EU opens anti-trust investigation into Google

24 Feb 2010

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The European Commission is to mount a preliminary anti-trust investigation into Google’s alleged dominant position in the online browsing and digital advertising business following complaints by three competing websites.

The commission is understood to have circulated formal questionnaires seeking information about complaints from three firms: shopping website Ciao! from Bing, which is owned by Microsoft; French legal search engine eJustice and British price comparison website Foundem.

The complaints by the companies centre on the way Google’s search results are compiled and the terms and conditions it attaches to deals with advertisers.

They allege that Google unfairly ranks the sites of internet competitors, effectively lowering their rank in search results that appear on Google sites.

The European Commission’s previous penalities on tech companies

While it is only a preliminary enquiry, the European Commission has a formidable reputation in the technology industry, having exacted enormous penalties from companies in the past.

For example, it decided in 2004 to hit Microsoft with a massive €441-million fine over its alleged dominance in the global software business and last year hit Intel with a record €1.06-billion fine in an anti-trust case over alleged abuse of its dominant position in the CPU market.

Google currently handles some 80pc of European web searches, compared to 65pc in the US.

However, Google’s legal counsel for Europe, Julia Holtz, said the company is responding to the allegations in a calm, measured way and says anti-trust investigations go with the territory for large technology companies.

“As Google has grown, we’ve not surprisingly faced more questions about our role in the advertising ecosystem and over overall approach to competition. This kind of scrutiny goes with the territory when you are a large company. However, we’ve always worked hard to ensure that our success is earned the right way – through technological innovation and great products, rather than by locking in our users or advertisers or creating artificial barriers to entry.”

Confirming the European Commission has notified Google of the complaints from Ciao, Foundem and eJustice, Holtz said: “While we will be providing feedback and additional information on these complaints, we are confident that our business operates in the interests of users and partners, as well as in line with European competition law.”

Holtz said in her blog that each complaint by the three internet companies raises different issues.

The ultimate question is whether Google is doing anything to choke off competition or hurt competitors or users.

“This is not the case. We always try to listen carefully if someone has a real concern and we work hard to put our users’ interests first and to compete fair and square in the market. We believe our business practices reflect those commitments.”

By John Kennedy

Photo: Companies Foundem, eJustice and Ciao! from Bing have alleged that internet search giant Google unfairly ranks the sites of internet competitors, effectively lowering their rank in search results that appear on Google sites

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com