Google Being Probed; Time for More Competition?

Posted by on June 27, 2011 in Business News, Internet Marketing, Legal Matters for Business [ 0 Comments ]

Many business owners actually like some good competition when all is said and done.

It gives them the ability to see how they measure up against competitors in the eyes of the consumer, where they need to tweak goods and/or services, and where there is room for growth.

When it comes to the search engine giant Google, a number of other companies are indicating it is time for the competition to heat up.

Google announced June 24 that it is the subject of a government probe, something that others in the search engine arena have been seeking for some time now.

In a blog post, the company reported that it is being investigated by the Federal Trade Commission (FTC), stating it is “unclear exactly what the FTC’s concerns are.”

Noting that “The competition is only one click away,” Google denies that it is holding a monopoly on the search engine business. Google added, “We recognize that our success has led to greater scrutiny. Using Google is a choice — and there are lots of other choices available to you for getting information.”

It comes as no surprise to those who use the Internet that Google is the dominant player.

According to comScore, the Mountain View, California-based company controls approximately two-thirds of the search market in the U.S., while maintaining more than 80 percent of the share in many parts of Europe. The company also licenses the world’s largest smartphone operating system and it share of U.S. display advertising revenue recently topped Yahoo.

While major companies have been targeted before to prevent them from becoming monopolies in their respective industries, Google is not likely to be broken up anytime soon. U.S. antitrust law states that it is not illegal to be a monopoly – only to purchase one unlawfully or abuse it.

According to a Wall Street Journal report, the FTC probe is likely to focus in on whether the search engine giant’s searches unfairly direct users to the company’s ever-increasing network of services at the expense of rivals.

Some companies have complained that Google’s marketing position allows it to determine whether businesses win or lose, highlighting the way Google ranks its own services in its “natural” search results and/or the figure it charges them to place an advertisement.

According to Fairsearch.org, a group that represents a number of companies opposed to Google’s tactics, “Google engages in anti-competitive behavior…that harms consumers by restricting the ability of other companies to compete to put the best products and services in front of Internet users, who should be allowed to pick winners and losers online, not Google.”

While the government obviously has an interest in the practices of Google to make sure it is playing by the rules, some states have also gotten in on the action.

Attorneys general in Texas, New York, California and Ohio have either started investigations of Google or began preliminary probes.

For the time being, Google is likely to continue its present form of business and comply with any and all federal and state investigations.

In 2010, it is estimated that Google’s annual revenue was $29.32 billion, a 24 percent gain from the previous year. Meantime, the company’s 2010 net income was $8.51 billion, a 30 percent jump from 2009.

With numbers like those, is the competition really only one click away?

Photo credit: peakpositions.com


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