Google faces new federal antitrust probe

PUBLISHED : Friday, 24 May, 2013, 11:14am
UPDATED : Saturday, 25 May, 2013, 2:37am

Google, the software and web-search company, is facing a new antitrust probe by the United States Federal Trade Commission into whether it is using its leadership in the online display advertising market to illegally curb competition, people familiar with the matter said.

The fresh inquiry, which comes after the FTC's decision to close a review of Google's search business in January without taking action, is in the preliminary stages and may not expand into a larger investigation, they said.

FTC investigators are examining whether Google is using its position in the market for display ads in the United States, a US$17.7 billion industry that includes the sale of banner ads on websites, to push companies to use more of its other services, a practice that can be illegal under antitrust laws, the sources said. Google has been drawing regulatory scrutiny around the world as it bolsters its market share of digital advertising.

Canada's Competition Bureau is preparing to start a formal inquiry into Google's search practices, the company disclosed last week.

The European Union is investigating Google for the way it operates the search business and has also opened a probe into its handset division, Motorola Mobility, over the licensing of its patents to rival device makers.

Antitrust agencies in Argentina and South Korea are also scrutinising the company. Google and the FTC declined to comment on the probe.

Google ended a 20-month investigation in January over whether it unfairly skewed search results by pledging to change some business practices and settling allegations that it misused patents to thwart competitors in smartphone technology, thus avoiding a potentially costly legal battle with US regulators.

The FTC's resolution of its probe into Google's search practices came as a blow to Google's competitors, including Microsoft, Yelp, and Expedia.

An alliance of e-commerce and web-search companies had pressed the FTC to bring a lawsuit, claiming that Google's dominance of the internet search business, combined with the company favouring its own services in answers to queries, violates antitrust laws.

The FTC secured clearance to move forward with the new investigation in the display advertising market from the antitrust division of the US Justice Department under a process that ensures the two agencies do not investigate the same matters at the same time.

In the new investigation, the FTC is exploring concerns about Google's growing market share with some of its digital advertising tools and services, including technology that places display advertisements on websites, the sources said.

The FTC is looking at whether Google is using its tools to force companies to bypass competing products and use other Google properties, including a marketplace for buying and selling internet display ads, and features that help companies maximise revenue, the sources said.

The agency is also reviewing Google's potential to use its dominance in search advertising to squeeze out competitors in the display advertising market, the sources said.