Google faces a new antitrust investigation in America
By M.G. | SAN FRANCISCO
GOOGLE’S lawyers and lobbyists in Washington rarely have an idle moment. According to a report by Bloomberg on May 23rd, America’s Federal Trade Commission (FTC) has opened a preliminary investigation into whether the internet behemoth has abused its clout in display advertising to give it an unfair advantage over competitors. There is no guarantee that this will turn into a formal investigation, but it is yet another example of how Google is coming under intense scrutiny from regulators.
Earlier this year the FTC closed a long-running investigation into whether the company had used its dominance in search unfairly to benefit its own panoply of services over those of rivals. The agency concluded that Google’s practices were not illegal. The firm did make some voluntary tweaks, such as allowing companies to keep their content out of results in specialised Google search services such as shopping. But competitors hoping for more drastic changes were frustrated. (In a similar case in the European Union, Google has offered more concessions, which the European Commission is now “market testing”. Competitors say these too do not go far enough.)
History may well repeat itself in the case of display advertising. Google is certainly a big player here, but it has powerful rivals. Last year Google’s share of the $15 billion American online-display market reached just over 15% according to eMarketer, a research firm. The number two in the market, Facebook, accounted for 14.6% of total revenues. If Google is less dominant in display advertising than in other areas, why are regulators looking into the market?
The answer is that the agency has received complaints from (unnamed) Google competitors who allege that it has been trying to force website publishers who use its DoubleClick ad exchange service, which it acquired in 2007, to use other ad-related services offered by Google too—an approach known as “tying” or “bundling”. Firms with considerable market power can use bundling to restrict competition.
So regulators are right to be wary of the practice. But they should also be wary of the motives of those who gripe the loudest about Google. It is striking that complaints about its behaviour appear to be coming not from web publishers, but from rivals who stand to gain if Google is stymied by regulatory action. Lawyers on both sides of the debate will have plenty to keep them busy.
