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FTC probe could be hard, costly battle for Google

Investigation could prove to be good news for Microsoft -- FTC could push Google to be less aggressive

June 24, 2011 02:45 PM ET

Computerworld - Google Friday acknowledged that it has received formal notification of a Federal Trade Commission review, prompting analysts to say the search company could be in for a long, tiring and expensive battle.

"These things are costly," said Geoffrey Manne, executive director of the International Center for Law & Economics, a global think tank.

"They'll have to come up with the usual millions of pages of documents," he said. "It's a costly ordeal. If [the FTC] decides they have enough of a case, they'll want to try it and not settle it. That is potentially very problematic for Google."

Earlier today, Amit Singhal, a Google Fellow, disclosed in a blog post that the company had received notification of an FTC probe into its business, including the search and advertising operations.

In the post, Singhal said the company would cooperate fully with the federal investigation.

"It's still unclear exactly what the FTC's concerns are, but we're clear about where we stand," Singhal wrote. "Using Google is a choice [for users] -- and there are lots of other choices available to you for getting information."

Singhal also noted that Google focuses on labeling advertisements correctly, being transparent about how their rankings work and providing the most relevant search results. "These are the principles that guide us, and we know they'll stand up to scrutiny," he said.

On Thursday, the Wall Street Journal reported that the FTC was gearing up to serve Google with civil subpoenas in what looked to be a formal, wide-ranging antitrust investigation into whether the company has abused its Web dominance.

Past federal investigations into Google focused on mergers and acquisitions. The new probe is a much broader look into the company's business practices and how much it might use its dominant position to muscle other players out of various markets.

The FTC action isn't the only antitrust investigation that Google has to deal with.

Late last fall, the European Commission launched an investigation into allegations that Google abused its heavily dominant position in online search to promote the company's other services.

"I think that this has been coming for a long time and it had to eventually happen," said Dan Olds, an analyst with The Gabriel Consulting Group. "Once Europe started their investigation, it was just a matter of time before the FTC did the same."

And both Olds and Rob Enderle, an analyst with the Enderle Group, noted that Google can't take the FTC investigation lightly.

"A full FTC investigation along these lines can take more than a decade from start to finish -- like with IBM back in the day," said Olds. "It's going to be a long and very expensive process for all concerned. With the level of electronic records we have today, just the discovery process is going to be massive, with investigators having the ability to make Google give up emails, meeting notes, and other records stretching back years."

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