Google's antitrust probe could prove distracting, analysts say

An extended EC investigation could also benefit Microsoft-Yahoo search partnership

The European Commission's decision to launch an antitrust investigation into Google Inc. activities could be the start of a long, tough haul for the seach giant, analysts say.

"At the very least, this will force Google to spend time and resources complying with the investigation and mounting a legal defense," said Dan Olds, an analyst with The Gabriel Consulting Group.

"The news is that the EU has launched an investigation," Olds added. "It really depends on what violations are alleged and how the EU laws treat those violations. Google has to take this seriously, but at this point we don't know whether it's going to be a mountain or a molehill."

The level of distraction could quickly mount if the investigation leads to new antitrust complaints filed against Google by competitors, or investigations by regulators from other countries, including the U.S., analysts said.

"This makes it more attractive for any company to cry foul against Google," said Whit Andrews, an analyst for Gartner Inc. "[U.S. companies] could point to Europe and say, 'We're not the only ones who think Google is too powerful.'"

Julia Holtz, Google's top antitrust lawyer, acknowledged in a blog post today that the EC investigation was triggered by complaints filed with it by Foundem, a U.K.-based price comparison site,, a French legal search engine, and Ciao, a German search site that was recently acquired by Microsoft. The EC today confirmed the investigation , and disclosed that it had notified Google of the probe earlier this month.

Analysts noted that Microsoft would likely benefit if the Google investigation grows into a multi-pronged, messy case.

"If this were to turn into a big deal for Google, it could give the Microsoft and Yahoo [search] consortium a chance to make up some ground," said Olds. "Google has a big search lead in the EU and anything that slows them down or inhibits their business practices is, by definition, good news for Microsoft and Yahoo."

Google and Microsoft have long been engaged in a heated battle that continues to escalate. As the competition extends to everything from enterprise applications to the burgeoning search market , the fight has become critical to the bottom lines of both companies.

Rob Enderle, an analyst with the Enderle Group, wondered whether Google had acted similarly to Microsoft before it was hit with its own EC antitrust charges multiple times before reaching a settlement late last year.

"This may be an example of how Google is making mistakes that Microsoft made, rather than learning from and avoiding them," Enderle said. "Of course, it depends on what they find, but government agencies seldom walk away from these things empty handed. They have to justify the work, so expect an adverse finding against Google with a fine likely."

Paul Meller with the IDG News Service contributed to this article.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld . Follow Sharon on Twitter at @sgaudin , send e-mail to or subscribe to Sharon's RSS feed .

Read more about government in Computerworld's Government Knowledge Center.

Copyright © 2010 IDG Communications, Inc.

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