Google is yet again finding themselves in hot water as the Federal Trade Commission is poised to slap them with an antitrust lawsuit. The FTC staff recommendation for the antitrust lawsuit is not unexpected given the swift investigations of Google by California, New York, Oklahoma, Mississippi, Ohio and Texas. On top of the U.S. investigation, there is also an antitrust investigation of Google taking place in Europe.
Google’s alleged missteps under investigation include:
- Favoring their own commerce services, such as Google Shopping and Google Places, by manipulating search results to show the services for buying goods and advertising local businesses on their own product, rather than fairly show search results for other comparison sites.
- Discriminating against advertisers from competing online commerce services on AdWords, Google’s advertising marketplace.
- Creating contracts with carriers and handset makers that prevent them from modifying or removing Google products.
The FTC has questioned comparison shopping service NexTag, known as Wize Commerce since June, who contends that since Google has worked on developing its own shopping comparison product, the traffic to the NexTag site from Google has fallen by half. The concern is that Google is intentionally manipulating search results in their favor. In response, Wize Commerce has doubled the amount they spend on Google’s paid ads, which has increased the traffic to NexTag from Google search by 60 percent. Says Wize Commerce chief executive Jeffrey G. Katz, “We need to be competitive when they own the show.”
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The FTC is gearing up with a crack team of experts to take Google to task, including Washington-based litigator Beth A. Wilkinson, and famed consulting economist Richard Gilbert of the University of California, Berkeley. Antitrust experts say that, more than likely, the lawsuit will result in a settlement.
But others are not so sure as to how an FTC antitrust lawsuit would be beneficial to consumers. Says Peter Cohan of management consulting and venture capital firm, Peter S. Cohan & Associates, to E-Commerce Times, “If the FTC forces Google to treat its competitors differently in search, that could mean giving higher-ranking results than might otherwise be given.”
He goes on to point out that it would impact advertising because consumers would click on results less. The details are expected to continue to come out in the coming months, and we will all be curious to see if the FTC chooses to pursue action.
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