sent to us months ago are not enough to overcome our concerns". He said he has written to Google chairman Eric Schmidt "asking Google to present better proposals."

Google had suggested that it would put "frames" around promotional links offered on its results page, such as its paid-for Shopping results and other Google-owned properties like YouTube or Maps.

But those were bitterly criticised by opponents. Fairsearch, a lobbying group whose members include Microsoft and Nokia, as well as smaller British, French and German web companies, said that anything which gave Google's own products more prominence would increase, rather than reduce, its dominance.

The basis of their complaint is that Google unfairly promotes its own services while downgrading rivals'.

Almunia put Google's proposals to a "market test" in April, only to see them rejected almost immediately. If the rivals had agreed to Google's suggestion, the conflict would have been over.

Instead Fairsearch pointed to a survey by US group Consumer Watchdog which said that more than half of people in a survey did not realise that Google Shopping links were paid-for. It also pointed to a study by two American academics of 1,888 British users carried out in mid-June which found that "Google [services] benefit from better placement, richer graphics and better visuals than it permits competitors" - which resulted in one in five people clicking on Google's services, but only 1 in 200 on rivals'.

The disparity was even greater on mobile phones, where the smaller screen severely limits the number of results - and rival links - that can be shown.

They concluded that Google's previously suggested tweaks to its search results would have little if any impact on the existing monopoly - and might even strengthen it.

The EC's key remaining concern is over Google's promotion of its other services such as Shopping, Maps and others in its results when it presents search results. Google has argued that the services are offered as part of its "universal search" results - although Maps, Shopping and YouTube can be found at their own URLs, and have their own downloadable apps for mobile phones.

The EC investigation was triggered in November 2010 by a complaint from British "vertical search" company Foundem, which demonstrated how results for Google-owned properties consistently scored higher than its own, despite no obvious differences in the content or quality of the results.

Fairsearch has called for Google to make public the criteria that it uses for promoting some search results above others, so that there would be a "level playing field" for those competing to be at the top of the search rankings. Around 90% of all clickthroughs on desktop results pages come from the results displayed on the first page.

Joaquin Almunia, whose team has been investigating Google's dominance since November 2010, has hinted previously that if Google does not provide a satisfactory solution then the EC might take court action. That would be a lengthy process but could see Google fined up to 10% of its worldwide revenue for "abuse of a monopoly position".

The EC's hard line is in contrast with the US, where the Federal Trade Commission (FTC) carried out a similar investigation into Google's search results over a two-year period. Although the Guardian understands that FTC staff were keen for the agency to pursue a full investigation, a majority of the five FTC commissioners - who have to decide on actions - were not in favour of action.

If Almunia prevails, Europe will be the only area in the world which has successfully forced Google to alter how it presents search and promoted results.

A Google spokesman said its proposal "clearly addresses" the four areas of concern laid out by EU authorities, which relate to promotion of its own services, "scraping" of other sites' content, portability of advertising campaigns between search engines, and display of rivals' adverts on the same pages as Google ones.

"We continue to work with the commission to settle this case," the spokesman said.

Both sides have said that they are committed to reaching a settlement.

Fairsearch also filed a formed complaint of "anticompetitive conduct" against Google's Android operating system, claiming predatory pricing, on 25 March.