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Originally published June 23, 2011 at 8:04 PM | Page modified June 24, 2011 at 9:33 AM

Antitrust probe could ensnare Google like it did Microsoft

The Federal Trade Commission reportedly is poised to launch a broad antitrust investigation of Google's search practices that could mark the start of a lengthy legal process, potentially ensnaring the company in the same kind of antitrust confrontation that dogged Microsoft in the '90s.

San Jose Mercury News

quotes Have fun Google. Better hire 1000 lawyers. Oh, you already have. This sounds very... Read more
quotes Those who cannot compete, litigate. Or buy some politicians to litigate for them. Read more
quotes It's about time. Read more

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SAN JOSE, Calif. — The Federal Trade Commission (FTC) reportedly is poised to launch a broad antitrust investigation of Google's search practices that could mark the start of a lengthy legal process, potentially ensnaring the company in the same kind of antitrust confrontation that dogged Microsoft in the '90s and ultimately sapped its corporate power.

At issue is whether Google has used its dominant standing in search to improperly promote its products at the expense of its competitors. But experts noted Thursday that the FTC brings formal charges in only a minority of the cases it investigates.

Any investigation could be resolved by a negotiated settlement, or by the FTC deciding not to proceed with a formal complaint against Google.

Still, legal experts agreed that the FTC's pending action, reported Thursday by The Wall Street Journal citing anonymous sources, would represent a significant problem for one of Silicon Valley's most prominent companies.

For Google, such an investigation would be yet another legal distraction for a company already dealing with antitrust investigations by the European Commission and the Texas attorney general, and whose top executives found themselves in a confrontation with Congress this week about whether to testify on antitrust matters.

Silicon Valley companies unhappy with Google's search practices already have spoken informally with federal regulators in recent months and would be involved in an FTC inquiry, according to people familiar with the matter.

While Google has undergone federal antitrust reviews before, they have been in response to a proposed acquisition or partnership — most recently Google's $700 million purchase of travel search company ITA Software, and its proposed acquisition of display ad firm AdMeld — not around the core search business that supplies more than three-quarters of its revenue.

An FTC investigation would be "serious. This is not an everyday thing," said Ted Henneberry, a Washington, D.C., antitrust lawyer who has served as an adviser to both the U.S. Department of Justice and the FTC.

"From my viewpoint, if I put all this stuff together, I would be hard-pressed to say they are going to get out of this altogether," said Henneberry, referring to Google's antitrust and privacy problems in the U.S. and Europe.

"How close is this to the Microsoft case? Man, I've got to say, it's getting closer every single day," said Gary Reback, a Palo Alto, Calif., antitrust lawyer who headed efforts that ultimately led to the federal antitrust lawsuit against Microsoft in the 1990s.

"The basic legal theory is the same, and the precedent for whatever the FTC does if they take action against Google will be the Microsoft case," said Reback, who in recent months has represented a number of Silicon Valley companies that have complained about Google's search practices to federal regulators. He declined to name the companies.

Experts said it could take up to three years for the FTC to gather enough evidence to decide whether to file a formal antitrust complaint. Others experts predicted the agency would have a hard time finding the evidence to support such a charge.

"There is really not much evidence that consumers are harmed in any respect by Google's conduct," said David Balto, a senior fellow at the Center for American Progress who is a former policy director of the FTC.

Google declined to comment Thursday. As a public company, Google would be required to disclose any investigative demand it receives from the government.

In a November blog post in response to the European Commission's decision to open an antitrust investigation, two Google executives defended the company's search dominance.

"Our product innovation and engineering talent have delivered results that users seem to like, in a world where the competition is only one click away," wrote the Google executives, Susan Wojcicki and Udi Manber. "However, given our success and the disruptive nature of our business, it's entirely understandable that we've caused unease among other companies and caught the attention of regulators."

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