FTC to Subpoena Google Over Antitrust in Search

Google is facing subpoenas regarding its search ad practices from the Federal Trade Commission, which is also speaking to the search engine's rivals about the company's business practices.

The Federal Trade Commission will subpoena Google over concerns that it has stifled competition on the Web, an action that could lead to a more formal antitrust inquiry into the company's search advertising practices.

The Wall Street Journal said the FTC's five-member panel will soon send Google (NASDAQ:GOOG) formal demands for information.

Moreover, the FTC will eventually send companies that work with Google formal requests for info about their work with the search engine, which commands 65 percent of the U.S. search market and averages a 90 percent-plus share in some countries around the world..

Neither Google nor the FTC would comment for eWEEK about this matter, which comes after the European Commission began investigating Google for similar transgressions overseas in November.

Vertical search engines Foundem, eJustice.fr, Microsoft Ciao and Microsoft (NASDAQ:MSFT) itself complained to Europe's antitrust agency that Google surfaced its own links on Google.com before those of smaller rivals. This favoritism, they argued, proved anticompetitive.

Europe's concerns were extended to the U.S. by the Texas state Attorney General Greg 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.

Google typically faces antitrust investigations over its larger mergers, such as its $3.1 billion bid for DoubleClick in 2008 and most recently, its $700 million bid for travel search vendor ITA Software.

After the Justice Department cleared the ITA buy in April, Bloomberg said the FTC warned Microsoft, Yahoo (NASDAQ:YHOO) and several other high-tech companies that it will issue civil investigative demands for info about Google's search ad practices. These demands are tantamount to subpoenas.

That brings matters to the present. 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 didn't do itself any favors when it declined to make one of its top executives available for a senate subcommittee's request for testimony about the search market.

U.S. senators Herb Kohl (D-WI) and chairman of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, and Mike Lee, (R-Utah) have threatened to subpoena Google CEO Larry Page and Executive Chairman Eric Schmidt to testify for their hearing on the search industry next month.

Google expects to send Chief Legal Officer David Drummond, who has been with the company for years and in 2007 testified before the committee regarding Google's DoubleClick acquisition and other matters.

"We're in talks with the Subcommittee, and we'll send them the executive who can best answer their questions," a Google spokesperson said.

However, Kohl and Lee said in a June 10 letter they preferred to have Page or Schmidt to answer "fundamental questions about business operations rather than merely legal matters."

Failing to bend to the Senate's wishes could draw more scrutiny from the FTC. FairSearch.org, which includes Expedia, Microsoft and more online travel companies whose goal was to keep ITA from falling into Google's grasp, 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.

The Journal said the FTC's investigation could take a year or longer to unfold, and may not result in any formal charges. Versus Google.