Page last updated at 13:21 GMT, Wednesday, 24 February 2010

Google faces European competition inquiry

Google melting watches
Google says it works within EU competition law

The European Commission is looking into complaints about Google's behaviour, the company has revealed.

The complaints were made by UK price comparison site Foundem, French legal search engine, and Microsoft's Ciao.

Google's senior competition lawyer Julia Holtz said the internet giant was "confident" it operated within European competition law.

Foundem claims that its site is demoted in Google's search results.

"Foundem... argues that our algorithms demote their site in our results because they are a vertical search engine and so a direct competitor to Google," Google said.

"'s complaint seems to echo these concerns."

Google screengrab from Foundem's submission
Foundem's complaint included screengrabs from Google searches which claimed Google's own comparison service (highlighted in red) were too prominent

Market dominance

The complaint regarding price comparison site Ciao, which Microsoft bought in 2008, concerns Google's standard terms and conditions.

Microsoft initially took its case to the German competition authority, but Google said it had now been transferred to Brussels.

A Microsoft spokesman said: "Although we haven't been notified yet by the commission, we do believe it's natural for competition officials to look at online advertising given how important it is to the development of the internet and the dominance of one player.

We just want a level playing field. We are very hopeful that our case will inspire others
Shivaun Raff, founder of Foundem

"In the meantime, we continue to co-operate with the German government's investigation into complaints brought by Ciao."

Google dominates the search engine market. It has about a 65% share of the US market and about 90% in Europe.

In a statement, the European Commission confirmed that it had received three complaints against Google that it was looking into. It emphasised that it had not opened a formal investigation.

"As is usual when the Commission receives complaints, it informed Google earlier this month and asked the company to comment on the allegations," it said. "The Commission closely cooperates with the national competition authorities."

'Immediate threat'

In a blog, Google's Ms Holtz revealed that the commission had told the company that it had received the complaints.

"Though each case raises slightly different issues, the question they ultimately pose is whether Google is doing anything to choke off competition or hurt our users and partners," she said. "This is not the case."

Foundem said in its filing of complaint that Google had the "ability to arbitrarily penalise rivals and systematically favour its own services".

It said Google's Universal Search was a "mechanism for automatically inserting its own services into prominent positions within its natural search results" and "poses an immediate threat to healthy competition and innovation".

Foundem founder Shivaun Raff said its problems with Google's rankings were resolved in December 2009, but it was filing the complaint on behalf of other search firms.

Ms Raff said Google had an "unprecedented" amount of control over its market.

"We just want a level playing field," she told the BBC. "We are very hopeful that our case will inspire others."

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