Under the spotlight
The WSJ is reporting that the US Federal Trade (FTC) is launching a broad, formal investigation into Google to see if it has engaged in anti-competitive behaviour in the search advertising market, which it dominates. The FTC has yet to formally confirm this action.
At the same time the FT's sources tell it the attorneys-general in the states of New York, California and Ohio have recently initiated similar formal investigations.
Google has a near monopoly in search advertising in many markets, and although that itself isn't illegal, the use of that position to harm competition is. Google has faced allegations for some time of favouring certain search results - specifically those linking to its own products.
In February 2010 some price comparison sites lodged a complaint with the EU about Google's business practices in this market. This eventually led to the opening of a formal antitrust investigation. More recently Google's acquisition of travel search company ITA prompted howls of outrage from competitors, but was eventually approved by US regulators, subject to some conditions. The recent proposed acquisition of ad optimizer Admeld will be also be scrutinized, according to Bloomberg.
The price comparison complaint was linked to ICOMP - an organisation devoted to promoting competition online. The ITA complaints were aggregated into fairsearch.org, which has similar aims, but identifies Google explicitly as the baddy. Both organisations list Microsoft as a member, which also happens to be Google's main competitor in search.
"The Federal Trade Commission's investigation seems to be focused on the issue of ‘prioritisation'," blogged ICOMP today. "Despite its public denials, there seems to be little doubt that Google, by one means or another, ensures that its commercial services (shopping, maps, music etc) get higher rankings than similar services offered by others. Not only is this totally unclear to consumers, but it can have a calamitous effect on online businesses which compete with Goggle (i.e. competing shopping, map, video etc service providers)."
"The result of Google's anti-competitive practices is to curb innovation and investment in new technologies by other companies," said fairsearch.org in a statement. "These anti-competitive practices include scraping and using other companies' content without their permission, deceptive display of search results, manipulation of search results to favour Google's products, and the acquisition of competitive threats to Google's dominance."
Microsoft, of course, knows all about antitrust scrutiny, have been subject to it for much of its history. It's almost inevitable that any company with an overwhelming market share will be investigated for anticompetitive activities, and regardless of the outcome of this investigation, it will probably result in Google trying even harder to at least appear to deliver unbiased search results.
Google had yet to formally comment on the matter at time of writing.
UPDATE - 18:00, 24 June 2011 - Google has now acknowledged the FTC action and blogged on it here.
