Google's (GOOG) search market share is about 80% in the U.K., Germany, and France, according to Comscore. That compares to about 66% of the U.S. market. The No.1 search company's dominance has sparked a European Commission anti-trust investigation. According to The Telegraph, "The Commission has written to Google with a series of questions over how its search functions operate and also questioned the way it sells advertising." The companies that have filed the complaints that the the E.C. has acted on are U.K. search site Foundem, a shopping price comparison site, Ciao, which is owned by Microsoft (MSFT), and ejustice.fr, a French site for browsing legal content.Foundem says that Google uses filters to remove some sites from its search results. Google posted a response on its website stating, "While we will be providing feedback and additional information on these complaints, we are confident that our business operates in the interests of users and partners, as well as in line with European competition law."
The media has begun to speculate that the E.C. investigation will be the beginning of a string of aggressive antitrust actions against Google, not unlike those Microsoft faced in the U.S. and Europe beginning with the "United States vs. Microsoft" case in 1998. That case alleged that the world's largest software company used its market share in PC operating systems to gain market share for its Internet Explorer browser. Related actions taken by the E.C. lasted for over a decade and were only in their final settlement stages late last year. The E.C. forced Microsoft to pay $1.7 billion in fines as part of its antitrust actions against the company. Redmond's legal fees were certainly in the tens of millions of dollars.
The Google matter revolves around whether it uses its algorithms to screen out the sites of its competitors. Google is so dominate in the search industry that it would seem to have little reason to do that, especially in light of the legal repercussions. But large companies are not immune to making stupid decisions. If Google did act illegally, it may face a long series of government investigations which could spread beyond Europe.
Introduction to Preferred Shares
Learn the difference between preferred and common shares.View Course »