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Google investigated over alleged antitrust violations


The European Commission has opened an investigation into Google's search engine business to discover whether it should be fined for abusing its dominant market position to benefit itself at the expense of competitors.

The Commission is acting on complaints from three companies which said that their web search and price comparison businesses were affected by Google behaviour designed to encourage web searchers to use its own services.

"The opening of formal proceedings follows complaints by search service providers about unfavourable treatment of their services in Google's unpaid and sponsored search results coupled with an alleged preferential placement of Google's own services," said a European Commission statement. "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."

The European Commission is responsible for enforcing EU competition law. It conducted a nine-year case against Microsoft over allegations that its bundling together of its services was anti-competitive. It followed that with a related case lasting a further two years against the software maker.

It also levied a €1 billion fine on Intel last year over secret payments and rebates it paid to companies that agreed not to use rivals' chips in computers.

An appearance near the top of Google's 'natural' search rankings or its paid-for contextual adverts is a lifeline for many companies because of the near-total dominance that the company has in the European search engine market.

It lists sites and services according to its own secret ranking system. It is this system which will be the focus of the Commission's investigation.

"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 specialised 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," said the Commission statement. "The Commission will also look into allegations that Google 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."

Search engines Foundem and ejustice.fr and Microsoft-owned price comparison site Ciao made the complaints in February of this year.

"EU competition law imposes special obligations on dominant undertakings and ICOMP believes that it is important for these obligations to be fully understood and enforced as a consequence of this investigation," said David Wood, legal counsel for the Microsoft-sponsored competition lobby group of which Foundem is a member.

"In particular a dominant Google has a responsibility to behave transparently, to deal fairly with competitors and customers and to afford everyone the opportunity to share in the benefits of the online marketplace," said Wood.

Google executives Susan Wojcicki and Udi Manber said in a blog post that the company would co-operate with the Commission, but that it thought that it behaved properly.

"We aim to be as transparent as possible. We provide more information about how our ranking works than any other major search engine, through our webmaster central site, blog, diagnostic tools, support forum, and YouTube channel," said the post. "We give our advertisers information about the ad auction, tips on how to improve their ad quality scores, and the ability to simulate their bids to give them more transparency. And we’re committed to increasing that transparency going forward. At the same time, we don’t want to help people game our system. We do everything we can to ensure that the integrity of our results isn’t compromised."

"We built Google for users, not websites. It may seem obvious, but people sometimes forget this- 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," it said. " The most important thing is that we satisfy our users."

The Commission said that it would also examine restrictions allegedly placed on advertisers by Google.

"The Commission's probe will additionally focus on allegations that Google imposes 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," it said. "Finally, it will investigate suspected restrictions on the portability of online advertising campaign data to competing online advertising platforms."

Competition law expert Adrian Wood said that the case will be an extremely complicated one.

"This could prove to be one of the most complicated investigations ever undertaken by the European Commission," he said. "The Commission will be required to demonstrate that Google is dominant in a field of economic activity – namely in one or more markets for types of online searches – for which there is no existing analytical template available at pan-European level."

"To substantiate any abuses, the Commission will have to analyse detailed forensic programming evidence, the like of which [it] has probably only encountered rarely in the internet age," he said. "As the Microsoft and Intel cases amply demonstrate, however, the Commission is prepared to pursue investigations to their absolute limit if it is certain of the legal and evidential basis for its intervention."

The Commission's investigation is open ended, with no deadline by which it must act or present its case.

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