Google responds to EC anti-trust investigation

Spokesman says the Internet behemoth is unlikely to incur fines

The European Commission (EC) is taking a closer look at Google in response to complaints filed by companies that allege the Internet search engine disadvantaged their sites through its placement of both paid advertising services and search results.

Foundem, a UK search site; Microsoft-owned Ciao, an online-shopping site; and French site, which compiles case information and lawyer services, initiated complaints against the U.S. company.

“The opening of formal proceedings follows complaints by search-service providers about unfavorable treatment of their services in Google’s unpaid and sponsored search results coupled with an alleged preferential placement of Google’s own services,” the commission said in a statement released Nov. 30.

Both types of Google search results are at issue: the unpaid results and the paid listings, or sponsored links. Unpaid results are ranked in part by an algorithm that determines relevancy by the number and quality of other sites that link to it. Sponsored listings pop up when keywords are determined to match what the browser is reading.

On Nov. 30, the EC’s anti-trust branch released a statement saying it would investigate the case but cautioned that “the initiation of proceedings does not imply that the commission has proof of any infringements,” an important distinction that William Echikson, Google’s senior communications and public affairs officer, based in Brussels, said sets this case apart from more recent high-profile investigations.

“This is not the same as IBM,” he told The Prague Post, referring to an investigation announced in July this year into whether the company is abusing its dominant position in the market for mainframe computers. Under former Competition Commissioner Neelie Kross, the EC fined Microsoft 1.68 billion euros ($2.2 billion/42 billion Kč) and fined Intel 1.06 billion euros.

“This is an administrative step, not an indictment. If you look at the statement of objections, they don’t state real suspicion that something was actually done wrong,” he said.

The plaintiffs say Google has disadvantaged their companies by lowering the ranking of their sites in the unpaid results and barring advertising partners from allowing competing ads on their websites.

Low rankings are a result of unoriginal content, Google said in a statement, and reiterated that it tells webmasters their algorithms disadvantage sites that have duplicate content, a common issue on “vertical search” services. These types of websites collect results from other sites – air ticket prices, for example, or other price comparisons. In many cases, Google has its own services that immediately provide the information.

“Most of these [complaining] sites are basically poor-quality,” Echikson told The Prague Post. “There’s not a lot of original material there. If you’re looking up an address, you don’t want to have a list of sites that eventually lead you to a map.”

Google’s services have expanded in recent years to favor its own map, news and video services, and Foundem believes it will continue to branch out into other services, elbowing out competition, according to a blog post signed by Adam Raff and Shivaun Raff, co-founders of Foundem and the Search Neutrality organization.

“Similar harm to competition and innovation is inevitable when Google extends this strategy into new domains, such as financial search, travel search, property search, job search, social networking, browsers, operating systems, mobile and so on,” the blog reads.

The expansion of services is similar to those offered by dominant Czech search engine Seznam, which also runs the map and directions service The Czech Republic is unique in that it is one of only four countries where Google does not have the dominant market share for Internet searches.

Representatives of Seznam said they are currently looking at the matter of the EC investigation and wouldn’t provide comment on specific issues.

“We’re at the point where we’re investigating this issue,” said Jaroslav Souček, product manager at Seznam. “The problem is pretty complex, and we’re clarifying our position.”

In Foundem’s case, Google said it determined the website duplicated 79 percent of its content.

Two of three plaintiffs are supported by Microsoft, Echikson pointed out. Foundem belongs to ICOMP, an Internet lobbying group that receives funding from Microsoft, and Ciao was bought by Microsoft in 2008 and renamed Ciao Bing, in reference to Microsoft’s search engine. Echikson suggested the companies were most likely encouraged by Microsoft to raise the issue. Foundem also filed a complaint with the Federal Communications Commission in February, when it initially filed the EC complaint.

“Just by having a list like we do, there are bound to be people who don’t like it. If you finish 10th, you’re not going to dig it, right?” he said. “You’re going to be angry, and complaints come from companies who have been pretty angry about this.”

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