FTC Ramping Up Pressure in Google Probe

FTC Ramping Up Pressure in Google Probe

Antitrust regulators are examining key areas of Google’s business in its ongoing investigation of the company, suggesting potential threats to its plans to expand its business beyond its search engine business.

Federal Trade Commission lawyers have been inquiring into whether or not the Mountain View, Calif.-based company prevents smartphone makers that use its Android OS from using competitors’ services. Authorities are also looking into whether or not Google privileges its own products, such as “Places” listings and Google Finance products, above rival services in search results.

The FTC served Google with subpoenas initiating the probe in June. At the time, Google stated it was uncertain what areas of its business were under scrutiny and denied that it engaged in anti-competitive actions.

Many analysts believed that its search engine rankings were at the core of the probe, but the expansion of FTC’s investigation into its Android OS and other products may be a harbinger of a more serious, comprehensive look into Google’s business practices, particularly in areas where Google is banking on for much of its future.

Android powers nearly half of new smartphones in the world, according to Canalys, and Google’s mobile search engine, included on many Android devices, is expected to propel much of its advertising in the future.

The FTC is still in the early stages with its probe, having already held initial interviews and meetings with Google and some of its competitors. But the regulator will soon send out subpoenas to third parties to gather evidence for its investigation, and its Android business may come under the lens, giving rivals an opportunity to voice their complaints.

Some of these allegations against Android have already been aired in court, particularly by Skyhook Wireless, which filed suit against Google, saying the company pressured device makers to drop Skyhook’s location technology in favor of Google’s.

The FTC may also look into Google’s practice of inserting its search engine as the default for many phones that use Android. If the regulator finds fault and imposes restrictions or penalties against Google for this practice, the result may greatly impact Google’s mobile advertising strategies ahead.

With the widening scope, the FTC probe has the potential to be a large-scale examination of Google’s impact in the technology world, and could echo similar investigations by regulators into Microsoft’s business two decades ago, which subject the software giant to large-scale penalties brought against it by the Justice Department.

The company already faces antitrust investigations in Europe, which has been examining Google’s business practices with an eye for anticompetitive behavior since last year. The FTC’s investigation may last a year or longer, and may or may not result in the filing of a lawsuit by the regulator against Google.

The FTC probe may have already impacted some of Google’s business decisions, perhaps influencing the company to adjust its products and search results to mollify competitors. Late last month, for example, Google removed reviews from other sites in its Places pages, addressing complaints from rival businesses like Yelp that Google steals their content and then demotes their own listings in search rankings.

While the results of the FTC’s probe lay well into the future, further adjustments by the company to address complaints may help head off legal action and stand Google in good stead with regulators.

The FTC’s investigations had greatly impacted major companies like Microsoft in the past, and with indications that the scope of the case grows more comprehensive, some of the company’s future strategies for growth may hang in a fragile balance.

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