Google Confirms FTC Review, Will Cooperate

Google (NASDAQ:GOOG) June 24 said it has received a notice that the U.S. Federal Trade Commission has formally launched an investigation of the company's search business.

Google Fellow Amit Singhal said the company, which holds 65 percent search share in the United States and 90 percent-plus in many other countries, received the notice and will work with the FTC just as it has in the past to answer questions.

"It's still unclear exactly what the FTC's concerns are, but we're clear about where we stand," Singhal wrote in a blog post. "Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow."

Google's search business has come under considerable scrutiny in the last several months, starting in Europe.

The European Commission launched an investigation into the company's search practices after vertical search engines such as Foundem, eJustice.fr and Microsoft's (NASDAQ:MSFT) Ciao complained the company favored its own Web services in search results on Google.com over theirs. They argued that this put them at a significant competitive disadvantage in the market.

Google faces similar accusation in the United States from Texas State Attorney General Gregg Abbott, who asked for reams of info on Google's ad pricing, shopping search and the ranking of Websites in search results and ad listings.

News of a formal FTC inquiry has been brewing for months, though the Wall Street Journal correctly foreshadowed the formal inquiry.  

The FTC has decided to press forward after hearing complaints from Microsoft, Expedia (NASDAQ:EXPE), TripAdvisor, Yelp and others that Google promotes its own Web services above their own.

Google has denied all allegations, noting that its search algorithms analyze Website quality and popularity based on links for placement as part of its PageRank system. The company is fond of telling anyone who mentions the "monopoly" word in the same breath as "Google" that the competition is just a click away.

While Singhal did not repeat that mantra in his post, he argued Google's goal is to put the user first by delivering results that are as relevant and with great speed and efficiency. For example, the company introduced Google Instant predictive search technology last year and is advancing this technology set to include Web pages and images this summer.

Singhal also noted that Google makes sure to distinguish ads from search results, and share information about its ad practices with advertisers and how its search technology works with those who want to learn more about it.

The company also created a Data Liberation front in 2009 to ensure users control their own data. This is accompanied by a Google Dashboard, which lists data users create with Google's Web services.

Despite all of this, FairSearch.org, formed by Expedia and other online travel companies committed to stop Google from acquiring ITA Sofware last year, cheered the idea that the FTC is launching a broad antitrust investigation into Google's business practices.

"Google engages in anti-competitive behavior across many vertical categories of search that harms consumers by restricting the ability of other companies to compete to put the best products and services in front of Internet users, who should be allowed to pick winners and losers online, not Google," FairSearch said in a statement.

As FairSearch.org suggests, the FTC's argument might be that Google limits consumer choice by hiding vertical search rivals lower in its results. This burden of proof could prove quite difficult.