EU antitrust pile-on overshadows Google’s Groupon

November 30, 2010

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

NEW YORK — Google’s problems in antitrust are intensifying, and it’s likely to be a long slog. The European Commission is examining whether Google is using its dominance in online search to unfairly extend its reach into related areas the way Microsoft once did. The probe is auspiciously timed: Google is contemplating a near-$6 billion bid to enter the e-coupon business by buying Groupon, according to news reports.

Google has about two-thirds of the search market in the United States, according to comScore, and that goes higher in Europe. In France it’s about 90 percent.

Meanwhile, the company has expanded its offerings in areas from maps to comparison shopping. And it keeps on adding more. It agreed earlier this year to buy ITA Software, which specialized in online travel search. Buying Groupon would give Google pole position in the fast growing market for online coupons.

There’s nothing necessarily wrong, of course, if searchers end up finding their way to Google’s non-search services. But critics allege that the company puts its own offerings higher up in search results and forces rivals to pay penalty rates to advertise on Google. If that does happen, it could give Google’s offerings a big and perhaps unfair advantage, since so many users reach their destinations through its search engine. Say someone types in a street address. Why scroll through a few pages of results to find a rival map provider if there’s a Google map as the first result?

Whether Google is acting unfairly isn’t clear. The company doesn’t reveal much about how its search algorithms work. True, opening up would allow companies to game the system and ensure their results placed higher. That could mean a bunch of spam entries instead of useful answers to queries. Yet the black box nature of Google’s operations means users simply have to trust the company not to rig the system in its own favor.

Even supposing Google is favoring its own services in search results, there’s an ancillary problem for regulators. Some tying-together of products may give consumers a better experience — something Google notes. For instance, after typing an address, is it more useful to get a map in response or a list of blue links? The answers to such questions in an antitrust context aren’t clear — and it may take years for the European Commission and other regulators to figure out their answers.

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