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FTC’s antitrust inquiry turns up heat on Google
Although Microsoft thwarted an attempt to break up the company, it was distracted for years, and the company has never been quite the same. The investigation may have made Microsoft more vulnerable to companies such as Google during the late 1990s as the Internet emerged as an important new platform on computers.
Now, Google faces some of the same threats as it tries to figure out how to counter the rising popularity of services such as Facebook.
In an extreme scenario, the FTC’s inquiry could be the first step in a long process that ends with Google having to spin off YouTube and some of the other pieces of the empire it has built for 13 years. Although it doesn’t have to, the FTC could hand its case off to the Justice Department, as it did in the Microsoft inquiry.
“Inevitably, if we get to the point where Google is found to have abused its power, we are going to be talking about divestiture because divestitures are always a better way to go than trying to regulate something like this,” said Gary Reback, an antitrust lawyer in Silicon Valley who is representing some of the companies complaining about Google’s practices.
Other antitrust attorneys think the investigation could result in less radical solutions, such as prohibiting Google from featuring its own services at the top of its search results. Google could also agree to periodic audits of how it programs its search engine, much as did earlier this year in a settlement of an FTC investigation into its privacy practices.
Google is expected to put up a fierce fight. The investigation is aimed at the heart of its business, its formula for ranking the quality of websites and ads, which has evolved since Google co-founders Larry Page and Sergey Brin began working on it at Stanford University. The company views the recommendations that it produces as a matter of opinion protected by the First Amendment.
“It’s still unclear exactly what the FTC’s concerns are, but we’re clear about where we stand,” one of Google’s top search engineers, Amit Singhal, wrote Friday on the company’s blog. “Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow.”
Google has been preparing for this battle since it was almost sued by the Justice Department over a proposed Internet search partnership two and a half years ago. The Justice Department drew up a complaint alleging Google had built a monopoly in Internet search, but never filed it because Google scuttled its agreement with Yahoo to avoid going to court.
Google has been under increasing government scrutiny since then. It has prevailed in the key confrontations and won regulatory approval for several key acquisitions, including its $3.2 billion purchase of online ad service DoubleClick in 2008, last year’s $681 million purchase of mobile ad service AdMob and a $700 million purchase of airline fare tracker ITA Software in April.
To prove Google abused its dominance, regulators will have to get it to turn over sensitive documents that it has resisted sharing in the past. And Google probably won’t be shy about fighting for the right to adjust its search formula to deliver more useful results to its audience.
The company says it needs to fine-tune search results to weed out the sites that try to game its system and win a high ranking even though they have little to do with whatever a person was searching for.
Tessler reported from Washington. AP Technology Writer Barbara Ortutay in New York contributed to this report.
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