Google Faces EU Antitrust Investigation over Search

The European Union’s inquiry into Google’s search practices has evolved into a full-blown investigation as the agency’s antitrust watchdog pledged to take a hard look at the search engine.

Foundem, eJustice and Microsoft’s Ciao filed complaints last February with the EU, alleging that Google surfaces links for its own Web services over those of the smaller comparison shopping engines on Google.com.

The European Commission followed up with this statement Nov. 30:

“The Commission will investigate whether Google has abused a dominant market position in online search by allegedly lowering the ranking of unpaid search results of competing services which are specialized in providing users with specific online content such as price comparisons (so-called vertical search services) and by according preferential placement to the results of its own vertical search services in order to shut out competing services.”

The Commission will further look into allegations that Google lowered the quality score, a signal that helps determine the price paid to Google by advertisers, for sponsored links of competing search services.

The Commission’s probe will also scrutinize allegations that Google prevented ad partners from placing competing ads from some vendors on their Websites.

Google, which denied the claims at that time and asserted rival Microsoft was behind the hullabaloo, reiterated its defense in a blog post Nov. 30 and said the scrutiny was to be expected given Google’s size and success in search.

Google also told eWEEK in a statement:

“Since we started Google we have worked hard to do the right thing by our users and our industry-ensuring that ads are always clearly marked, making it easy for users to take their data with them when they switch services and investing heavily in open source projects. But there’s always going to be room for improvement, and so we’ll be working with the Commission to address any concerns.”

The Commission stressed that it has no proof of any infringements, but that it will conduct an in-depth investigation of Google over the matter.

If the Commission agrees with the plaintiffs that Google violated the spirit of competition in Europe, it can fine it up to 10 percent of Google’s global sales. Based on Google’s 2009 revenues of $24 billion, that would cost the company $2.4 billion.

Microsoft and Intel can attest to the cost of a Commission finding of guilt of abusing competition; both have been whacked with $1 billion-plus fines from the organization.

Google watchdogs for the Consumer Watchdog praised the Commission’s move but lamented the lack of such scrutiny of the search engine in the United States.

“It’s long been clear that Google unfairly uses its dominance in search to benefit its own services,” said John M. Simpson, director of Consumer Watchdog’s Inside Google project.

“I’m pleased with the European announcement, but this is a U.S. company and it is past time for our authorities to act decisively.”