Regulators are watching Google over antitrust concerns

Regulators are watching Google over antitrust concerns

In the 1990s, Gary Reback, a Silicon Valley lawyer, almost single-handedly brought the antitrust weight of the federal government down on that era's high-tech heavyweight, Microsoft Corp. Now, Reback contends there is a dangerous new monopolist in the catbird seat: the search giant Google Inc.

This month, Reback shepherded Adam and Shivaun Raff, the husband-and-wife entrepreneurs behind the London comparison shopping site Foundem, around Washington. The three held meetings with congressional staff members and antitrust enforcers at the department of justice and the federal trade commission.

Their goal was to air the Foundem couple's complaint that in 2006, Google's supposedly objective algorithms suddenly dropped Foundem into the netherworld of Google search results. They say Google also raised the rates Foundem had to pay to advertise alongside search results. These moves, the couple say, pushed their comparison shopping site out of view, and Google later put the spotlight on its own shopping listings.

Google is the “arbiter of every single thing on the Web, and it favours its properties over everyone else’s," said Reback, sitting in a Washington cafe with the couple. “What it wants to do is control Internet traffic. Anything that undermines its ability to do that is threatening."

Google says its mission is to give users the information they're looking for even if that means giving its own content priority and de-emphasizing sites it believes offer poor experiences. “Telling a search engine that it cannot innovate and show results in a way that benefits users would undermine the very goals of our competition laws," says Matthew Bye, a Google lawyer.

But the search giant's decisions on such matters may soon be judged by higher authorities. Over the last several years, it has become the canonical way to search the Web, an information doorway that dictates what kind of knowledge is visible to the browsing public.

Almost a decade after Google promised that the creed “don't be evil" would guide its activities, the federal government is examining Google's acquisitions and actions as never before, looking for indications that the company's market power may be anticompetitive in the worlds of Web search and online advertising.

“They are not just on the radar screen. They are at the centre of it," said Tim Wu, a professor at Columbia University. “If you are in the federal government and are interested in antitrust, you are looking at Google."

Google has managed to squeak by most regulatory reviews. On Friday, the federal trade commission approved Google's $750 million (Rs3,525 crore) acquisition of AdMob, a mobile advertising start-up. Staff members had initially planned to oppose the purchase, even saying in a statement that the deal “raised serious antitrust issues". But the agency ultimately endorsed the deal, assuming that Apple Inc.’s entry in the market would facilitate competition.

Nevertheless, the search giant may get an indication this summer of just how uncomfortable Washington can get for such dominant firms. Federal judge Denny Chin is expected to rule in the next few months on Google's amended settlement with authors and book publishers and whether the agreement gives the search giant too much control over the millions of library books that it scanned. The department of justice has opposed the settlement on two occasions.

At the same time, Google's own missteps have prompted a new round of scrutiny. This month, it admitted that its camera-equipped cars, which drive around photographing the world's neighbourhoods for Street View images within Google Maps, had inadvertently collected fragments of communications from people using unsecured Wi-Fi networks. Privacy advocates howled, while the federal trade commission and regulators in Europe said they were looking into the matter.

Can monopolies exist online, when competition is only a click away? What constitutes anti-competitive behaviour in the complex networked economy, where the very size of big companies allows them to operate more efficiently, and thus grow even bigger?

Google executives acknowledge the scrutiny. “We’re getting larger, and we have been very disruptive within some industries," says Alan Davidson, head of US public policy at Google. “We know we have a giant bull’s-eye on our backs."

©2010/The new York Times