Google advertising practices to be scrutinised by US consumer regulator

Google's search engine is governed by mathematical algorithms that prioritise results according to their popularity with prior users. Rivals have accused the company of abusing its dominant position in the search engine market by altering search results to stifle competition and control the flow of information to internet users.

Google said it would work with the consumer protection regulator to answer questions about its activities but said it was "unclear" what the FTC's precise concerns are.

"We received formal notification from the U.S. Federal Trade Commission that it has begun a review of our business," Amit Singhal of Google said in a company blog.

"We respect the FTC’s process and will be working with them (as we have with other agencies) over the coming months to answer questions about Google and our services. It’s still unclear exactly what the FTC’s concerns are, but we're clear about where we stand," the blog said.

Google said that its search services have provided internet users with greater choice that allows users to control the information they receive. The company said it labelled advertisements that appear in search results and detailed transparency measures it has developed to explain how it ranks websites.

"We share more information about how our rankings work than any other search engine, through our Webmaster Central site, blog, diagnostic tools, support forum, and YouTube," the Google blog said.

"We also give advertisers detailed information about the ad auction and tips to improve their ad quality scores," the blog said.

"We’ve recently introduced even more transparency tools, announcing a major change to our algorithm, providing more notice when a website is demoted due to spam violations, and giving advertisers new information about ads that break our rules," the Google blog said.

Campaigners FairSearch, which claims to represent several of Google's competitors, including Microsoft and Travelocity, said that Google had manipulated search results to promote its own content to users.

"Consumers benefit from more choices in the search marketplace competing to win users, innovating to improve products and displaying results transparently," FairSearch said on its website.

"When search providers engage in search discrimination – manipulating search results to promote a favoured product and punish competitors – consumers pay the price," FairSearch said.

"No one company should be allowed to use its dominance to foreclose competitors from the search marketplace – particularly in high-traffic specialty segments, like travel, jobs, health, real estate, media and local search," FairSearch said.

"Based on growing concern that Google is abusing its search monopoly to thwart competition, we believe policymakers must act now to protect competition, transparency and innovation in online search," FairSearch said.

A US Senate committee has requested that two senior Google officials give evidence about competition issues on the internet, but so far the company has resisted saying that its chief legal officer was best placed to address those issues, according to a report http://bits.blogs.nytimes.com/2011/06/24/google-confirms-f-t-c-antitrust-inquiry/?partner=rss&emc=rss by the New York Times.

Google is already facing a probe into its advertising practices in Europe. The European Commission is looking into complaints it received from some market-specific search engines. They claimed that Google undermined their business by altering Google search results to promote other Google services.

"You have an overwhelmingly dominant search engine," Shivaun Raff of UK-based search engine company Foundem said, according to a report by The Register. "If you add to that that search engine's ability to apply discriminatory penalties - they're discriminatory because some services are manually rendered immune through whitelists - and you add the ability of that search engine to preferentially insert its own services at or near the top of the search results, all of that adds up to an unparalleled and unassailable competitive advantage."

Google has previously come in for scrutiny from regulators for a series of mergers, acquisitions and projects it hoped to complete.

In 2007 the FTC and European Commission approved Google's merger with DoubleClick, an advertising organisation, despite complaints from competitors.

Google aborted plans to place some Google adverts on Yahoo's search results in 2008 after the US Justice Department had voiced concerns that the agreement may deny consumers proper competition.

Earlier this year Microsoft claimed Google hid information from search engine results that made it difficult for non-Google search engines, like Bing which Microsoft operates, to link to Google-owned YouTube. They claimed the "technical measures" Google employed meant it could not compete on an equal footing with Google's own search engine.

Microsoft itself spent more than ten years fighting European competition law investigations that resulted in it being hit with hundreds of millions of euros in fines.