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Google Denies Rankings Hanky-Panky as EU Pursues Probe

Google Denies Rankings Hanky-Panky as EU Pursues Probe

Google is flatly denying that there is any substance to allegations that it is stifling competition with other search services, but the European Commission is going forward with its investigation. Websites with lower-quality content tend to rank lower, noted Google spokesperson Adam Kovacevich, and those are the sites that typically complain about their rankings.

By Erika Morphy
12/01/10 2:34 PM PT

The European Commission has opened an antitrust probe of Google for allegedly discriminating against competing search services by restricting its advertising partners from placing ads on their sites. It also is investigating whether Google has restricted advertisers from moving their data to competing ad services.

It is one of the broadest regulatory investigations into Google ever, and it was triggered by complaints earlier this year that Google was deliberately keeping certain websites' rankings low in search results.

In February, the European Commission notified Google that it received complaints from a UK price comparison site, Foundem, a French legal search engine, ejustice.fr, and Microsoft's Ciao from Bing.

Though each complaint was slightly different, they all centered on how the companies show up in search rankings, with the subtext being whether Google's ranking system chokes off competition.

The European Commission opened a preliminary inquiry as a result.

Not So, Says Google

The allegations are not true, Google spokesperson Adam Kovacevich told the E-Commerce Times.

Websites with lower-quality content tend to rank lower, he said, and those are the sites that typically complain about their rankings. He pointed to Foundem as an example, noting that 79 percent of its content is duplicated from other sites.

Nevertheless, the EC has initiated proceedings, the next stage in an antitrust investigation. At this point in the process, "the commission has no proof of any infringements. It only signifies that the commission will conduct an in-depth investigation of the case as a matter of priority," it says in a statement.

EC spokesperson Amelia Torres referred the E-Commerce Times to the commission's press release, declining further comment on the investigation.

Several Allegations

The EC is looking into several matters, including complaints by search service providers of unfavorable treatment in Google's unpaid and sponsored search results, coupled with alleged preferential treatment of Google's own services.

It also is investigating allegations that Google has lowered the rankings of unpaid search results for competing services that specialize in providing users with specific online content such as price comparisons (so-called vertical search services), while according preferential placement for the results of its own vertical search services in order to shut out competition.

The Commission is also looking into allegations that Google lowered the "Quality Score" -- one of the factors that determine the price paid to Google by advertisers -- for sponsored links of competing vertical search services.

Google denies all of these allegations, Kovacevich said. "We do not impose exclusivity obligations on advertisers, and we absolutely provide advertisers with the ability to export their ad campaigns to other platforms."

Following Microsoft

Google is hardly the first large U.S. tech company to find itself the subject of an EC probe, noted Keith Hylton, a law professor at the Boston University School of Law.

"I think we've all seen this movie before in the case of Microsoft," he told the E-Commerce Times.

Google, though, has the benefit of hindsight and can see what happened with Microsoft, he pointed out.

"It is easy to predict where things will go from here," Hylton continued. "One of the major differences between the U.S. and EU is that if one of our antitrust regulators goes after a company for violation of antitrust law, that regulator has to go to court and prove its case -- and sometimes they lose. That is not true in the EU. The competition authority has a record of the Court of First Instance supporting it on major cases, so the credibility of their threat is a lot stronger."

Google may try to negotiate a deal with the Commission to avoid a long protracted proceeding that ends with a huge fine, Hylton suggested.

There is a real possibility of a fine whenever the EC launches an antitrust investigation, especially against a non-European company, Ryan Radia, an analyst with the Competitive Enterprise Institute, told the E-Commerce Times.

However, Google has an unusually strong case, he said, and in this instance, it is unclear if the EC will be able to take action against it.


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