European competition inquiry into Google highlights a bigger tussle with rival Microsoft.
By Kamal Ahmed, City Editor (Sunday Telegraph)
Published: 6:21AM GMT 24 Feb 2010
EU inquiry points the searchlight on Google's methods
The boot might just be moving on to the other foot. After years of grappling with European Union anti-trust investigations, Microsoft has finally got Google in the cross-hairs of the competition authorities.
The news today that the European Commission has asked Google to respond to complaints from three internet companies over the mechanics of its search and advertising functions will bring a cheer from the offices of Redmond, Washington, where
Microsoft is based.
For decades, Microsoft has been portrayed as the Big Bad Wolf of the technology world, signing restrictive "bundling deals" which meant companies had to take its Internet Explorer service and market-dominating Windows together. The EU has fined Microsoft a total of €1.68bn (£1.5bn) over competition transgressions and only announced last December that the company has made sufficient operating changes to allow the Commission's anti-trust inquiry to be wrapped up. The announcement came more than a decade after the first complaint from Sun Microsystems in December 1998.
Although the Commission's investigation is at a preliminary stage, Google knows that once the process starts it can be difficult to stop, as the multiple complaints against Microsoft proved. That said, Microsoft did not help, tying up the Commission in a legal quagmire rather than simply changing what it did.
Google knows there are some big risk factors here. The confidentiality of algorithms Google uses to define where companies appear on its search pages could be exposed – opening it up to "gaming" by spamming companies looking for search hits. The way it charges for advertising could also be open to the investigation.
Google's response will be straight-forward: we have the best search functions of any of the search engines which is why we are dominant in the marketplace. The public like us because of that, our competitors don't. We don't have "favourites" in search because the public would soon see through that and would choose other sites. With 272m possible results for a search term like iPod, for example, it would be an impossible exercise in any case.
Although the details of complaints lodged by Ciao, the German online shopping website owned by Microsoft, Foundem, a UK search site, and ejustice.fr, a French legal search site, are important, the bigger picture here is the battle between the two multi-billion pound internet giants for web supremacy.
Google has been burnt before in its battles with Microsoft. In 2008 it lost out on a search deal with Yahoo! after a concerted lobbying effort by Microsoft.
To rub salt into that particular wound, Microsoft then launched an ultimately successful $45bn (£29bn) bid for Yahoo!'s search business which entailed Yahoo! largely giving up search and handing it to Bing, Microsoft's search engine. Bing is now the clear number two in the market.
The way companies are ranked on search sites is obviously vital to their success. Foundem alleges they were deliberately penalised by Google because they could be a competitor to its own search sites.
In a post from Foundem last year, the company said: "Google has always used various penalty filters to remove certain sites entirely from its search results or place them so far down the rankings that they will never be found." Google says that Foundem's criticisms are wrong, and that since Foundem has started offering better content, it has risen up the rankings and now rates often higher than if the same searches are done on Bing.
The battle in Europe will lift the lid, intriguingly, on the lobbying campaigns of both sides. Critics of Microsoft point out that Foundem is a member of the Initiative for a Competitive Online Marketplace, ICOMP, an organisation which receives funds from the US technology giant. In 2007, ICOMP faced criticism after claims that the PR agency handling the account, Burson-Marsteller, had not made the link to Microsoft clear when contacting organisations.
ICOMP says that it is transparent about what it does and that it is not a "mouthpiece for Microsoft". "ICOMP represents the interests of over 50 members and many more stakeholders that agree on the need for a more competitive, transparent, privacy friendly, and secure online marketplace," its website says.
Google will hope that the Commission's investigation goes no further than the preliminary questions from Brussels – and that it is quick and it is clear. If the case drags on, Google knows that when competition authorities and internet giants tangle the results can often be costly.
No comments:
Post a Comment