Google Faces Key Antitrust Probe

By Gary Kim June 24, 2011

The Federal Trade Commission is about to launch a broad, formal investigation into whether Google has abused its dominance in Web-search advertising, the Wall Street Journal reports. Google has been investigated in the past, with no apparent long-term negative impact. 

But some policy watchers think the Google probe ultimately could be as much of a watershed event for antitrust policy as the Justice Department's landmark lawsuit against Microsoft Corp. in the 1990s, which did not lead to a formal breakup of the company, but many believe has had a negative impact on the company. 

The civil probe, which some would argue has the potential to reshape how companies compete on the Internet, is considered by many to be the most serious legal threat yet to the 12-year-old  company. The impact of such actions on innovation in the software and computer industry is not clear. But it seems a reasonable conclusion that innovation at Google will suffer if the new probe deems Google to have monopoly power in the search business, for example, as the remedies would likely include measures to prevent Google from using its power in search to create new businesses in other areas. 

The new inquiry is said to focus on fundamental issues relating to Google's core search-advertising business, its biggest money maker.

Competitors may cheer a monopoly finding. But it seems at least possible that less innovation from Google would be the result of such a ruling, and the subsequent remedies FTC would impose. It isn't so clear that Microsoft's fortunes are directly related to its earlier designation as a monopoly provider with restrictions on what it could, and could not do. One might argue other issues are at work. 

Nor is it clear that any potential monopoly designation for Google would have similar impact. Many would note that Google's ability to innovate has been less recently than in former years, as the organization has grown so much. 

But one also wonders how long it will be before Apple suffers similar pressure. Large firms perceived to be powerful always run up against antitrust review, sooner or later. Apple is bound to encounter that, eventually, if it keeps growing. 

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Gary Kim is a contributing editor for TechZone360. To read more of Gary’s articles, please visit his columnist page.

Edited by Jennifer Russell

Contributing Editor

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