The Wall Street Journal
The Texas attorney general's office is conducting an antitrust review of Google Inc.'s core search-engine business, a sign of widening government scrutiny of the Web giant.
Texas's top prosecutor has inquired about allegations by several small companies that Google unfairly demoted their rankings in search results or the placement of their advertisements on the search engine, Google said Friday.
The Internet giant disputed the allegations, which have been reported previously, tracing them to three companies with ties to rival Microsoft Corp.
A spokesman for Texas Attorney General Greg Abbott said an investigation of Google was ongoing but declined further comment. A Microsoft spokesman declined comment.
Don Harrison, a deputy general counsel at Google, said in a blog post that the company is sometimes asked about the fairness of the search engine and why some websites are ranked higher than others.
"Given that not every website can be at the top of the results, or even appear on the first page of our results, it's unsurprising that some less relevant, lower quality websites will be unhappy with their ranking," Mr. Harrison wrote.
Google said Texas officials asked for information about the cases of Foundem.co.uk, TradeComet.com LLC and myTriggers.com Inc., which have each claimed separately that Google unfairly demoted their search rankings to eliminate them as competitors.
TradeComet, a business search engine, has sued Google in federal court in New York, but the case was dismissed. It is appealing. MyTriggers, a price comparison site, sued Google in Franklin County, Ohio, common pleas court. Google has denied wrongdoing.
The European Commission is also conducting a preliminary inquiry into the complaint by Foundem, a British price comparison site. Google has denied violating European law.
In its blog post, Google said Foundem is backed by ICOMP, an organization funded largely by Microsoft and added that TradeComet and myTriggers are represented by the same antitrust attorneys Microsoft uses.
Microsoft, which competes with Google in multiple businesses, has acknowledged helping direct the complaints of small companies about Google to antitrust authorities. It has denied being behind their antitrust suits. The owners of Foundem, SourceTool and myTriggers have all denied they are acting on behalf of Microsoft.
TradeComet's chief executive, Dan Savage, said: "Obviously, Google is just trying to distract from its own problems by pointing to others and their lawyers."
A spokesman for myTriggers said: "Though there are probably a lot of other victims too, MyTriggers' concern is just the harm to MyTriggers done by Google's anticompetitive conduct and bullying tactics. We have a strong antitrust claim and look forward to our day in court."
Foundem couldn't be reached for comment.
Under Mr. Abbott, who is facing re-election this fall, Texas has been active in antitrust cases. His office has been examining the electronic-book market, which saw price increases for some titles being sold by Apple Inc. for its iPad device, people familiar with the matter have said. In 2008 Mr. Abbott reached a $28 million civil settlement with Abbott Laboratories over alleged false reporting of drug prices.
In targeting Google's core business, Texas has moved ahead of the federal agencies charged with enforcing U.S. antitrust laws, the Justice Department and Federal Trade Commission. Both agencies have conducted antitrust reviews of Google's transactions.
The Justice Department, for example, moved to block Google's advertising deal with rival Yahoo Inc., forcing it to abandon the deal. This year, the FTC approved Google's $750 million purchase of mobile advertising company AdMob.
The Justice Department currently is reviewing Google's $700 million acquisition of ITA Software Inc., which powers the airfare search for numerous websites including Kayak.com and Microsoft's Bing search engine.
But neither the agency or the FTC is known to have conducted a monopolization inquiry that targets Google's core business of search advertising. Google accounts for more than 65% of all U.S. search queries, and an even larger portion of total search advertising revenue. Google handles about 90% of search queries in other countries such as France.
Google places text ads near search results, and it also ranks them based on the amount an advertiser bids, the popularity of the ad—how often users click on them—as well as the relevance and quality of the ad. Those ads now account for the majority of Google's $24 billion in annual revenue.
Separately, Google agreed Friday to pay $8.5 million to cover attorneys' fees and set up an education fund to settle a private class-action lawsuit that alleged its Buzz social-networking service violated users' privacy. The service, launched in February, at first created a network of contacts based from Google's email service, Gmail. Each user's network was visible to other users.
After an outcry, Google changed the settings so that contacts were kept private by default.
The proposed settlement of the case, filed on Friday in federal court in San Francisco, also requires Google to make further announcements about the privacy aspects of Buzz and fund Internet privacy efforts by public-interest groups.
Texas's top prosecutor has inquired about allegations by several small companies that Google unfairly demoted their rankings in search results or the placement of their advertisements on the search engine, Google said Friday.
The Internet giant disputed the allegations, which have been reported previously, tracing them to three companies with ties to rival Microsoft Corp.
A spokesman for Texas Attorney General Greg Abbott said an investigation of Google was ongoing but declined further comment. A Microsoft spokesman declined comment.
Don Harrison, a deputy general counsel at Google, said in a blog post that the company is sometimes asked about the fairness of the search engine and why some websites are ranked higher than others.
"Given that not every website can be at the top of the results, or even appear on the first page of our results, it's unsurprising that some less relevant, lower quality websites will be unhappy with their ranking," Mr. Harrison wrote.
Google said Texas officials asked for information about the cases of Foundem.co.uk, TradeComet.com LLC and myTriggers.com Inc., which have each claimed separately that Google unfairly demoted their search rankings to eliminate them as competitors.
TradeComet, a business search engine, has sued Google in federal court in New York, but the case was dismissed. It is appealing. MyTriggers, a price comparison site, sued Google in Franklin County, Ohio, common pleas court. Google has denied wrongdoing.
The European Commission is also conducting a preliminary inquiry into the complaint by Foundem, a British price comparison site. Google has denied violating European law.
In its blog post, Google said Foundem is backed by ICOMP, an organization funded largely by Microsoft and added that TradeComet and myTriggers are represented by the same antitrust attorneys Microsoft uses.
Microsoft, which competes with Google in multiple businesses, has acknowledged helping direct the complaints of small companies about Google to antitrust authorities. It has denied being behind their antitrust suits. The owners of Foundem, SourceTool and myTriggers have all denied they are acting on behalf of Microsoft.
TradeComet's chief executive, Dan Savage, said: "Obviously, Google is just trying to distract from its own problems by pointing to others and their lawyers."
A spokesman for myTriggers said: "Though there are probably a lot of other victims too, MyTriggers' concern is just the harm to MyTriggers done by Google's anticompetitive conduct and bullying tactics. We have a strong antitrust claim and look forward to our day in court."
Foundem couldn't be reached for comment.
Under Mr. Abbott, who is facing re-election this fall, Texas has been active in antitrust cases. His office has been examining the electronic-book market, which saw price increases for some titles being sold by Apple Inc. for its iPad device, people familiar with the matter have said. In 2008 Mr. Abbott reached a $28 million civil settlement with Abbott Laboratories over alleged false reporting of drug prices.
In targeting Google's core business, Texas has moved ahead of the federal agencies charged with enforcing U.S. antitrust laws, the Justice Department and Federal Trade Commission. Both agencies have conducted antitrust reviews of Google's transactions.
The Justice Department, for example, moved to block Google's advertising deal with rival Yahoo Inc., forcing it to abandon the deal. This year, the FTC approved Google's $750 million purchase of mobile advertising company AdMob.
The Justice Department currently is reviewing Google's $700 million acquisition of ITA Software Inc., which powers the airfare search for numerous websites including Kayak.com and Microsoft's Bing search engine.
But neither the agency or the FTC is known to have conducted a monopolization inquiry that targets Google's core business of search advertising. Google accounts for more than 65% of all U.S. search queries, and an even larger portion of total search advertising revenue. Google handles about 90% of search queries in other countries such as France.
Google places text ads near search results, and it also ranks them based on the amount an advertiser bids, the popularity of the ad—how often users click on them—as well as the relevance and quality of the ad. Those ads now account for the majority of Google's $24 billion in annual revenue.
Separately, Google agreed Friday to pay $8.5 million to cover attorneys' fees and set up an education fund to settle a private class-action lawsuit that alleged its Buzz social-networking service violated users' privacy. The service, launched in February, at first created a network of contacts based from Google's email service, Gmail. Each user's network was visible to other users.
After an outcry, Google changed the settings so that contacts were kept private by default.
The proposed settlement of the case, filed on Friday in federal court in San Francisco, also requires Google to make further announcements about the privacy aspects of Buzz and fund Internet privacy efforts by public-interest groups.
