EU to investigate whether Google is crushing the competition

A bad day for Google: it's hit with an EU competition probe - and loses an extraordinary privacy case.

Last Updated: 21 Dec 2011

The European Commission said today it was investigating three separate complaints about Google’s behaviour – all of which basically suggest that Google is using its massive dominance of internet search to crush the competition. The exact details are a bit hazy, but the jist seems to be that Google is using its search engine to push its own services to the exclusion of rival offerings. Google insists that it plays within the rules – but it’s another sign that the search giant is facing a lot more critical scrutiny these days...

The issue is that since so many people use Google as their gateway to the internet, it has a huge amount of power over what we see and don’t see. And according to the three complainants – UK price comparison site Foundem, French legal search engine and Microsoft-owned German comparison site Ciao – it’s been taking advantage. Foundem claims that Google demotes the site in its results, while promoting its own price comparison offering (often without clearly labelling it as such).

Google claims to be confident it can see off this probe, but the involvement of the EU is a serious headache. If nothing else, Google will have to devote considerable time, energy and expense to fighting the charges – which, this being the EU, may drag on for years. It could technically be fined up to 10% of its $24bn turnover. And almost more damagingly, there’s a chance it may have to reveal details about its search algorithms, or the way it charges for advertising – which is bound to erode its competitive advantage.

This news will undoubtedly have gone down well at Microsoft; the software giant has previously been hammered with £1.5bn in fines by EU anti-trust regulators, so it will be delighted to see Google under the cosh instead. In fact it's been a good day for Microsoft: it’s also just re-taken the top spot in the Business Superbrand Top 500, with Google slipping to fifth. This list is largely subjective, since it’s based on a poll of various brand experts. But it does show that the all-conquering Google brand is starting to lose a little bit of its lustre.

Privacy issues are one of the biggest reasons for this, of course. So Google will have been alarmed by a remarkable court ruling in Italy this morning: three top Google exes (a senior VP, its former CFO and its global privacy counsel) have just been convicted of ‘violating privacy’, after a video of an Italian schoolboy with Down’s Syndrome being bullied was put onto the site. There was no suggestion that the three concerned had anything to do with the upload – but the court ruled that Google should have taken it down more quickly. Google called the ruling ‘astonishing’ and promised to appeal. But it just goes to show: now it’s a big gun, it’s there to be shot at.

In today's bulletin:

EU to investigate whether Google is crushing the competition
Northern Rock savers to lose gold-plated Government guarantee
Editor's blog: Bullying? Listen up, you dozy dolts
UK baulks at £2bn cost of EU maternity leave proposal
Glaxo shows the benefit of business tax breaks

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