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Google-Microsoft search war hits new heights

Google blames Microsoft for antitrust probe; analysts say it's but another front in search war

March 2, 2010 05:50 PM ET

Computerworld - The already heated online search war cranked up a notch in recent days as Google officials openly blamed Microsoft for triggering the European Commission's antitrust probe into its activities.

Analysts say that if true, Microsoft's decision to seek an EC antitrust investigation into Google activities would mark the latest move in its continuing effort to knock the high-riding search vendor down a peg or two.

The EC announced late last month that it had launched an antitrust investigation of Google based on complaints from three firms, two with connections to Microsoft.

Over the past year or so, Microsoft has been spending a lot of money and development resources to capture some of Google's 60% share of the search market. But while the release of Microsoft's Bing search engine last summer did garner a lot of attention, Google still maintains the dominant position it has held in the search market for years.

Now Microsoft appears to be taking a different route -- creating a legal storm that would distract Google officials and keep them from focusing on the future of the business.

"Against Google's level of control," any effort to compete directly in the search business "could take [Microsoft] a lot of years and a massive investment," said Rob Enderle, an analyst with the Enderle Group. "This approach [using legal means to distract Google] potentially shortens their time and the investment.

"The disparity in market share is simply too large for them to close the gap unless Google makes a massive sustained mistake or is hit by a successful antitrust action," he added.

Whit Andrews, an analyst at Gartner Inc., said it's no surprise that the Microsoft-Google battle would enter a new realm, in this case the courtroom.

"I think that search is the most important crossroads in the history of information," Andrews said. "I expect the striving conflict among the most powerful companies and countries in the world to intensify."

In a conference call with journalists last week, Julia Holtz, Google's top antitrust lawyer, blamed Microsoft for sparking the probe. "Microsoft is our competitor, and that explains many actions," she said.

She noted that the three companies whose complaints triggered the investigation included Ciao, a German company acquired by Microsoft in 2008.

"Ciao [was] a long-time AdSense partner of Google's, with whom we always had a good relationship," Holtz said in a blog post. "However, after Microsoft acquired Ciao in 2008, we started receiving complaints about our standard terms and conditions. They initially took their case to the German competition authority, but it now has been transferred to Brussels."

She also noted that a second complainent, Foundem, a U.K. price comparison site, is a member of of a trade group called iComp, which is largely funded by Microsoft.

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