March 4, 2010 8:45 pm

Microsoft in spotlight over Google case

When internet entrepreneur Shivaun Raff was looking last year for ways to advance her campaign against Google over what she claimed were anti-competitive practices, she found support and advice from a deep-pocketed source: a Brussels-based lobbying group almost entirely funded by Microsoft.

That meeting of interests contributed to her search service, Foundem, eventually lodging a formal complaint to the European Commission, and helped to trigger Brussels’ decision to launch the first-ever antitrust review of Google’s core search business.

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The Microsoft connection has become the focus of intense interest in Brussels – particularly since the software company itself lodged another of the three complaints that triggered the Commission’s informal inquiry.

Foundem’s public campaign against Google, which it accused of unfairly relegating its service in the Google search rankings, began under its own steam. But it took the help of the Microsoft-backed group – Initiative for a Competitive Online Marketplace – to turn that into a formal anti-trust complaint.

Ms Raff said she had previously ruled out a complaint because she had assumed it would be too expensive and difficult for a small company. But she said that after approaching IComp last year, the idea “came up in conversation” with representatives of the body, and that they assured her it was not as daunting a process as she thought.

A “virtual” body without a permanent staff, IComp’s work is carried out by legal adviser David Wood and Burson-Marsteller, the communications group that has played a central role in Microsoft’s lobbying activities. Their fees are paid in large part by Microsoft, which set up IComp and is said by one person familiar with the group to pay most of its running costs.

Ms Raff said that while she had formulated the main part of the complaint, Mr Wood had also worked on it, “topping and tailing” it with his expertise. Mr Wood played down his involvement, describing it as only “high-level advice”.

Gavin Grant of Burson-Marsteller, who played a part in setting up IComp, said his agency had supported Foundem in ways including advising it on which European MPs to approach with its case and helping it deal with press enquiries. However, he denied that this amounted to providing full support to Foundem, adding: “They couldn’t afford our fees.”

Ms Raff and the IComp founders all insisted that Foundem’s founders were the driving force behind its complaint. But the signs of Microsoft’s involvement will raise questions about whether the fierce rivalry between the two technology companies has helped to set the regulatory arena.

“There are those in the Commission who will be more sceptical of complaints that look like they are fomented by Microsoft and part of an attempt to deflect [the Commission’s] attention from Microsoft itself,” says Thomas Vinje, the legal representative for Ecis, a tech industry group that waged a successful lobbying campaign in Brussels against the software group.

In a blog last week, Microsoft sought to pre-empt that criticism, pointing out that European antitrust reviews were often triggered by complaints from competitors. But while Ecis’ support was broad-based, with companies such as Oracle and IBM acting behind the scenes in support of more overt opponents such as Sun Microsystems, the complaints against Google for now remain narrow.

There has been a pattern of small companies launching competition-related complaints in Brussels and then being backed by trade associations in which rivals have a role – or sometimes being backed by those rivals themselves. This has been particularly noticeable in the highly-charged technology area where many of the fiercest antitrust battles of recent years have been fought.

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