Google confirms investigation by Federal Trade Commission

Internet search giant Google has confirmed the Federal Trade Commission will investigate whether it is unfairly disadvantaged competitors by promoting its own services on search results pages.

The confirmation follows reports that subpoenas are being prepared for the investigation, which is said to be one of the biggest of its kind.

This isn’t the first time Google has been probed over competition matters. Late last year the European Commission announced an investigation into whether Google had manipulated search results to promote its own products ahead of those of three major websites, one of which is owned by Microsoft.

Google confirmed the investigation on its blog last week, with legal counsel Amit Singhal saying it had “received formal notification from the U.S. Federal Trade Commission that it has begun a review of our business”.

“We respect the FTC’s process and will be working with them (as we have with other agencies) over the coming months to answer questions about Google and our services,” he said.

However, Singhal also said it is not clear what the FTC’s concerns are.

But last week the Wall Street Journal reported the FTC is very clear in its intentions. It claims the FTC wants to investigate whether Google is abusing its advertising business, and added this whole process could be one of the biggest legal threats the 12-year-old company has ever faced.

The report draws parallels between this case and the government probe against Microsoft in the 1990s, which resulted in a wave of public scrutiny against the software firm that shepherded the company into loosening its grip on control of operating systems.
Already several companies have complained publically against Google’s dominance in this space, saying the company is prioritising its own services against those of private companies. Foundem, Ejustice.fr and Ciao are just some of the firms that have said Google is unfairly competing against them, prompting the European Commission investigation.

American companies Yelp and Expedia have also complained against Google’s practices, along with Microsoft as well.

The main reasoning behind these complaints is that because Google holds such a large portion of the search market – over 80% – users are essentially forced into using it. And because Google emphasises that companies should do their best to ensure their sites are found, these businesses say any attempt to lower their rankings amounts to uncompetitive behaviour.

This becomes an increasingly serious issue as Google branches out into offering more services in new industries, such as travel and group-buying services.

Google also said in its blog post that using its services “is a choice”.

“And there are lots of other choices available to you for getting information: other general-interest search engines, specialized search engines, direct navigation to websites, mobile applications, social networks, and more.”

Reseo chief executive Chris Thomas says while the issue is contentious, it is often difficult to tell whether Google is actually prioritising its own services.

“Google continues to create tools like Google Places and so on, these free products are designed to create a lead funnel into paid advertising. I think that’s always been their plan and it’s a pretty effective one.”

“Whether they’ve had to prioritise that over other results, it’s very difficult to say.”