Google under EU investigation over online ads

In the latest blow to Google’s ever-expanding online ambitions, the European Commission, the executive body of the European Union, has opened an antitrust investigation into Google’s practices in online advertising. According to allegations made by Microsoft‘s German subsidiary Ciao.de, British price comparison site Foundem, and French legal search specialist Ejustice, Google has discriminated against competitors by placing their links lower in search results than its own services, thus abusing its dominant position in online search.

Google has allegedly lowered the ranking of competitive vertical search sites — mostly price comparison sites — in favor of its own in the main body of search results as they appear on a Google search results page. These results are “natural”, or unpaid search results as opposed to the paid ads which appear on the top and the right-hand side of the page.

Vertical search sites specialize in a specific kind of search, like travel, health, or shopping. Some appear designed to game Google’s algorithms and benefit from free traffic from the Web search engine rather than providing a genuine service to users, while others offer a legitimately helpful service.

The EC is also looking into claims that Google has manipulated its internal “quality score”, which determines the amount of money an advertiser has to pay for an ad that appears on Google’s search results page. And finally, the Commission is investigating whether or not Google is also trying to stop websites from accepting rival ads, making the company sound like quite the online bully.

While the EC has opened an investigation into the matter, it doesn’t mean there is proof of any wrongdoing on Google’s part–yet. The EC states simply that it will “conduct an in-depth investigation of the case as a matter of priority.”

According to various outlets such as the BBC, BusinessWeek, and the New York Times, Google responded with a statement saying that it has “worked hard to do the right thing by our users and our industry.” Google said it has marked ads clearly and has allowed advertisers export their data from its service to other services easily. Google also said there is always “room for improvement”, and the company will be working with the commission to “address any concerns.”

There is no legal deadline for the investigation, meaning that it is likely to take months, if not years for the EC to reach a conclusion in what will be a highly complex case.

The EU has a history of taking on giant companies before, hitting Microsoft with a fine of 497 million euros, or $794 million, in March 2004 over antitrust issues, and, more recently, the regulator fined Intel 1.08 billion euros, or $1.38 billion. It is apparent that the EU is not a pushover when dealing with multinational companies and therefore this could mean trouble for Google, should the company be found to be using anti-competitive practices.

[Photo credit: Carlos Luna]