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Posted at 9:51 AM ET, 11/30/2010

E.U. launches formal antitrust investigation into Google

By Cecilia Kang

The European Commission, the European Union's executive body, said Tuesday it has opened a formal antitrust investigation into Google's search practices. The E.C. said in a release it will focus on whether Google illegally used its dominance in search to lower the rankings of unpaid search results from competitors while giving preferential rankings to its own services.

In a statement, it said, "This initiation of proceedings does not imply that the Commission has proof of any infringements. It only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority."

Specifically, the E.C. will focus on the four following areas:

1) Rankings: Google allegedly lowered the ranking of unpaid search results of competitors that specialize in services such as price comparisons. The firm has also allegedly given preferential placement of its own search services in order to shut out competitors.

2) Sponsored Advertising: Google allegedly lowered the 'Quality Score' for sponsored links of competing vertical search services. The Quality Score is one of the factors that determine the price paid to Google by advertisers.

3) Advertising Obligations: Google allegedly forced exclusivity obligations on advertising partners, preventing them from placing certain types of competing ads on their Web sites, as well as on computer and software vendors, with the aim of shutting out competing search tools.

4) Data Portability: Google allegedly restricted services from transporting advertising campaign data to competing online advertising platforms.

Google, in its official blog, said it will work with the E.C. on its investigation. But it also stressed that its search service is focused on users so some Web firms may be unhappy with their rankings.

"Not every website can come out on top, or even appear on the first page of our results, so there will almost always be website owners who are unhappy about their rankings," wrote Susan Wojcicki, senior vice president of product management and
Udi Manber, vice president of engineering.

David Balto, a antitrust attorney and fellow at the Center for American Progress, said the E.U. investigation won't necessarily lead to a similar investigation in the U.S.

"The standards under the U.S. are even higher than the EU and the U.S. enforcers will be reluctant to launch an investigation based on complaints of a disappointed competitor trying to pawn off bad a deceptive searches," Balto said.

But the European investigation comes amid greater scrutiny of Google's business practices. The search firm's proposed merger with online flight software provider ITA is under review and opposed by some firms such as Expedia, Kayak, Travelocity, and TripAdvisor, who are lobbying the Justice Department against the deal.

By Cecilia Kang  | November 30, 2010; 9:51 AM ET
Categories:  Antitrust, Google  
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Next: House hearing Thursday on opting out from Web tracking; eyes on FTC report this week

Comments

So will Google present the criteria for their rankings for the world to know? Google is the new Microsoft apparently. It would be very easy for users to switch their home search pages to something else. The idea that one has to pay more to get a higher ranking is repugnant. Popularity of search places might be a reasonable criteria but when that popularity is predetermined by some retail mentality of product placement then the quality of the sites can be drawn into question. I think I'm changing my home page to Bing or one of their other competitors. www.Dogpile.com is conglomeration search site that uses input from multiple search engines. That sounds more fair and perhaps will give a more accurate representation of what is available on the web.

Posted by: PayPaul | November 30, 2010 4:28 PM | Report abuse

Dear Ms Kang, I found your piece about the European Commission's decision to open an investigation on Google's policies very clear and informative.
You aptly recall the four major areas of inquiry that prompted this initiative. If these concerns end up being upheld by factual evidence, it will obviously be a major issue for that Company. And as far as I know, not the first instance when Google ends up in quicksands regarding the business/ethics mix.
Needless to say, it's very natural for you to bring forward the Company's spokepersons stand and response to this new episode. Your reader certainly wants to know what Google has to say for itself.
I find it more surprising to have so much attention paid to Mr Balto's reaction. I have no doubt he must be an expert in his own way, but using ... Google ... it only takes a split second to find out that, only two months ago, he already acted as a white knight for Google in a piece that first appeared in the HuffPost, and then in the American Progress website, both of them using the other one as a credential on his authority. What can you make out of this?
At the end of the day, I'm not sure we're looking for "A Solution Without A Problem", but it sounds like Google has found an attorney without a fee.
Otherwise, the E.U. bodies involved will very likely end up on some kind of a compromise, like they already have on say Google Books and StreetView, or on I.E. with MicroSoft.
In any case,they can hardly be motivated by some unspoken goal to advocate "disappointed competitors" since, as we well know, there is at this point no European search engine or browser of significant outreach available.

Posted by: WithAllDueRespectAndAppreciation | November 30, 2010 5:18 PM | Report abuse

The only tried and true method of getting instant cash is to get the EU "antitrust commission" to fine an American company a billion dollars and weaken their position in the marketplace. Worked a charm with Microsoft and earned a $billion. OK, not earned, stolen.

First it was the stupidity over the catching of an individual on a Google camera that came around every four years and ignoring the millions of domestic EU surveillance cameras that record 24 x 7 x 365. Then it was the deal with Google trying to triangulate on the IP address of a WiFi signal and was accused again of once every four years catching somebody's password.

Let's call this what it is -- International Economic War. Dressed up in a fancy commission, but extortion to help the deficits of the EU countries. Just forget the ridiculous "antitrust" and have the commissioners wear masks while in session.

Posted by: tommariner | November 30, 2010 5:21 PM | Report abuse

Danny Sullivan, the search guru, has written an insightful (and partly satirical) article titled "The Incredible Stupidity of Investigating Google for Acting Like a Search Engine" at Searchengineland.com. Sample paragraph:

"I did a search at Google today for 'cars' and was shocked. Rather than list links allowing me to search for “cars” on Bing, Yahoo, Baidu, Voila, Naver and Yandex, Google instead favored its own search results. I’m glad the EU will be investigating whether this favoritism violates anti-trust laws."

Posted by: Durant_Imboden | November 30, 2010 6:17 PM | Report abuse

What about Apple's practice of blocking all apps not sold by Apple?
That is monopoly at its worse!

Posted by: analyst72 | December 1, 2010 7:27 AM | Report abuse

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