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Google warned by EU's antitrust inquiry of 'search manipulation concerns'

GOOGLE has been warned about manipulating search results for its own gain by the European Competition Commissioner and given a matter of weeks to find remedies for the problems outlined in the large anti-trust inquiry into the search company’s business.

In a letter to Google’s executive chairman, Eric Schmidt, the EU’s anti-trust chief, Joaquin Almunia, outlined for the first time four areas of concern that have arisen through its lengthy investigation into the company.

The Commission began an antitrust investigation into the internet search giant in November 2010 after complaints from rivals, including Microsoft, that it had abused its dominant market position.

Almunia’s first concern centres on Google’s manipulation of search results. “In its general search results, Google displays links to its own vertical search services differently than it does for links to competitors,” he said. “We are concerned that this may result in preferential treatment compared to those of competing services, which may be hurt as a consequence.”

Secondly he is concerned about Google’s observance of copyright laws. “Our second concern relates to the way Google copies content from competing vertical search services and uses it in its own offerings,” Almunia explained.

“Google may be copying original material from the websites of its competitors such as user reviews and using that material on its own sites without their prior authorisation. In this way they are appropriating the benefits of the investments of competitors. We are worried that this could reduce competitors' incentives to invest in the creation of original content for the benefit of internet users. This practice may impact for instance travel sites or sites providing restaurant guides.”

Thirdly there is concern over restrictions written into Google’s advertising contracts.“Our third concern relates to agreements between Google and partners on the websites of which Google delivers search advertisements. Search advertisements are advertisements that are displayed alongside search results when a user types a query in a website's search box,” the antitrust chief said.

“The agreements result in de facto exclusivity requiring them to obtain all or most of their requirements of search advertisements from Google, thus shutting out competing providers of search advertising intermediation services. This potentially impacts advertising services purchased for example by online stores, online magazines or broadcasters.”

The final concern relates to the portability of advertising across different web platforms.

“Our fourth concern relates to restrictions that Google puts to the portability of online search advertising campaigns from its platform AdWords to the platforms of competitors. AdWords is Google's auction-based advertising platform on which advertisers can bid for the placement of search ads on search result pages provided by Google.

“We are concerned that Google imposes contractual restrictions on software developers which prevent them from offering tools that allow the seamless transfer of search advertising campaigns across AdWords and other platforms for search advertising,” Almunia said.

The Commissioner said he wished for the matter to be solved as soon as possible and hinted that the case could be closed early if Google replied to his letter with sufficient remedies for the problems outlined.

A Google spokesman responded: "We've only just started to look through the Commission’s arguments. We disagree with the conclusions but we're happy to discuss any concerns they might have. Competition on the web has increased dramatically in the last two years since the Commission started looking at this and the competitive pressures Google faces are tremendous. Innovation online has never been greater."

Icomp, an internet lobbying body, financially backed by Microsoft, which has complained about Google's dominance in the past, welcomed Almunia's statements.

An Icomp lawyer, David Wood, said Almunia "implies that the commission has found that Google's behaviour constituted an abuse of its dominant position in the online search market".

“It is vital that the terms of any agreed settlement include measures to quickly redress the harm caused to European businesses and consumers and are sufficiently robust to ensure that such harm is not repeated," he added. ''We trust that this will prove to be the case and a competitive online market place will be restored."

The EU spent a decade battling Microsoft in a series of similar cases culminating in the technology giant being fined $1.44bn for failing to comply with an antitrust decision in March 2004.