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February 24, 2010 7:19 pm
Google on Wednesday mounted a robust public defence of its secretive search algorithms . It warned that any regulatory move to force it to disclose more about how its technology works would damage its core search service and the advertising that runs alongside it.
The informal review in Brussels was prompted by complaints from three European internet services, one of them owned by Microsoft and another a member of a trade group in which Microsoft has a strong hand, according to Google.
The inquiry is into Google’s search advertising, a business in which it is estimated to have a 90 per cent share in Europe, and its search ranking algorithms.
“Generally when you talk to our clients they would welcome greater transparency in its business practices ... [and] a regulatory review to make sure there is nothing going amiss,” said Sir Martin Sorrell, chief executive of advertising group WPP. The head of a large media-buying agency said: “The simple commercial reality of where [Google] sits and generates its revenues [is that] it will exploit its dominant position.”
Google denied that its overwhelming share of the European search business put it in a dominant position, since internet users and advertisers could easily switch to alternative services. But the company faced calls to be more transparent about how its search rankings and its Adwords advertising system work.
”We want some kind of more transparent mechanism to be put in place so that other companies don’t have to go through three years of appeals to Google,” said Shivaun Raff, founder of Foundem, a UK price comparison service and one of the companies that complained to the Commission. Foundem has accused Google of unfairly relegating it in search results in order to suppress competition.
However, Google executives said that any requirement to be more open about how the company’s systems worked would go beyond what European regulators have required in other cases and would be highly damaging.
“Even Microsoft was not required to open the source code of its operating system,” said Julia Holtz, Google’s senior competition counsel for Europe, the Middle East and Africa. “If someone forced us to do that, it would destroy our product.”
She also denied that Google deliberately relegated competitors to a lower position in its search rankings. “It would not make sense to marginalize Foundem but not Amazon – Amazon is a much bigger risk to us,” she said.
Reporting by Tim Bradshaw and Maija Palmer in London, Richard Waters in San Francisco and Nikki Tait in Brussels
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