WASHINGTON—The Federal Trade Commission is poised to serve Google Inc. with civil subpoenas, according to people familiar with the matter, signaling the start of a wide-ranging, formal investigation into whether the Internet-search giant has abused its dominance on the Web.
The agency's five-member panel of commissioners is preparing to send its formal demands for information to Google within days, these people said. They said other companies are likely to receive official requests for information about their dealings with Google at a later stage.
Representatives for Google and the FTC declined to comment.
From Google's perspective, the FTC's unfolding antitrust probe is the most serious to date in the U.S., though it won't necessarily lead to any federal allegations of wrongdoing against the company.
Although Google has faced several antitrust probes in recent years, the inquiries, at least in the U.S., have largely been limited to reviews of the company's mergers and acquisitions. The U.S. Justice Department currently is conducting an antitrust review of Google's recent purchase of Internet-advertising company Admeld Inc. for around $400 million, said people familiar with the probe.
The new inquiry, by contrast, will examine fundamental issues relating to Google's core search-advertising business, said people familiar with the matter. The business is the source of most of Google's revenue. The issues include whether Google—which accounts for around two-thirds of Internet searches in the U.S. and more abroad—unfairly channels users to its own growing network of services at the expense of rival providers.
In November, the European Commission, the European Union's executive arm, opened its own formal investigation into allegations by several companies that Google had violated European competition laws. Google denies the allegations.
Many policy watchers think an FTC probe of Google could ultimately be as much of a watershed for antitrust policy as the Justice Department's landmark lawsuit against Microsoft Corp. in the 1990s. The company narrowly managed to survive being broken up, but industry and legal experts credit the suit with checking the company's ability to use its dominance in personal-computer operating systems to control other technology sectors.
Still, Google wouldn't be an easy target for the FTC. Under U.S. antitrust law, it isn't illegal to have a monopoly—only to abuse it. And courts have significantly narrowed the scope of antitrust law in recent years, further raising the bar for the FTC to bring a successful case.
Some companies complain about the way that Google ranks its own services in its "natural" search results or the amount it charges them for placing ads, contending that its market power gives it the ability to determine whether businesses succeed or fail. Foundem.co.uk, one of the companies whose complaints triggered the European probe, claims that Google demoted Foundem's comparative shopping services in its listings and gave premium placement to Google's own product-search results instead.
In the U.S., Google has sparked complaints from travel services like Expedia Inc. and TripAdvisor LLC, local listings services like Yelp, as well as Google's perennial rival, Microsoft. Many of them say Google promotes links to its own websites, starving their sites of vital traffic.
Still other companies contend that Google is abusing its dominance in search advertising to extend its control to other markets, from mobile telephones to online television, publishing and airline travel.
Google has long denied acting in an anticompetitive manner, saying that users can easily navigate to other choices on the Web. Many of the antitrust inquiries, Google says, are sparked by companies that fear their business models will be upended by its entry into their market.
"Given our success and the disruptive nature of our business, it's entirely understandable that we've caused unease among other companies and caught the attention of regulators," wrote two Google executives in a company blog post after the official European probe was launched in November.
Google handles some two-thirds of all U.S. Web searches, according to comScore Inc. In much of Europe, its market share is above 80%.
The FTC's preparations to subpoena Google are the first concrete signal that its commissioners have decided there is enough evidence to move forward with a formal investigation. The FTC's probe is expected to take a year or more to unfold. Though the outcome is uncertain, the agency fought hard with the Justice Department to handle the case, said people familiar with the investigation, and so is thought to be unlikely to walk away without taking any action. The FTC and Justice Department share responsibility for enforcing federal antitrust laws.
The FTC has been making informal inquiries about Google's business practices for several months, the people said. They said Google lawyers have met with FTC officials several times to explain various aspects of their business.
Some technology companies said privately that they have been contacted by the FTC in recent months, as it decided whether to open an investigation.
The agency's five-member panel of commissioners is preparing to send its formal demands for information to Google within days, these people said. They said other companies are likely to receive official requests for information about their dealings with Google at a later stage.
Representatives for Google and the FTC declined to comment.
From Google's perspective, the FTC's unfolding antitrust probe is the most serious to date in the U.S., though it won't necessarily lead to any federal allegations of wrongdoing against the company.
Although Google has faced several antitrust probes in recent years, the inquiries, at least in the U.S., have largely been limited to reviews of the company's mergers and acquisitions. The U.S. Justice Department currently is conducting an antitrust review of Google's recent purchase of Internet-advertising company Admeld Inc. for around $400 million, said people familiar with the probe.
In November, the European Commission, the European Union's executive arm, opened its own formal investigation into allegations by several companies that Google had violated European competition laws. Google denies the allegations.
Many policy watchers think an FTC probe of Google could ultimately be as much of a watershed for antitrust policy as the Justice Department's landmark lawsuit against Microsoft Corp. in the 1990s. The company narrowly managed to survive being broken up, but industry and legal experts credit the suit with checking the company's ability to use its dominance in personal-computer operating systems to control other technology sectors.
Still, Google wouldn't be an easy target for the FTC. Under U.S. antitrust law, it isn't illegal to have a monopoly—only to abuse it. And courts have significantly narrowed the scope of antitrust law in recent years, further raising the bar for the FTC to bring a successful case.
In the U.S., Google has sparked complaints from travel services like Expedia Inc. and TripAdvisor LLC, local listings services like Yelp, as well as Google's perennial rival, Microsoft. Many of them say Google promotes links to its own websites, starving their sites of vital traffic.
Still other companies contend that Google is abusing its dominance in search advertising to extend its control to other markets, from mobile telephones to online television, publishing and airline travel.
Google has long denied acting in an anticompetitive manner, saying that users can easily navigate to other choices on the Web. Many of the antitrust inquiries, Google says, are sparked by companies that fear their business models will be upended by its entry into their market.
"Given our success and the disruptive nature of our business, it's entirely understandable that we've caused unease among other companies and caught the attention of regulators," wrote two Google executives in a company blog post after the official European probe was launched in November.
Google handles some two-thirds of all U.S. Web searches, according to comScore Inc. In much of Europe, its market share is above 80%.
The FTC's preparations to subpoena Google are the first concrete signal that its commissioners have decided there is enough evidence to move forward with a formal investigation. The FTC's probe is expected to take a year or more to unfold. Though the outcome is uncertain, the agency fought hard with the Justice Department to handle the case, said people familiar with the investigation, and so is thought to be unlikely to walk away without taking any action. The FTC and Justice Department share responsibility for enforcing federal antitrust laws.
The FTC has been making informal inquiries about Google's business practices for several months, the people said. They said Google lawyers have met with FTC officials several times to explain various aspects of their business.
Some technology companies said privately that they have been contacted by the FTC in recent months, as it decided whether to open an investigation.
No comments:
Post a Comment