|Google has denied any wrongdoing and says it will work with authorities to review its business practices [Reuters]|
US authorities have launched an investigation into the internet giant Google over claims that the company could be abusing its lucrative search and advertising business to stifle competition.
The Federal Trade Commission (FTC) is looking into allegations that Google filters internet searches to promote its own companies, while hiding results that would take users to competitors.
Google confirmed the FTC inquiry in a blog post on Friday, and said it would work with authorities in a review of its business practices. But it denied any wrongdoing.
“Yesterday, we received formal notification from the US Federal Trade Commission that it has begun a review of our business,” Google executive Amit Singhal wrote on a blog post on Google’s website.
“It’s still unclear exactly what the FTC’s concerns are, but we’re clear about where we stand.”
‘Google is a choice’
The company also expressed confidence that it could withstand the scrutiny.
“Using Google is a choice – and there are lots of other choices available to you for getting information: other general-interest search engines, specialised search engines, direct navigation to websites, mobile applications, social networks, and more,” Singhal wrote in the blog post.
The government inquiry will require Google to convince regulators that its closely guarded formula for search results is designed to give users the best recommendations, and not bury links to its rivals.
Currently, requests for directions may turn up Google Maps, and queries for a video might point to the company’s own site, YouTube.
The inquiry is also expected to probe Google’s financial engine, which includes the advertising links tied to the subject of each search request.
Some of these commercial messages appear, shaded in colour, at the top of the results page, while others are stacked in the right-hand column.
Google, which runs an estimated 65 per cent of web searches worldwide, can make or break a company depending on its search ranking, analysts say.
Though it began as a scrappy startup, Google has branched out into various businesses including online mapping, shopping and travel, as well as providing operating systems for mobile phones and tablet computers.
But the company makes most of its money from search-related advertising, an amount expected to exceed $35bn this year.
Analysts say that is why the FTC probe targetting Google’s search business poses a potentially serious risk to the company.
Rob Enderle, a Silicon Valley analyst, compared the case to the anti-trust troubles of Microsoft in the 1990s over its dominance of the personal computer industry.
“They’re on that non-enviable Microsoft path to being regulated,” Enderle told the AFP news agency of Google.
“They’re the kingmakers,” he said. “If you play well on Google search then you’re going to get the advertising revenue and if you don’t then you won’t.
“And that kind of control makes anybody very nervous.”