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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.

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