Antitrust storm clouds gather over Google

REUTERS/Rick Wilking/Files

Google co-founder Larry Page talks to reporters with then-Google CEO Eric Schmidt in 2009.

Is the United States government about to put Google Inc’s oft-repeated “Don’t be evil” mantra to the test?

On Friday, Google revealed that the U.S. Federal Trade Commission has launched an investigation into whether the technology titan has illegally abused its dominant position as the world’s most popular search engine to steer users towards its own sites and services instead of those of its competitors.

Confirming several reports from earlier this week, Google officials said the U.S. antitrust regulators formally notified the Mountain View, California company on Thursday that it was launching a review of the company’s business practices.

Perhaps it was inevitable that Google would fall under the scrutiny of U.S. antitrust officials, but that doesn’t mean the Silicon Valley stalwart is facing an imminent day of reckoning.

Given the company’s dominant position in the search space — Google’s search engine still accounts for about two-thirds of all Web queries — combined with its aspirations to become a force in mobile, business productivity software and even e-commerce, it was only a matter of time before federal regulators would demand to peek behind the Google curtain.

Google officials say the company respects the FTC’s investigation process and that Google will co-operate with any investigation.

On the surface, the most obvious corollary for Google’s current predicament would be the landmark antitrust investigations led by the United States government and European Union into the business practices of Microsoft Corp. in the late 1990s.

At the time, Microsoft and its Windows platform represented the epicentre of the computing world. Steve Jobs had only recently made his return to Apple Inc. and had not yet turned the company around, which meant that if you were using a computer at the time, it was probably running Windows.

The subject of the U.S. Department of Justice’s action against Microsoft centred around the company’s practice of packaging the Internet Explorer browser with each copy of Windows. This essentially gave Internet Explorer preferential treatment inside Windows, placing competing platforms — namely Netscape Navigator, Opera and others — at a distinct disadvantage.

Part of the reason Microsoft’s tactics were seen as anti-competitive was that by packaging one browser with Windows at a time when it would take significant time and effort to download a competitor from the Internet using a 56k modem or to drive to the store to purchase a boxed copy of another browser, most users traveled the path of least resistance and just stuck with Internet Explorer.

Google’s case is significantly different. While Google remains the top dog in Web queries, it’s comparatively easy for users to switch to a different search engine. You don’t need to download special software or drive to the store to pick up a copy of Bing or Yahoo Inc.’s search product, you just have to type in a different Web address.

As you might expect, Google’s response to the FTC included several mentions of the word “choice” and pointed out that “competition is only one click away.”

“We aim to provide relevant answers as quickly as possible —- and our product innovation and engineering talent have delivered results that users seem to like, in a world where the competition is only one click away,” Google Fellow Amit Singhal wrote in a post on the Official Google Blog.

“Still, we recognize that our success has led to greater scrutiny.”

Google’s point is clear: it doesn’t force anyone to use its search engine. People use Google because they like Google and they are satisfied with the search results it returns.

After all, there’s a reason the company’s name has become a verb meaning “to search the Web.”

According to several reports, the FTC will be investigating whether Google’s search and advertising businesses, including the way the company orders search results, constitutes anti-competitive behaviour.

Unsurprisingly, Google keeps its search algorithm secrets close to its chest, and is loathe to let anyone see the entirety of the secret recipe that determines the ranking of search results. However, it appears the way in which Google orders search results will be the primary area of focus for investigators.

Still, there seems to be some confusion on Google’s part about what exactly the FTC will be investigating.

“It’s still unclear exactly what the FTC’s concerns are, but we’re clear about where we stand,” Mr. Singhal wrote.

“Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow. No matter what you’re looking for —- buying a movie ticket, finding the best burger nearby, or watching a royal wedding —- we want to get you the information you want as quickly as possible. Sometimes the best result is a link to another website. Other times it’s a news article, sports score, stock quote, a video or a map.”

The New York Times reported this week that FTC officials debated privately this month whether to grant the agency’s Bureau of Competitions the power to serve subpoenas to Google’s top executives. Google co-founder and chief executive Larry Page, co-founder Sergey Brin and executive chairman Eric Schmidt have all been identified as potential witnesses.

Of course, this won’t be the first time Google has been hauled up in front of antitrust authorities. In the past, the company has faced probes from both the FTC and the Justice Department over its acquisitions of companies like DoubleClick, AdMob and travel services company ITA Software.

Only this time, the investigators aren’t taking aim at Google’s acquisitions, ambitions or any of its side businesses and science projects.

Indeed, this investigation will strike at the very heart of Google’s core business: search and advertising.

Which means that any findings that go against Google could have lasting implications for the fortunes of the search engine giant, and potentially, for the future of the Internet itself.

Before all is said and done, plenty of analysts will weigh on on both sides of the debate. Some will argue that Google should be left alone and that competition should be allowed to continue without government intervention.

Others will say that Google has become too powerful and that its influence must be checked, that despite the company’s professed altruistic intentions, it exerts too much control over the flow of online information.

In the end, investigators would be wise to keep the best interests of Web users in mind as their investigation progresses.

Google should not be held to a different level of public scrutiny nor afforded any additional benefit of the doubt simply because of the company’s “Don’t be evil” mantra and its promises to only do what’s best for the greater Web.

After all, Google is a business like any other.

Still, if the investigation into Google reveals that the reasons users flock to the company’s products and services is simply because they are superior to those of its competitors, Google should not be made to suffer for its success.