European antitrust authorities have launched an investigation into Google’s search business, probing whether the Web company has used its dominant position to unfairly crowd out competitors.
The European Commission said it opened the investigation following complaints from specialty search providers that Google (NASDAQ: GOOG) has been lowering the page rank of their services in favor of its own. A Web search for pricing comparisons, for instance, might unfairly prioritize Google’s own offering ahead of a competitor’s.
European authorities are also examining a set of anticompetitive allegations surrounding Google’s advertising business, including the charge that the company has been deliberately lowering the quality score — a key metric that determines how much advertisers pay for sponsored links on Google’s site — attached to competitors’ paid search ads.
EC officials were quick to note that the investigation only stems from allegations made by Google’s competitors, pointing out that the announcement of the probe, still in its early stages, should not be seen as a presumption of guilt.
“This initiation of proceedings does not imply that the commission has proof of any infringements,” the EC said in a statement. “It only signifies that the commission will conduct an in-depth investigation of the case as a matter of priority.”
EC officials said their investigation will also explore allegations that Google leaned on computer and other device makers to build in favorable integrations with its services to the detriment of competitors, and that it schemed to lock advertisers’ campaign data into its ad platform to prevent its partners from defecting to a rival.
In a statement emailed to InternetNews.com, a Google spokesman defended the company’s track record on openness and data portability.
“Since we started Google we have worked hard to do the right thing by our users and our industry — ensuring that ads are always clearly marked, making it easy for users to take their data with them when they switch services and investing heavily in open source projects,” the spokesman said. “But there’s always going to be room for improvement, and so we’ll be working with the commission to address any concerns.”
A pair of Google executives took to the company blog this morning to address the antitrust investigation, claiming that Google offers more insight into how its search engine operates than its major competitors, but maintaining that certain details about how the algorithm and paid search rankings work need to be kept secret to prevent publishers and advertisers from gaming the system.
The EC investigation comes as Google is working to secure approval from the U.S. Justice Department for its proposed acquisition of ITA Software, a provider of flight data software, for $700 million.
Several Internet travel companies have banded together under the FairSearch.org coalition to protest the transaction, arguing that with ITA in its pocket, Google would be inclined to manipulate the results for travel searches, undermining competition in the sector.
“The European Commission’s announcement of a formal antitrust probe, looking into allegations that Google abuses its dominance in search to favor its own services and lower competitors’ search result rankings, underscores why the FairSearch.org coalition is urging the Justice Department to challenge Google’s proposed acquisition of ITA Software to protect consumers and competition in the online travel market,” Tom Barnett, counsel to Expedia, said in a statement emailed to reporters.
Barnett previously headed the Justice Department’s Antitrust Division, leading the 2008 review of Google’s proposal to link its search-advertising business with Yahoo’s, a deal that was ultimately scuttled after Barnett’s team threatened to sue to block the transaction.