European antitrust probe targets Google

 

BRUSSELS --- European Union regulators will investigate whether Google Inc. has been manipulating its search results to stifle competition, funnel more traffic to its own services and protect its global stranglehold of the online search market.

The European Commission's move, announced Tuesday, is the first formal investigation by a major regulatory agency into these issues. If regulators conclude Google acted illegally, the company could face billions of dollars in fines, similar to what Microsoft Corp. and Intel Corp. faced in recent antitrust cases brought by the commission.

Word of the investigation caused Google's stock to tumble $26.40, or 4.5 percent, to close at $555.71. It was the largest one-day drop in the company's shares since mid-July. The company is also dealing with national antitrust probes in Germany, Italy and France.

The inquiry's timing threatens to complicate Google's efforts to expand an empire that will bring in nearly $30 billion in revenue this year. U.S. officials are reviewing its $700 million acquisition of a leading travel technology provider, ITA Software.

Perhaps most troubling to Google, the European Commission conceivably could require it to divulge information about the algorithms that decide the links listed at the top of its search results.

The investigation was triggered after several competitors -- U.K.-based price comparison site Foundem, French legal search engine ejustice.fr and shopping site Ciao, owned by Microsoft -- complained their services were being buried in Google's main search results.

The companies also contended that Google highlights its own services, such as online price comparison, in the advertising section of the search results. Google charges other companies to be listed in this prime space.

In addition, regulators will look into whether Google tried to prevent other Web sites in its advertising network from featuring the commercial messages from its rivals. They also want to know whether Google made it more difficult for advertisers to export their information to other online marketing platforms.

The issue could boil down to whether Google has a right to program its search engine the way it wants or whether it is abusing its market power.

This much is clear: Google's services consistently have ranked at or near the top of its search results. In some cases, there's clear logic to the rankings because some of Google's properties, including its mapping service and YouTube video site, are considered to be among the best and most authoritative in their categories.

But other Google services, such as finance and health, that aren't as widely used or as well regarded also tend to get high rankings in the search results.

Google has steadfastly insisted it avoids bias in its search results by using a closely guarded formula for determining rankings. At other times, Google executives have conceded they sometimes give their own services preferential treatment, and have argued that if users aren't happy with the results, they can easily migrate to another search engine.

The investigation does not imply any wrongdoing by Google, which controls about 90 percent of the online search market in Europe, but shows the antitrust watchdog is taking the complaints seriously enough to launch a detailed examination of the company's practices.

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