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Update: Europe launches antitrust inquiry into Google

Update: With comments from European Commission

Europe's competition authorities said they have launched an informal antitrust inquiry into Google after receiving complaints from three companies about the online giant's seach and advertising practices.

"The Commission has not opened a formal investigation for the time being," said Marisa Gonzalez Iglesias, a spokeswoman for the commisson's competition bureau. "As isusual when the Commission receives complaints, it informed Google earlier this month and asked the company to comment on the allegations."

She declined to give more details and pointed to Google's statement on the company's Web site. The European Commission has been more aggressive in inspecting the behavior of Silicon Valley companies. Last year, it imposed a $1.4 billion fine on chip giant Intel, finding it abused its market power. It has also until recently reviewed Microsoft's practice of bundling its Internet Explorer browser with Windows operating system.

Google disclosed the probe in a blog posting Tuesday evening in which it disputed the allegations by its competitors.

In the U.S., Google faces increased scrutiny by federal antitrust watchdogs. The Justice Department said in a federal fairness hearing last week in New York that Google's settlement with book authors and publishers could unfairly inhibit competitors in online publishing. The Federal Trade Commission's inquiry into Google's board ties with Apple led CEO Eric Schmidt to quit the board of Apple, which it competes with on mobile software and devices.

Google has said it expected greater attention by governments because of its size and aggressive push into so many new industries. In recent months, that including forays into making cellphones, broadband services, music, and social networking.

In the European review, Foundem, a British price comparison site; a French legal search engine called; and the Ciao! from Bing consumer review site -- brought their complaints to the European Commission's competition bureau, which has since notified Google of the review.

"Though each case raises slightly different issues, the question they ultimately pose is whether Google is doing anything to choke off competition or hurt our users and partners. This is not the case," wrote Julia Holtz, Google's senior competition counsel.

Specifically, Google said that Foundem and argued to the European Commission that Google's search engine demoted their sites in its results. Google argued that the search results are based on its algorithms and don't intentionally assign a lower rank to competing search engines.

"Our algorithms aim to rank first what people are most likely to find useful and we have nothing against vertical search sites -- indeed many vertical search engines like, Opodo and Expedia typically rank high in Google's results," Holtz wrote.

Ciao, which is owned by Microsoft and an advertising partner to Google, complained about Google's terms and conditions for its AdSense program. The firm first brought its compaint to German authorities and its case was transferred to the European Commission, according to Google.

Critics in the United States have complained that Google has created its own network of applications tied to its dominant search engine, making it difficult for competing applications.

Google says that competition is readily provided by search engines such as Yahoo and Microsoft's Bing. And Google says it has done nothing to unfairly tie users to its applications.

By Cecilia Kang  |  February 23, 2010; 9:59 PM ET
Categories:  Antitrust , Google , Microsoft  
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