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2010-12-01 10:01:56
Google's European headquarters The probe does not imply any wrongdoing by
The European Commission has launched an investigation into Google after other
search engines complained that the firm had abused its dominant position.
The EC will examine whether the world's largest search engine penalised
competing services in its results.
The probe follows complaints by firms including price comparison site Foundem
and legal search engine ejustice.fr.
Google denies the allegations but said it would work with the Commission to
"address any concerns".
Earlier this year the attorney general of Texas launched a similar
investigation following complaints from firms including Foundem.
The objections in both cases are from competitors which allege that Google
manipulates its search results.
"The European Commission has decided to open an antitrust investigation into
allegations that Google has abused a dominant position in online search," the
body said in a statement.
It said the action followed "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."
It probably was inevitable that Google would get into trouble with competition
authorities.
If you are as big as Google, you are bound to tread on people's toes,
regardless of whether you move carefully or morph into a corporate monster.
The European Commission's competition watchdog has quite a track record with
tech companies: Microsoft and Intel both received bloody noses and had to pay
massive fines.
This case, though, will be a tricky one, because to determine the outcome the
Commission will have to look closely at Google's all-important search
algorithm, the rules that determine whether your company shows up high or low
in Google's search results.
Google regularly tweaks this algorithm, and as it changes the ranking it can
make or break companies.
To pin down the US search giant, the Commission will have to find a smoking
gun, either in the algorithm itself, or in Google's e-mail trail.
The Commission's investigation does not imply any wrongdoing by Google.
"Since we started, Google we have worked hard to do the right thing by our
users and our industry," said the firm in a statement.
"But there's always going to be room for improvement, and so we'll be working
with the Commission to address any concerns."
Sir Martin Sorrell, chief executive of WPP, the world's largest advertising
agency, welcomed the EU's decision to investigate.
"Search is the portal to the internet and Google has a colossal share," Sir
Martin told the BBC. "I do not think that the investigation is surprising,
given the strategic importance of the internet."
He said that many of WPP's big clients will also welcome the probe.
"When someone [like Google] is so successful you have to wonder why," he said.
"If the EU find something it will ensure consumer choice is protected. If [the
EU] doesn't find anything, that will be good."
ICOMP, a business group whose members include Foundem, said it welcomed the
investigation. "This is not just about search results," said ICOMP's legal
adviser David Wood.
"This is about the whole ecosystem of doing business with online content,
online advertising companies and software companies."
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Bill Echikson, Google's senior communications manager said "competition is one
click away"
Core business
Google offers two types of search result - unpaid results produced by the
firm's algorithms that are displayed in the main body of the page and "ads",
previously called sponsored links.
The investigation will try to determine whether the firm's method of generating
unpaid results adversely affects the ranking of other firms, specifically those
providing so-called vertical search services.
These are specialist search providers, and can include sites that offer price
comparison, for example.
Foundem alleges that Google's algorithms "remove legitimate sites from [its]
natural search results, irrespective of relevance". It also says that the firm
promotes its own services over those offered by competitors.
"Google is exploiting its dominance of search in ways that stifle innovation,
suppress competition, and erode consumer choice," Foundem said in its complaint
filed in February 2010.
But Google argues that there are "compelling reasons" why these sites are
"ranked poorly".
For example, it said, Foundem "duplicates 79% of its website content from other
sites."
"We have consistently informed webmasters that our algorithms disadvantage
duplicate sites," the firm said.
Start Quote
Google appears to have learned from the mistakes of other high-profile American
targets of the EU regulators. Instead of greeting the news of the inquiry with
outrage and bluster, it has issued a diplomatic statement
End Quote Rory Cellan-Jones BBC technology correspondent
The Commission will also look into allegations that Google manipulated elements
of its system that determine the price paid for ads from these sites.
Finally, the investigation will also probe how the company deals with
advertising partners.
Advertising is the core of Google's business.
Google is alleged to impose "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," according to an EC statement.
In addition, the EC said it would also look into "suspected restrictions on the
portability of online advertising campaign data to competing online advertising
platforms."
Google says it already allows customers "to take their data with them when they
switch services" and that its contracts "have never been exclusive".