Google’s Search Tactics Under Investigation in Europe

Nine months after reports first surfaced that the European Commission was investigating Google (s goog) over its search tactics, the commission is now confirming it’s indeed opening a formal antitrust investigation on the search giant. The commission is looking at whether Google illegally used its dominant market position to lower the ranking of unpaid search results from competing vertical search providers and placed restrictions on advertising partners from advertising Google rivals.

The commission doesn’t say which specific issues originally prompted the investigation. But Google, in response to three original complaints lodged in February, confirmed they came from UK price comparison site Foundem, a French legal search engine called, and Microsoft’s (s msft) Ciao from Bing. Google said at the time it was confident its conduct was legal and noted that Foundem was a member of an organization called ICOMP, which is funded partly by Microsoft, while Ciao was now owned by Microsoft.

Here’s a look at what Google is being investigated for:

  • Favoring its own search results while lowering those of rival vertical search providers.
  • Lowering the “Quality Score'” for sponsored links of competing vertical search services. The Quality Score helps determine how much advertisers pay for placement next to certain results.
  • Enforcing exclusivity agreements with advertising partners preventing them from running ads for competing search products on their sites. Also, striking agreements with software and computer vendors to shut out competing search services.
  • Restricting the portability of online advertising campaign data to competing online advertising platforms.

Shivaun Raff, chief executive of Foundem, said in a statement: “(Google) is turning an ostensibly neutral search engine into an incredibly powerful marketing channel for their own services.” Google said in a statement to Bloomberg that it worked hard to mark ads clearly and enable users and advertisers to move their data to other services. But it said it would work with the commission to address its concerns.

This is just one part of Google’s antitrust scrutiny overseas. The company has also been criticized in Europe for its Street View service, which inadvertently gathered personal e-mails and passwords from unsecured wireless networks. As Mathew originally wrote back in February, this is another sign marking Google’s ascendance as it becomes more of a Microsoft-like target for regulators. Google can face fines of up to 10 percent of revenue for an abuse of monopoly power, though it’s unlikely Google would face the same type of $1.38 billion penalty levied against Intel (s intc) by the commission. Still, the investigation raises questions that get at the heart of Google’s secretive search ranking system, which has gotten new scrutiny lately after a New York Times (s nyt) story showed how it can be gamed to help businesses with bad reputations maintain high page rankings.

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