EU opens Google antitrust probe after price-comparison sites cry foul

The European Commission Tuesday announced it has launched an investigation into Google's practices, to determine whether the Mountain View, California company is abusing its power as Europe's number one search engine.

The case will examine whether Google violates European Union treaty Article 102, which states:

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

The issue at hand is Google's treatment of vertical search services, which are specialty search services that index and compare only very specific pieces of information. An example of a vertical search service would be something like Kayak, which only indexes airfare, hotel, and travel-related data.

Google has been accused of a handful of misdeeds regarding placement of search results for these services and related issues with their advertisements. First, it's been accused of putting its own vertical search services ahead of competitors to shut them out of competition.

Secondly, it's been accused of lowering the "quality score" for sponsored links of competing services, effectively driving down their value to advertisers by burying these sites in keyword searches.

Thirdly, Google has been accused of imposing exclusivity obligations on its advertising partners, which prevents them from running certain types of ads, namely those of Google's competitors in the vertical search market.

Finally, Google allegedly restricts its customers' advertising campaign data from being used by other advertising platforms.

This investigation comes nearly a year after European vertical search services Foundem, Ciao!, and eJustice.fr, filed antitrust complaints with the European Commission.

Addressing the investigation today, Google's Senior Vice President of Product Management Susan Wojcicki, and Vice President of Engineering Udi Manber said, "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. Today, the European Commission has announced that they will continue to review complaints about Google's search and search advertising. We respect their process and will continue to work closely with the Commission to answer their questions."