The global search giant, Google Inc., has said that the U.S. Federal Trade Commission will review its business practices and promises to co-operate with the probe.
Yesterday, we received formal notification from the U.S. Federal Trade Commission that it has begun a review of our business. We respect the FTC's process and will be working with them (as we have with other agencies) over the coming months to answer questions about Google and our services, the company said on a blog post.
It's still unclear exactly what the FTC's concerns are, but we're clear about where we stand, it further added.
The probe was first reported on Thursday when The Wall Street Journal cited sources familiar with the matter saying the FTC was expected to open an antitrust investigation into Google.
Regulators across the U.S. and in Europe are stepping up their scrutiny of Mountain View, Calif.-based Google, which has the largest share of the U.S. Web-search market. The company, much like Microsoft in the 1990s, may be forced to spend years defending itself against a probe into whether Google uses its lead to keep out competitors and harm consumers.
However, Google defended its practices through the blog post.
Search helps you go anywhere and discover anything, on an open Internet. Using Google is a choice-and there are lots of other choices available to you for getting information: other general-interest search engines, specialized search engines, direct navigation to websites, mobile applications, social networks, and more, Google executive Amit Singhal.
Microsoft suffered similar fate in its two-decade fight with the U.S. Department of Justice and state attorneys over charges that it abused its monopoly in operating systems to crush competition in other areas, reports Reuters. Microsoft finally settled the matter in 2002, and only last month emerged from government oversight.
Bill Gates felt like he was being punished for being successful, and he never really recovered from the antitrust trial, said Michael Cusumano, Professor at MIT Sloan School of Management, who was involved in the trial. Microsoft has suffered as a result. They're not as aggressive. They definitely lost their edge.
Whether Google's Page will handle the review of his company better than Gates remains to be seen. The 38-year-old son of academics is known for a stubborn streak, championing ambitious technology and products though their near-term financial payoffs are not clear.
Page and the company chairman Eric Schmidt, have resisted calls earlier to testify before the Senate Judiciary Committee's antitrust subcommittee hearing on competition in the Internet search domain.
Google's desire to stand firm against government intrusion were evident from its strong resistance to China last year protesting censorship of search results in China. Now it has to fight similar scenario on its homefront.
The amount of time involved is almost beyond human calculation, Bob Lande, an FTC veteran who now teaches at the University of Baltimore School of Law told Reuters.
The resolve of the company and its management will be put to test with prolonged legal battles. But Google's shares are already under pressure as investors worry about the increasing competition it faces from Facebook and others.
Shares of Google began reached more than $600 this year but ended down 1.11 percent at $474.88 on Nasdaq.
It's still unclear exactly what the FTC's concerns are, but we're clear about where we stand, Singhal wrote on the blog post on Google's website.
The FTC is expected to address complaints from Google's rivals that its search results favor the company's own services. Google, which runs an estimated 69 percent of Web searches worldwide, can make or break a company depending on its search ranking, says the Reuters report.
The European Commission, and the attorney general in Texas launched investigations into similar issues last year over complaints on price comparison websites for electronics, travel or mortgages. California, New York and Ohio are following suit, according to a source familiar with the matter.
This is just the beginning. You've got the EU investigating Google, you've got the Feds investigating Google. The state AGs have Google in the crosshairs. It's not a great position to be in, Colin Gillis, technology analyst at BGC Partners told Reuters. You start having regulators tamper with your core business, that's something to be concerned about.
But typically less than one out of every 10 investigations lead to enforcement. This investigation faces daunting odds, explains David Balto, a former FTC policy director. The complaints presented to the FTC are from disgruntled advertisers, not consumers. That is not a strong foundation to an antitrust case, Reuters quoted him as saying.