July 7, 2010 6:39 pm

Brussels to look closely at Google probe

The prospect of Google facing a European inquiry into alleged anti-competitive behaviour appeared to increase on Wednesday, with Brussels’ leading competition official breaking his silence to suggest how seriously he took the issue.

Warning about the risks of online market dominance, Joaquin Almunia said he would look closely at complaints from three companies, including Microsoft, that the search company had unfairly demoted rivals in its rankings.

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“The work is at an early stage, but given the importance of search to a competitive online marketplace, I am looking at the allegations very carefully,” he told a conference organised by University College London.

The fact that the EU commissioner has commented on the case for the first time since the complaints were filed five months ago will do nothing to dampen growing speculation in Brussels legal circles that the commission is likely open a formal probe into the search business the next few months – probably after the summer break.

Mr Almunia also said he would apply the same principles of competition online as in the “bricks and mortar world”. Viral growth characteristics online lend themselves to high degrees of customer concentration, as Google and Facebook have found.

“If companies do establish themselves in a strong position in a market, there may be risks that they will use this position to foreclose other markets,” Mr Almunia said.

Competition officials are understood to be still gathering data, and are in regular contact with the company – and Mr Almunia added that no decision on whether to begin a formal probe had been taken.

Google said on Wednesday that it was “very confident” that its business operated within European competition law.

“We’re working with the commissioner and his team to answer their questions, including how Google’s search ranking works to produce the most relevant and useful search results for users,” it said.

Mr Almunia said he wanted to bolster local innovation, indicating that more American technology companies could face pressure to be open, transparent and interoperable with rivals, especially in mobile and “cloud computing” internet services.

“It is an established fact that Europe is good at networks and we have strong companies in that sector. But time after time we have failed to fill the pipes,” he said. “The biggest web services were all developed overseas. We cannot afford to continue to miss the boat on so many different parts of the digital value chain.”

Mr Alumunia was critical of “closed” internet systems, which could deter new competitors in the “essential building blocks for a next generation of innovation”.

“The internet would not be the success it is today had it not been built on open, interoperable standards and protocols,” he said.

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