EC Launches Formal Google Competition Probe

The European Commission on Tuesday launched a formal investigation into whether Google has abused its dominant position in the online search market to shut out rivals in areas such as price comparisons and advertising.

The move is in response to complaints by rivals including Microsoft and UK price comparison site Foundem, which allege that Google gives preferential placement to its own services in both search results and sponsored listings, according to the Commission.

Complaints

In February Foundem, French legal search engine ejustice.fr and Microsoft’s price comparison site Ciao filed a complaint with the Commission, spurring a preliminary investigation. The companies alleged that Google’s search algorithms demote their sites in Google search results because they are Google competitors.

Foundem is a member of an organisation called ICOMP funded partly by Microsoft to lobby against Google in Europe.

Google said it would cooperate with the Commission but denied any wrongdoing.

“Since we started Google we have worked hard to do the right thing by our users and our industry, ensuring that ads are always clearly marked, making it easy for users to take their data with them when they switch services and investing heavily in open source projects,” Google said 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.”

Allegations

The Commission said the initiation of the investigation does not imply it has any proof of infringement. “It only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority,” the Commission stated.

The Commission said it would look into allegations of exclusivity obligations on advertising partners that prevent them from placing certain types of competing ads on their websites.

It said the investigation will also cover alleged restrictions on the portability of advertising campaign data, allowing it to be shifted to competing advertising platforms.

The Commission can fine companies up to 10 percent of their global turnover for breaching competition rules.

Collins Stewart analysts pointed to the complaints as part of its downgrade of Google to “hold” in January. The research firm noted: “Increasing regulatory scrutiny was one of the minor reasons for our downgrade of Google in January. Due to Google’s dominating position in search, the regulatory scrutiny will likely surface more often.”

Privacy troubles

In September Google said it would pay $8.5 million (£5.5m) to settle a lawsuit which claimed the Google Buzz social networking service, violated privacy.

Google Buzz was the first of two major privacy snafus on Google’s part this year. The search engine in May admitted its Street View cars has accidentally collected 600GB of user data from Wi-Fi networks in countries all over the world.

Google is working with those countries to give back the data or destroy it. Privacy regulators in Germany and attorneys general in the US are investigating the company over this.