Microsoft Corp stepped up its rivalry with Google Inc, claiming in its first-ever complaint to antitrust regulators that Google systematically thwarts Internet search competition.

The formal complaint to European Commission regulators marks a role change for Microsoft, itself the target of antitrust action for two decades in the United States and Europe.

The filing of this complaint reflects one of the greatest ironies of antitrust history, said Thomas Vinje, global head of antitrust practice at Clifford Chance, who led a coalition that won EU fines against Microsoft.

Microsoft has learned from its own unpleasant experiences how to cause maximum disruption for its competitors via competition law.

The complaint also underscores the erosion of Microsoft's near-monopoly of the personal computer market as Apple Inc has outgrown it in revenue. Google controls over 90 percent of the Internet search advertising market in Europe, well ahead of Microsoft's Bing. And Web browsers such as Firefox and Google's Chrome have eaten away at the market lead by Microsoft's Internet Explorer.

In its complaint on Thursday, Microsoft claims Google engages in a pattern of actions that unfairly impede competition.

Google is already under investigation by the European Commission after complaints from three small companies, one of them owned by Microsoft.

Google indicated it was not overly concerned by the complaint. We're not surprised that Microsoft has done this, since one of their subsidiaries was one of the original complainants, Google spokesman Al Verney said.

For our part, we continue to discuss the case with the European Commission and we're happy to explain to anyone how our business works.

EU Commission spokeswoman Amelia Torres said in an emailed statement that the Commission takes note of the complaint and, as is the procedure, will inform Google and will ask for its views on it. No further information will be given.

On Nasdaq, Microsoft fell 0.8 percent to $25.41 at mid-afternoon, while Google rose 0.9 percent to $586.80.

WRENCH IN GOOGLE SETTLEMENT EFFORTS

Microsoft becoming a formal complainant does make a difference in the Commission's ongoing investigation into Google, said Christopher Thomas, a partner at law firm Hogan Lovells, citing the company's resources and determination.

The complaint will throw a wrench into Google's efforts to reach a settlement with the Commission, added Vinje of Clifford Chance. Even the requisite preliminary review of such a complaint would seem likely to delay any potential settlement by at least six months.

A source familiar with the case told Reuters last month that Google and the Commission were interested in resolving the issue but there were no concrete proposals on the table.

Microsoft said it felt it was time to challenge Google on legal grounds directly.

As troubling as the situation is in the United States, it is worse in Europe, said Brad Smith, Microsoft's top lawyer, on a blog on the company's website.

That is why our filing today focuses on a pattern of actions that Google has taken to entrench its dominance in the markets for online search and search advertising to the detriment of European consumers.

THE CHARGES

The complaint charges that Google hurts competition by walling off content on its YouTube site, so other search engines cannot display accurate results; making it hard for Microsoft's mobile phone software to show videos from YouTube; blocking access to content owned by book publishers; not letting advertisers use their own data about customers garnered from Google on other sites; blocking websites from using competing search boxes; and making it expensive for potential competitors to Google to advertise online.

Google shouldn't be permitted to pursue practices that restrict others from innovating and offering competitive alternatives, Microsoft's Smith said in his blog.

(Editing by Mike Nesbit, Jon Loades-Carter and Richard Chang)

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