Update: EC confirms Google antitrust probe

The European Commission said today that it's in the early stages of an antitrust investigation into search giant Google Inc.

"The Commission can confirm that it has received three complaints against Google which it is examining," the European Union's top antitrust authority said in a statement.

It added that this doesn't amount to a formal investigation "for the time being."

The Commission said that it informed Google of the investigation earlier this month and asked the company to comment on the allegations. Google will cooperate closely with the national competition authorities from the 27 E.U. member states, it said.

According to a Google blog post that appeared overnight European time, the complaints filed with the Commission came from U.K. price comparison site Foundem, a French legal search engine called eJustice.fr, and a German search site called Ciao that was recently acquired by Microsoft Corp. The Commission did not name the companies.

Google pointed out in its blog that Foundem is a member of a trade group called iComp, which is largely funded by Microsoft.

In a statement, Microsoft said that "it's natural for competition officials to look at online advertising, given how important it is to the development of the Internet and the dominance of one player."

Google's top antitrust lawyer, Julia Holtz, said in a conference call with journalists today that she doesn't expect the Commission to pursue its probe beyond the preliminary stage it is at now.

"We are hopeful we can convince the Commission not to pursue a case. I am confident they will conclude there is nothing to it," she said.

She blamed Microsoft for sparking the probe in the first place. "Microsoft is our competitor, and that explains many actions," she said.

Google's algorithms lie at the heart of the inquiry. While they are written by the company's programmers, Holtz said they try to match what users are looking for as closely as possible. The same is the case for all search engines.

Foundem's complaint focuses on the fact that its Web site dropped sharply down the rankings of pages that appear in Google searches. Foundem argues that this happened because it is being blacklisted because it competes with Google. In December, the price comparison site returned to the high position in the page rankings.

Holtz claimed that Google neither blacklists nor whitelists pages. She said that Foundem returned to greater prominence in Google's search results because "they made changes to their Web site that caused them to rise again." She noted that the webmaster tools on the Google search Web sites give detailed instructions how to gain a higher position in search results.

However, she was less clear about why Foundem fell in the first place. She said Google makes around 400 changes to its search algorithms every year, explaining that changes are necessary in order to stay one step ahead of spammers, who constantly try to get high page rankings for their Web sites, even when their sites don't offer what the users are searching for.

The main factor influencing how pages are ranked is whether they contain users' search terms, but there are around 200 signals that help determine how pages are ranked, Holtz said.

Other Web sites can also influence Google's search results, she said, explaining that "references from others is a good indicator of the importance of a Web site."

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