June 24, 2011 9:08 pm

FTC opens formal probe against Google

The US government has opened a formal investigation into the influence over the internet that Google has amassed as a result of its dominance of the search business.

The move marks Washington’s most significant antitrust intervention in the technology industry since its case against Microsoft more than a decade ago. It caps a widening series of regulatory probes of the search group on both sides of the Atlantic.

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Google revealed the investigation, launched by the Federal Trade Commission, in a blog post on Friday.

“It’s still unclear exactly what the FTC’s concerns are, but we’re clear about where we stand,” wrote Amit Singhal, the engineer in charge of Google’s algorithms, which determine where other sites appear in the company’s search rankings. “Since the beginning, we have been guided by the idea that if we focus on the user, all else will follow.”

Google has been the subject of an investigation by Brussels since last autumn, after complaints that the company had harmed some websites by deliberately pushing them down its search rankings and that it had abused its dominance of search advertising.

Complaints have followed more recently that Google puts its own services ahead of those of other web companies, robbing rivals of internet traffic.

The US Department of Justice recently cleared Google’s acquisition of travel service ITA, despite claims from rivals that it would let the company dominate what has become the largest sector in online commerce.

The FTC has been gathering information from rivals and other companies that believe they have been harmed by Google’s search practices, said people familiar with the discussions.

On Friday, Google said it had “received formal notification” of the agency’s review. Washington does not announce antitrust investigations, but such studies become formal when the regulators issue subpoenas, known as civil investigative demands, under which they can start gathering evidence under oath.

Google’s defence is likely to rest heavily on the benefits it brings to internet users and advertisers, said antitrust lawyers.

“The FTC has got a significant burden of finding that consumers are harmed by Google’s conduct,” said David Balto, a former antitrust attorney at the FTC and senior fellow at American Progress. “Just because there is a chorus of complaining by competitors doesn’t mean that consumers are harmed.”

The attorneys-general of California, New York and Ohio have also joined Texas in launching their own enquiries, the Financial Times reported this week.

“We respect the FTC’s process and will be working with them [as we have with other agencies] over the coming months to answer questions about Google and our services,” Google’s Mr Singhal wrote.

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