Experts: Antitrust Probe May Be Big Trouble for Google

(Nov. 30) -- This isn't likely to go away quietly.

Google may have done nothing wrong, but experts say the European Union's antitrust investigation into whether the company has abused its dominant position in online search is serious. They also say it could present the most formidable legal challenge to the Internet behemoth in its nearly 13 years of existence.

"This is potentially a huge problem for Google," Jonathan Gleklen, who specializes in antitrust law at the firm Arnold and Porter, told AOL News today in a phone interview. "The EU is a serious antitrust enforcer. They have very significant resources, and they're tenacious and they don't frequently waste their time on investigations that don't go anywhere."

The European Commission said today that its regulators will conduct an "in-depth investigation" into complaints from other websites that Google gives "preferential placement" to its own search results and ads at the expense of its competitors.

Google defended itself today and said it is cooperating fully with the investigation.

The company said in a statement that it strives to "do the right thing by our users and our industry" by "ensuring that ads are always clearly marked, making it easy for users and advertisers to take their data with them when they switch services, and investing heavily in open-source projects," according to The Associated Press. But, it said, "there's always going to be room for improvement, and so we'll be working with the commission to address any concerns."

If the commission finds, however, that the company has unfairly shut other search engines out of the market, Internet antitrust experts say Google could pay dearly. The company could be fined up to 10 percent of its revenue -- equivalent to more than $2 billion, according to the AP.

And some say the costs to the company's reputation would be far worse. It has staked much of its success on providing Internet users with the most relevant search results online, but accusations that there might be bias in those results could prove deeply damaging.

That's what makes Ariel Katz, a law professor at the University of Toronto and the director of the Centre for Innovation Law and Policy, somewhat skeptical about the allegations. "Why would Google be so stupid to do such a thing that would over time undermine its main asset: the trust that people have in the power of its search results?" he asked.

But he said Google has become so dominant that the company may feel empowered to take some risks. "If there is merit in the allegations, that's serious," Katz told AOL News. "We all rely on Google. So we want to know."

The California-based company has come under increased scrutiny in Europe over unrelated copyright and privacy issues, but legal experts say the commission's probe could be Google's toughest challenge yet. "Just ask Microsoft," said Ronald Coleman, a New York-based attorney who specializes in antitrust litigation.

In 2008, the EU commission levied a $1.3 billion fine on Microsoft for failing to adhere to remedies the company agreed to in 2004, when regulators said the company had abused the market dominance of its Windows software. Coleman said that with nearly 90 percent of Europe's market share in online search, Google may be even more of a target than Microsoft was. "Google has no reason to think that they're any more immune than Microsoft. If anything, they may have more problems because they're actually more dominant in the market."

Coleman also said that controversy over whether the company's "Street View" feature violates privacy may have drawn the ire of the commission. "Europeans are obsessed with privacy, and Google has made a number of missteps in the last year in particular, which has made it very amenable to European distaste."

But Gleklen said Google can be as ubiquitous as it wants, as long as it's not abusing its incredible power in the market. "Is Google a monopolist? I don't think there's any doubt about that," he said. "But have they obtained or maintained that position by unlawfully closing out competitors? That's the real question here."

Others said the investigation was about transparency and could help shed light onto the business relationships of the Internet behemoth.

"The deepest problem is, we don't even know all its relationships to the companies it ranks," said Frank Pasquale, a law professor at Seton Hall University and an antitrust expert. "Given a critical mass of other complaints, this will and should move forward."