Google faces Brussels antitrust scrutiny

The European Commission has launched a preliminary antitrust investigation into Google’s search engine and its search-advertising service.

The European Commission on Wednesday said it had contacted the US internet company about two weeks ago about three complaints it had received and that the commission itself was examining them.

The authorities in Brussels stressed that they had not opened a formal investigation in the company or its practices at this stage.

According to Google, one of the three complaints was from rival Microsoft. That protest, from an online service called Ciao that was recently bought by the software company, echoes a complaint that had already been lodged with regulators in Germany.

The Commission added that it had asked Google to comment on the complaints and that it was co-operating closely with national competition authorities. This procedure is standard practice when complaints are received in Brussels, and it can take some time – often months – before a decision is made either to begin a formal probe or to drop the matter.

Google has faced antitrust reviews on both sides of the Atlantic. However, no government agency has previously started an official inquiry into its search and search-advertising services, in spite of indications from officials in both Brussels and Washington that such a review might become necessary.

Ms Holtz on Wednesday defended Google’s algorithm system for ranking web search results and said the company was optimistic that the authorities would not find a problem.

In a blog post on Tuesday night revealing the official review, Google sought to depict it as a consequence of its growing market power. “This kind of scrutiny goes with the territory when you are a large company,” said Julia Holtz, the company’s senior competition counsel for Europe, the Middle East and Africa.

”We’re hopeful we can convince them not to pursue this further,” she said.

The algorithm, she insisted, was a mechanical tool for ranking according to relevance. ”The algorithm does the ranking, not us,” she said, adding that companies had to “work on a good page to go up in the rankings”.

Once the algorithm is established, ”every webpage is treated in the same way,” she said.

Ms Holtz said she did not believe the company would need to offer any kind of remedies to help satisfy the antitrust authorities.

”It’s not necessary,” she said.

At an estimated 90 per cent, Google’s share of search advertising in Europe is higher even than its home market in the US, where most analysts put it at up to 80 per cent.

The complaint from Ciao, now part of Microsoft’s Bing search engine, centres on Google’s advertising system. While it has always maintained that advertising prices are set by auction, leaving it without any direct influence over pricing, it has faced complaints from a number of companies over its practice of setting minimum bid levels.

Sparked by two separate complaints, Google said that Brussels was also looking into its search rankings. It said the complaints had come from Foundem, a UK price comparison service, and, a French legal search engine, both of which had complained that they had been relegated to an unfairly low place in Google’s search rankings.

Google denied that it deliberately disadvantaged specialised, or “vertical”, search services like this, and pointed to others that appear high in its rankings.

“We understand how important rankings can be to websites, especially commercial ones, because a higher ranking typically drives higher volumes of traffic,” said Ms Holtz. “We are also the first to admit that our search is not perfect, but it’s a very hard computer science problem to crack.”

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