Monopolist Microsoft Complains About Google

Ever since Foundem, eJustice and Ciao filed antitrust complaints with the European Commission in Brussels (more than a year ago)  that Google was affecting their ability to do business online, it had been rumored that Microsoft had been behind the complainants, supporting them.

The speculation is now moot. In a move drenched in irony thick enough to choke on, Microsoft has formally added a complaint to the European Commission that Google has violated European competition law in search, advertising and other areas.

For a history refresher, Foundem, eJustice and Ciao alleged in February 2010 that Google is not respecting fair competition.

Specifically, Ejustice.fr and Foundem, a member of an organisation called ICOMP funded partly by Microsoft to lobby against Google in Europe, said that Google’s search algorithms demote their sites in Google search results because they are a vertical search engine and so a direct competitor to Google.

Microsoft acquired Ciao, a long-time AdSense partner of Google’s, in 2008 and renamed it “Ciao from Bing”. Shortly after the buy, Google said it began receiving complaints about its standard terms and conditions.

After months of deliberation (and, no doubt, information gathering), the EC formally opened an antitrust investigation against Google last November.

The Commission is looking into whether Google has abused a dominant market position in online search by lowering the ranking of unpaid search results of competing services, whether Google lowered the quality score for sponsored links of competing search services and whether Google prevented ad partners from placing competing ads from some vendors on their Websites.

Microsoft  joined the fray this week, with its own allegations. Brad Smith, senior vice president and general counsel for Microsoft, noted:

Google has built its business on indexing and displaying snippets of other organizations’ Web content. It understands as well as anyone that search engines depend upon the openness of the Web in order to function properly, and it’s quick to complain when others undermine this. Unfortunately, Google has engaged in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.

Smith listed six specific areas of concern where he says Google is behaving in an anticompetitive manner:

• Google restricts its Bing search engine from properly accessing it for its search results;
• Google blocked Microsoft’s new Windows Phones from operating with YouTube the way Google Android and iPhone do;
• Google is seeking to block access to content owned by book publishers;
• Google is restricting its advertisers’ access to their own data, prohibiting advertisers from using their data in an interoperable way with other search advertising platforms, such as Microsoft’s adCenter;
• Google contractually blocks leading Websites in Europe from distributing competing search boxes;
• Google discriminates against competitors by making it more costly for them to attain prominent placement for their advertisements.

A note about the book thing: US federal court already slapped that Google Books proposal down, so it’s sort of moot.

The rest may be valid, or they may be simply sour grapes from a company woefully behind Google in the search market. Really, Microsoft is lagging on the whole Internet, since Google through search is the ultimate gatekeeper. Google commands 65 percent of search share in the US and 90 percent overseas. Bing has about 13 percent market share in the US

A Google spokesperson told me today:

We’re not surprised that Microsoft has done this, since one of their subsidiaries [Ciao] was one of the original complainants. For our part, we continue to discuss the case with the European Commission, and we’re happy to explain to anyone how our business works.

If the EC agrees with Microsoft and its lower-profile complainants, Google may be fined ten percent of its annual revenue, which was $29 billion last year. That’s a princely $2.9 billion fine, even for Google’s big coffers.

If Microsoft gets its demands met by the EC and Google is stopped on all six counts, we might see Microsoft get better access to YouTube for Bing and other services, but I’m not sure how material this will be for either company.

In other words, what does Microsoft hope to achieve besides giving Google the same black eye browser makers, Adobe and others gave to Microsoft as complainants in Europe’s case versus the software giant nearly a decade ago?

It won’t be any moral victory considering the company was viewed as amoral by governments home and abroad a decade ago.

Perhaps the biggest thing to come of this is that an EC condemnation will force the US regulators such as the Federal Trade Commission and the Justice Department to take complaints from US attorney generals more seriously