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June 27, 2011

FTC's Google Probe

Google confirmed that the U.S. Federal Trade Commission has began a review of Google's business practices after many companies complained that Google used its dominance in the search market unfairly. "Those companies said that Google's anticompetitive practices include using other companies' content without their permission, deceptive display of search results, manipulation of search results to favor Google's products, and buying up competitive threats to its dominance," informs the Wall Street Journal. "The widely trailed investigation is the most significant in Google's 12-year history, on a par with the lengthy Department of Justice probe into Microsoft, which led to tighter regulation and from which the technology giant's image has never fully recovered," writes the Guardian.

Google says that this review is similar to the European Commission review. Last year, the European Commission notified Google that it has received complaints from three companies who claim that Google imposes unfair penalties on competing sites and uses Universal Search as an opportunity to promote its own services. Google argues that it's not a monopoly in search as "the cost of switching to a different search engine is zero". Google also says that its results are "a type of mathematically-derived opinion" and that Google was built for consumers, not websites.

"Search is much different than a utility. With you electricity provider, your telephone provider and your cable provider, there’s generally one cable coming into your home, and you have only one or two choices about which provider to pay for services. With the Internet, web services are only a click away. Google is like a GPS to the Internet – a helpful guide, but not necessary if you know where you're going," explains Google.

The cost of switching to a different search engine is certainly not zero. Google's brand is very powerful and for some people it's synonymous with search. It's also difficult to use another search engine that has a different interface, other features and doesn't know too much about you. Google is the default search engine in all important browsers, except Internet Explorer and Chrome, which doesn't have a default search engine.

Danny Sullivan says that Google's first real antitrust challenge started after announcing the intention to acquire DoubleClick, back in 2007. The likelihood of an antitrust suit made Google change its mind about the Yahoo search deal. Google barely managed to convince the FTC that it's OK to buy AdMob and the ITA acquisition has a lot of strings attached.

Google will continue to have a difficult time acquiring big companies and even startups, while the long list of investigations and lawsuits could slow Google down.

10 comments:

  1. "It's also difficult to use another search engine that has a different interface..."

    The cost of switching is not zero? What, do you propose to bring an antitrust suit against the English Language because it's too difficult to learn another language?

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  2. Google can (and must) compartmentalize, they have legal and general counsels and they can shied the rest of the operation.
    The complaining parties on both sides of the Atlantic are the same Microsoft backed groups ICOMP in Europe and 'Fairsearh' in the US and a sprinkle of astruturfers to feed quotes to the newspapers.
    The case against Google is exceptionally weak specially the 'search bias' bit (whatever that means) it has a strong first amendment argument and can claim that search results are speech (they've done so successfully before).
    They can continue as is and innovate, mainly because the claims are weak and because Larry Page doesn't strike me as someone who compromises on technology.

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  3. The cost of switching certainly *is* zero. Many of my friends have switched to Duck Duck Go and are extremely happy with the results. It didn't cost them anything. They claimed that they increased productivity.

    As long as Google continues to make the right decisions, like offering a search engine ballot on Chrome first run and supporting the Data Liberation Front, I'd hope that they can stay out of anti-competitive hot water. These gestures are the embodiment of allowing and encouraging competition.

    I think that Google sincerely believes its own PR -- that it is the best of breed and that it is bright and agile enough to compete on its own against others in the market without resorting to lock-in or hamstringing.

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  4. Daeng Bo

    That the problem the FTC and Europe has there no obvious signs of anti competitive behavior, like I been told there was by Microsoft, where there was sign contracts with companies blocking entry of other OSes on to the market.

    Google on the hand seem to have done everything it can to make it easy for people to move from service to service.

    An there no obvious consumer harm being done.

    But it clear Microsoft and other big tech companies are determine to unleash there allies onto Google. I think in the end Google will come out on top and will push at least in Europe for a quick settlement.

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  5. "Google is the default search engine in all important browsers, except Internet Explorer and Chrome, which doesn't have a default search engine."

    So in other words, Google is the default search engine in Firefox since IE,FF, and Chrome are the top three "important" browsers.

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  6. Safari has pretty wide-spread adoption too, Broseph.

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  7. @Broseph:

    Let's see:
    - desktop: Safari, Opera, Firefox.
    - mobile: Safari, Android's browser, Opera Mini, Opera Mobile.

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  8. Opera and Safari and mobile browsers make up about 15% of the market.

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  9. Isn't there a more involved picure here? Anyone who's anybody on the web wants to be lsited in G's search as well as others. It is G's search that really matters. Thats where the money is, especially if you include adsense?
    If it is G's fault you are ranked low for no apparently equal reason relative to others, you make less? Less clicks, less ad revenue? Are not the merits of a site compromised, not by the web designer or it's relative content- but by "click throughs"?, the number of visitors- as directed by Google?
    sure you may be able to find and reach the sites through others. However as the patently ( and perhaps default ) world leader in search....does not Google
    ( perhaps unfortunately for them ) acquire a responsibilty to not influence
    the income of these sites or perhaps the Web itself?
    I dont have the answer for it. Perhaps a redesign of the search results in some way. Certainly one cant tell them a "default" way to perform search.
    However there seems some discussions are well overdue on the matter. Search itself IS a Utility of the WEB- Has Google Search grown so much as to be considered such?

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  10. apologies for the above typing errors :-/

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