Search Engine giant Google will itself be searched by the Federal Trade Commission to examine whether it has used its dominant standing in search to improperly promote its products at the expense of its competitors. The examination may not be limited to this, FTC may also may also look at whether Google’s advertising policies discourage users from easily choosing between Google and competitors such as Microsoft and Yahoo!
According to the Financial Times attorney generals from California, New York, Ohio and Texas have started inquiries into Google’s search business.
A Mercury News report stated, “ the collection process began Thursday, when Google received a subpoena demanding wide-ranging information. The investigation could drag on anywhere from one to three years, antitrust experts said this week, before the commission decides whether to bring a formal antitrust complaint or charge against Google.”
This move by the Federal Authorities comes at a time when Google continues to hold more than two-thirds share of the Net search market not withstanding Microsoft’s efforts to revamp Bing.
This is not a first for Google. Last year the European Union launched a probe into Google’s search dominance. “However, what draws attention here is the presence of California’s Attorney General’s office,” says a report by The Street .
Continuing in the same vein the report says, “ while relatively successful in areas of fraud and abuse, like the $8.6 billion settlement it made against Countrywide Financial for deceptive mortgage practices, California has hardly been a watchdog in the area of corporate antitrust issues.”
Danny Sullivan, editor-in-chief of blog SearchEngineLand, had an answer to this, “Guess California doesn’t want to look like its being left out when Texas and two or three states are looking at doing the same thing.”
Mercury News reported, “In remarks last month in Silicon Valley that now appear to have foreshadowed those concerns, one of the five commissioners, J. Thomas Rosch, linked online advertising and search as he questioned whether Google had acquired lawful or unlawful monopoly power in both markets.”
The report quoted Rosch as saying in his speech about antitrust law at Latham & Watking, his former law firm in Menlo Park, “I have not yet made up my mind about that. I do not think this technology is moving too fast for the commission to challenge conduct or transactions that we have reason to believe will injure consumer choice.”
On Friday, Google confirmed that it is the subject of an antitrust investigation but expressed confusion about the probe. In a blogpost, Google Fellow Amit Singhal said, “We respect FTC’s process and will be working with them over the coming months to answer questions about Google and our services.” He continued,”It’s still unclear exactly what the FTC’s concerns are, but we are clear about where we stand. Since, the beginning, we have been guided by the idea that if we focus on the user all else will follow.”
The blogpost continued, “Our objective has remained the same for 13 years. We provide our users : Instant answers, New sources of Knowledge, Power tools – all for free.”
Responding to Google’s, “Comptetition is only one click away.”, Mercury News reported, “Some advocates say that is much less true in advertising than in search. Google in the first quarter of 2011 had about 60 percent of all U.S. net search ad revenue, according to the research firm IDC.”
The report continued, “Some advocates say Google’s lucrative Adwords search platform makes it difficult for small businesses that want to advertise with competitors like Yahoo or Microsoft’s Bing and need to transfer their data from the Google ad platform to another.”
The reported quoted Morgan Reed, Executive Director of the Association for Competitive Technology, a Washington organization that represents more than 3,000 small and mid-size app developers and information technology firms as saying, “ That’s not a problem for big advertisers, but it effectively forces many small businesses to advertise only with Google. It would be incorrect to say it’s an insurmountable barrier, but it’s absolutely a barrier and it’s just not worth it for a little guy to do it.”
The probe seems to have had a negative impact on Google’s stock which was down 1.1% Friday to $474.88. Scott Kessler, an analyst with Standar & Poor’s said, “Even on days when the market has firmed, it seems like Google has underperformed, and I think lot of it has to do with the overhang of the government inquiries.”