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Antitrust incoming? Google hit by EU complaint, FCC filing

Turning search into powerful marketing channel for own services, claims Foundem

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Shopping comparison site Foundem this week fired the opening shots in the coming Google antitrust battle, with a complaint to the European Commission and a filing with the US Federal Communications Commission accusing Google of posing "an immediate threat to competition and innovation." The US filing is in response to the FCC's net neutrality enquiry, and seeks to have search neutrality included in FCC rule-making.

German shopping site Ciao, which has been owned by Microsoft since 2008, and French legal search service ejustice.fr have also filed complaints with Europe. The data in the filing has also been passed to the Commission, Foundem co-founder Shivaun Raff told The Register. In it, with the help of data commissioned from ComScore, Foundem seeks to show that what Google calls "Universal Search" places Google services in prominent and preferential positions within its search results, giving the company an unassailable competitive advantage.

"They're turning an ostensibly neutral search engine into an incredibly powerful marketing channel for their own services," said Raff.

Google responded to the European complaints with a blog post pointing fingers at Microsoft, noting Foundem's membership of ICOMP (a Brussels lobbying body with Microsoft backing), and claiming that "after Microsoft acquired Ciao! in 2008 (renaming it Ciao! from Bing) we started receiving complaints about our standard terms and conditions. They initially took their case to the German competition authority, but it now has been transferred to Brussels."

As yet Google hasn't said who it thinks is pulling ejustice.fr's strings. It does however draw attention to Foundem's long-running battle against Google-imposed search and Adsense penalties, and says that ejustice.fr's complaint "seems to echo these concerns".

Google 'in denial'?

But Raff says that Google is being disingenuous in seeking to portray the complaint as being about penalties. Foundem's Adsense penalties were removed by Google in September 2007, and its search penalties in December of last year, and neither the complaint nor the FCC filing concerns these issues.

Coverage by The Register, the New York Times and the Guardian helped open channels of communication between Google and Foundem, says Raff, "and they [Google] came away totally aware that we were acting genuinely, and that genuinely they stood corrected".

So, she and her partner Adam Raff claim to be slightly surprised that Google is suggesting the case is about Foundem not understanding Google and screwing up its Search Engine Optimisation (SEO). "I think they're almost in denial about their policies and practices," says Adam.

The FCC filing uses ComScore data to show the effect that Google Universal Search placement has had on Google's own services and those of competitors in maps and product search. Preferential placing at the top of Google search results from May 2007 is argued as being responsible for Google Maps unseating MapQuest as the US market leader, and the filing quotes Hitwise's Heather Hopkins as saying that many more users were still actively searching for MapQuest than for Google Maps at the time when Google Maps' traffic was surpassing MapQuest.

For the UK mapping market, a Google spike is clearly visible in early 2007 (filing page 5), along with a steady decline for MultiMap and Streetmap.co.uk.

For product search, an investigation covering 273 common keywords showed (filing figure 6) what Shivaun Raff calls a "jaw-dropping" breadth of preferential placement for Google products.

The FCC filing and the European complaint arenot about specific penalties, say the Raffs, but about Google's market dominance (they claim it has 90 per cent of the search market in the UK, 85 per cent in the US), and the company's growing practice of pushing its own services to the fore.

"Universal Search inserts its own result using a different algorithm to everybody else," says Shivaun. "They're open about the fact - they call it 'blending', but other people call it bundling.

Ah yes, and we know about bundling, don't we people? "That bundling is probably illegal," says Shivaun. "Universal Search can topple competition and discourage competitors, and Google is planning to continue to extend its own products, into travel, jobs, property and finance."

So the complaint is essentially about the extent to which Google is using its control of the search market to bundle and to boost a growing range of products and services. Like certain companies before it, it stands accused of owning the platform, and leveraging its dominance there into dominant positions elsewhere. So how long before somebody says 'break-up'?

In a statement today, the European Commission confirmed that it had received three complaints, and although it has not yet opened a formal investigation, it has asked Google for information. ®

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