Regulators Put Focus On Google

2010-06-02 (수) 12:00:00

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By BRAD STONE

In the 1990s, Gary Reback, a Silicon Valley lawyer, almost single-handedly brought the antitrust weight of the federal government down on that era’s high-tech heavyweight, Microsoft. Now Mr. Reback contends there is a dangerous new monopolist : the search giant Google.

Last month, Mr. Reback shepherded Adam and Shivaun Raff, the husbandand- wife entrepreneurs behind the London comparison shopping site Foundem, around Washington. The three held meetings with United States Congressional staff members and antitrust enforcers at the Department of Justice and the Federal Trade Commission.

Their goal was to air the couple’s complaint that in 2006 Google’s supposedly objective algorithms suddenly dropped Foundem into the netherworld of Google search results. They say Google also raised the rates Foundem had to pay to advertise alongside search results. These moves, the couple say, pushed their comparison shopping site out of view, and Google later put the spotlight on its own shopping listings.

Google is the “arbiter of every single thing on the Web, and it favors its properties over everyone else’s,” said Mr. Reback, sitting in a Washington cafe with the couple. “What it wants to do is control Internet traffic. Anything that undermines its ability to do that is threatening.”

Google says its mission is to give users the information they’re looking for even if that means giving its own content priority and de-emphasizing sites it believes offer poor experiences. “Telling a search engine that it cannot innovate and show results in a way that benefits users would undermine the very goals of our competition laws,” says Matthew Bye, a Google lawyer.

But the search giant’s decisions on such matters may soon be judged by higher authorities. Over the last several years, it has become the canonical way to search the Web, an information doorway that dictates what kind of knowledge is visible to the browsing public. That growing market power has generated both skyhigh profits and unwanted regulatory attention.

Almost a decade after Google promised that the creed “Don’t be evil” would guide its activities, the federal government is examining Google’s acquisitions and actions as never before, looking for indications that the company’s market power power may be anticompetitive in the worlds of Web search and online advertising.

Google has managed to get by most regulatory reviews. On May 21, the Federal Trade Commission approved Google’s $750 million acquisition of AdMob, a mobile advertising start-up. Staff members had initially planned to oppose the purchase, even saying in a statement that the deal “raised serious antitrust issues.” But the agency ultimately endorsed the deal, assuming that Apple’s entry in the market would facilitate competition.

Nevertheless, the search giant may get an indication this summer of just how uncomfortable Washington can get for such dominant companies. A federal judge, Denny Chin, is expected to rule in the next few months on Google’s amended settlement with authors and book publishers and whether the agreement gives the search giant too much control over the millions of library books that it scanned. The Department of Justice has opposed the settlement.

At the same time, Google’s own missteps have prompted a new round of scrutiny. Last month it admitted that its camera- equipped cars, which photograph the world’s neighborhoods for Street View images within Google Maps, had inadvertently collected fragments of communications from people using unsecured WiFi networks. The F.T.C. and regulators in Europe said they were looking into the matter.

Taken together, these inquiries are a test for the federal government’s willingness to challenge a widely liked and admired company.

Google executives acknowledge the scrutiny. “We’re getting larger, and we have been very disruptive within some industries,” says Alan Davidson, head of United States public policy at Google. “We know we have a giant bull’s-eye on our backs.”

The company’s executives challenge the premise that Google is a monopoly, even as the company’s share of the search market inexorably rises, arguing that Google is still a minor player in the overall advertising market, which totals $800 billion a year.

Google also says that linking prominently to its own services over those of rivals is good for consumers and not malicious. But increasingly, above and mixed throughout those search listings, Google presents links to its own services, like maps, YouTube videos, local business results and product search listings. Executives say providing these easily accessible results clearly benefits users. Rivals say this is self-serving.

Google’s high-profile mistakes hurt because they convey the impression that Google’s behavior is increasingly inconsistent with its “Don’t be evil” mantra.

One of Google’s founders, Sergey Brin, acknowledged the mistakes recently at the company’s annual conference for developers in San Francisco. “We screwed up, and I’m not making excuses about it,” Mr. Brin said. “Trust is very important to us, and we’re going to do everything we can to preserve it.”