Google’s European travails

BRUSSELS, Belgium — Who exactly is going after Google? And why?

Last month, the European Commission, the executive arm of the EU, opened a formal probe into Google’s policies regarding the ranking of competitors’ websites in its search results, including links to paid advertising, and whether it restricts advertisers from working with Google competitors. This followed the filing of formal complaints in February by British price-comparison site Foundem and the French legal search tool ejustice.fr regarding the ranking system.  Ciao, a search service owned by Microsoft, lodged the advertising concerns.

Google denies the accusations, but said it has been and will continue being responsive to commission questions.

“There’s always going to be room for improvement, and so we’ll be working with the commission to address any concerns,” said Al Verney, Google’s Brussels spokesman.

At the same time, Verney rejected the specific allegations in the case:  “Since we started Google we have worked hard to do the right thing by our users and our industry. Google has never taken action to intentionally hurt competing services. We do not impose any exclusivity obligations on advertisers.”

Friday the commission expanded the probe to include similar complaints by two German companies that had originally filed with the German government. EU member states are not allowed to pursue anti-trust investigations in an area that’s already being investigated at the European level, so the transfer of portions of the complaints to Brussels’ dossier, explained competition commission spokesman Jonathan Todd, “was a natural consequence of that.”

Some analysts in the high-tech world suspect the commission has just been waiting for a way to go after Google, having pursued virtually every other American high-tech company. Microsoft has been there. Intel too. Penalties cost both companies billions of pretty pennies, not to mention the cost of their legal defense.  Apple wriggled out of penalties by changing its policies on iPhone applications and repairs when threatened with EU antitrust action.

EU law prohibits a company from abusing a dominant position and Google now holds between 80 percent and 90 percent of the European search-engine market share, much more in some countries. Should it have been expecting the probe?

Greg Sterling said he was. It’s “an opportunity to put the fear of God into Google,” said Sterling, a market analyst and contributing editor to SearchEngineLand.com, which tracks all the major players in the industry. The complaints gave the commission a much-desired platform, Sterling believes, “to put Google on notice … that it’s going to take every chance it can to rein in Google’s power because it doesn’t like the position Google has attained.”

But there are others who believe there is a more insidious plot behind the commission’s move.  The fact that Microsoft-owned Ciao is part of the suit spurs their suspicion.

“I think it’s backed by Microsoft,” said Clint Boulton bluntly, a writer for eWeek and GoogleWatch, a blog devoted to — and usually supportive of — all things Google.  Boulton said Microsoft “learned its lessons well” from years of being prosecuted — he purposely uses “persecuted” — by the EU. The software giant knows this case could “possibly put a hurt on Google,” its main competitor, Boulton said.

Complaining to the commission was a “genius” move by Foundem and ejustice.fr, Boulton said.  “You’ve got Microsoft whispering in your ear — it gets these companies thrust into the limelight,” he said.  “So it’s a win-win for them because they’re not the ones taking Google to court; all they have to do is show up and testify.  It’s better to lobby that a governing body do this than to go and do it on your own.”

But Shivaun Raff laughed a bit wearily when asked if Foundem is a front for a Microsoft campaign against Google. She and her husband, Adam, who cofounded the site, have been presented with the theory dozens of times.        

“It’s irritating, because it’s so untrue,” she said.

Foundem’s connection with Microsoft, Raff said, begins and ends with their shared membership in the trade group Initiative for a Competitive Online Marketplace (ICOMP), an organization that takes positions against Google.  The Raffs say it was news to them when Ciao and ejustice.fr were named as a co-complainants in February, because all three companies took their matters to the commission independently.

 Shivaun says the perceptions are “also a bit flattering,” because it shows that no one believes a “tiny company can so effectively take on the world’s most powerful brand.”

Foundem became one of ICOMP’S more than 40 members in 2009, while its complaints against Google date back to 2006.  That’s when the Raffs say they found that Google had entirely blocked their price-comparison and shopping site from showing up in Google search results.

They said ICOMP has nothing to do with Foundem's complaints. An attorney for the initative did once add some legalese to a document the Raffs — neither of whom are lawyers — had drafted, Adam Raff said, but that’s the sum total of the organization’s involvement in their case.

Microsoft has address the accusations too, pinning them squarely on Google. “Google is telling reporters that antitrust concerns about search are not real because some of the complaints come from one of its last remaining search competitors,” wrote Dave Heiner, vice president and deputy general counsel, in February.  “It’s worth asking whether Google’s response really addresses the concerns that have been raised. Complaints in competition law cases usually come from competitors.”

Shivaun Raff said Foundem's best defense is the facts and letting them speak for themselves takes a lot less staff than if they tried to hide information. The Raffs’ blog searchneutrality.org offers a detailed chronology into Foundem’s dispute with Google.

Google has explained in public statements that sites such as Foundem, which duplicate the majority of their content from other sites, are given lower positions in its ranking system than those with original material. But after years of back and forth, Google finally in 2009 had the block against Foundem removed by manually manipulating an algorithm, a process called “whitelisting.”   Despite a February statement by Google attorney Julia Holtz that, “We don’t whitelist or blacklist anyone,” the Raffs provide emails from “adwords-support@google.com” with the subject line “[#196919718] Update on Whitelisting”.

So once the Raffs resolved their issues with Google, why didn’t they just get back to running their business? “We had to do something to preserve our future,” Adam Raff explained.  With Google’s search engine dwarfing all competition, a company simply has to be listed there, as high as possible.  It is not acceptable, the Raffs believe, that Google favors its own results in what is advertised as an objective “universal search."

It’s Google’s search, however; why  shouldn’t it be allowed to rank its own products higher than others?  Adam Raff said fine, as long as users are informed. One remedy he said they have suggested in the legal process would be for Google to provide an option on its search results that says “show me the results UNpenalized.”

 It will be months, perhaps years, before the commission announces the results of its investigation into Google's behavior. In the meantime, from across the ocean, Greg Sterling cast more doubt on the prospect that Microsoft really could be behind the smaller two complainants, and even questions why it’s thrown Ciao in the ring.

“Microsoft might welcome some punishment for Google, some censure or some slap on the wrist,” Sterlin said, “but I don’t think they would necessarily welcome a principle of disclosure that would equally apply to them.”

Editor's note: The story was updated to correct a url.