Google May Face FTC Antitrust Probe

Search engine giant Google barely had time to breathe a sigh of relief over the results of one government investigation of it before possibly facing another. This time, it looks like the U.S. Federal Trade Commission has it in its cross-hairs. Could Google end up following Microsoft on the antitrust hot seat?

Bloomburg cited unnamed sources “familiar with the matter” as saying that high-tech companies have been requested to gather information for the probe. The commission told the companies that it will issue civil investigative demands – similar to subpoenas – for the information. Presumably, once it receives the information, the FTC will decide whether proceeding with a formal investigation is warranted.

The FTC held off on making these information requests until the Justice Department completed its examination of Google’s purchase of travel search company ITA Software. While the DoJ approved the $700 million deal, it attached two strings. First, Google must allow search engine rivals to access travel data; and second, it must permit the government to review any complaints about unfair behavior.  

Interestingly, the Justice Department began its investigation partially at the behest of FairSearch.org, an organization that includes Microsoft, Kayak.com, Expedia, and other Google competitors. The organization insisted that Google’s purchase of ITA Software would reduce competition in the field. Microsoft, of course, is no stranger to the Justice Department; back in the late 90s, the software giant faced scrutiny for its own monopolistic practices concerning operating systems and browsers.

Whether or not Google in fact holds a monopoly on online search, it’s impossible to deny its dominant market share. According to Net Market Share (http://marketshare.hitslink.com/search-engine-market-share.aspx?qprid=5), as of April 2011, the search giant’s share of the global search market stood at more than 83 percent. Microsoft’s Bing and Yahoo combined represent perhaps 10 percent of the global search market, while Chinese competitor Baidu can’t claim even five percent of that market.

While this certainly appears to meet the definitions of a monopoly, appearances can be deceiving. James Grimmelmann, an associate professor of law at New York Law School who specializes in Internet law, noted in an interview that Google maintains such a large market share “because their search results are better.” If Google is using that market share to leverage a better position in other markets – as Microsoft did when it started including its browser with every copy of its operating system – then a case can be made that the search giant is acting like a monopolist, and should be penalized accordingly. Indeed, there seems to be some evidence that this is happening; a lawsuit brought by Skyhook Wireless alleges that Google pressured Motorola and other Skyhook customers not to use Skyhook’s software for detecting a cell phone’s location. Google makes it own cell phone location product in competition with Skyhook’s.

It’s too early to tell if the FTC will in fact have a case against Google. But the search company is facing increasing scrutiny from government regulators. It’s not impossible that it could find itself facing the same questions once put to Microsoft – the very company Google had in mind when it adopted the motto “Don’t be evil.”

For more on this story, visit http://www.bloomberg.com/news/2011-04-29/google-said-to-be-subject-of-ftc-probe-into-web-search-industry-dominance.html.  

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