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Google's Antitrust Woes Are Just Beginning

There was more than a tinge of schadenfreude in the reports that emerged Wednesday about an antitrust investigation the European Union had allegedly opened into Google’s practices on that continent. Finally, the company that dared to flaunt its “don’t be evil” slogan — while amassing an almost unprecedented amount of market power on the web — would be held accountable, in what looked like an almost exact copy of the antitrust investigations that Microsoft was subjected to in the late 1990s. Unfortunately for all those who cheered the news, the EU has released a statement saying it has not opened an investigation into Google, preliminary or otherwise, despite what the Wall Street Journal and others might want to think. The statement said:

The Commission can confirm that it has received three complaints against Google which it is examining. The Commission has not opened a formal investigation for the time being. As is usual when the Commission receives complaints, it informed Google earlier this month and asked the company to comment on the allegations.

Although the WSJ and others referred explicitly to Google (s goog) disclosing news of a preliminary inquiry, the company never actually used those terms in its blog post on the issue. Much like the EU statement, Google said simply that several complaints had been lodged with the European Union, and that it had been asked to respond. It also suggested that Microsoft (s msft) was at least tangentially involved in bringing the complaints forward, since one company that registered a complaint — a vertical search engine called Foundem (whose complaint has been criticized by some as naive) — is a member of an industry body funded in part by the software behemoth, and another only started complaining about Google’s practices (according to Google) after being acquired by Microsoft.

The bigger question, of course, is whether Google deserves to be the subject of an antitrust investigation — whether in the European Union or anywhere else — and the uncomfortable answer is that it probably does (Google has also been more than happy to egg regulators on when Microsoft was the target). That’s not to say the company should be subjected to a five-year-long saga of drawn-out court challenges and posturing by federal authorities and regulators, the way Microsoft was. It’s simply a recognition of the fact that Google is a very different company now than it was even three or four years ago. Its market power is almost unparalleled, particularly in search-related advertising, which is to the web economy what steam power was to the industrial revolution.

Like it or not, that kind of power has consequences, and one of those consequences is that other companies and critics will allege all kinds of anti-competitive behavior is going on behind the scenes, including the rigging of search results. One of Google’s problems is that it keeps the details of its PageRank and other algorithms so secret that it’s difficult to disprove these kinds of allegations. In effect, its response to such criticisms is to say “We’re not doing that — trust us.” That might have been fine when Google was a tiny startup taking on the big web giants. Now it is one of those giants itself, with tens of thousands of employees and all the corporate headaches that come with it, and one of those headaches is having to answer to government regulators (TechCrunch had a good interview last year about Google and antitrust with Gary Reback, an antitrust lawyer who spearheaded the push to break Microsoft up in the 1990s).

So is Google entering its Microsoft period? Maybe. But it could be entering its Yahoo (s yhoo) period or its AOL (s aol) period, both of which would be much worse.

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Post and thumbnail photos courtesy of Flickr user BFLV

14 Responses to “Google's Antitrust Woes Are Just Beginning”

  1. Once the EU Commission gets going, it’s very, very hard to stop them, and usually only with vast amounts of cash. There is a vast bureaucracy sitting in Brussels that has to both feed itself and justify its existence… and extracting multi-billion dollar fines from multinationals is how they do it. My guess is that at some point in the future they are going to require Google to publicly document all of thier search algorithms. That’s when it will get interesting.

  2. simple solution = the EU Internet Planning Commission [or whatever the bureaucracy is called] should instruct their drones to use Bing, Ask, Yahoo, or that Google-beater search engine they were building. what happened there?

    love that European freedom of choice and innovation.

  3. As much as it is capitalism , it is socialism. Big companies in capitalist countries makes money and then shows “some monopolistic” behavior. Enter the courts, the money is distributed to from have’s to have-nots. Whats new we have seen it with ATT, Microsoft and in couple of years Google will be added to the list.

  4. Google’s response reminds me eerily of Microsofts – it’s basically “we care only about customers! It’s just bitter losers complaining!” Somewhere, I still have one of the “I support Microsoft’s freedom to innovate” t-shirts they made.

    Also, it’s worth noting that once an investigation starts, it tends to spiral well beyond the original complaint. The first complaints about MS to the EU came from Novell in 1993, and were based on MS’s licensing deals. These effectively made PC vendors pay for Windows licenses even on machines which never had Windows on them, which obviously meant a lot to Novell.

    However, once the investigation started, it quickly got a lot broader, and the ultimate main thrust of it was to do with media players, tying and bundling. Put that into the context of Google, and what starts out as an investigation into shopping sites could end up looking at (say) whether it’s anti-competitive to use a cash pile from your dominant position in search ads to subsidise phone operating systems.

    This one, as they say, will run and run.