Microsoft files complaint against Google

Microsoft asked European regulators Thursday to go after Google on antitrust grounds, accusing the search giant of trying to “entrench its dominance” on the Web.
It’s a major escalation in the war between the two tech titans.

Microsoft and other Google foes say Google’s powerful search engine and its move into other markets — from advertising to mobile phones to travel — has stunted industry-wide competition. Google has described itself as under siege – the victim of a Microsoft-led “anti-Google industrial complex.”

In an early-morning blog post Thursday, Microsoft executive Brad Smith said the company’s European Commission filing accuses Google of having “engaged in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.”
Smith offered a litany of examples of what he describes as Google's anti-competitive practices — arguing, for instance, that Google has disadvantaged competitors in video search, promoted its search boxes through exclusivity deals and sought to leverage its size over competitors in the neophyte e-book market.
"We readily appreciate that Google should continue to have the freedom to innovate. But it shouldn’t be permitted to pursue practices that restrict others from innovating and offering competitive alternatives," Smith said. "That’s what it’s doing now. And that’s what we hope European officials will assess and ultimately decide to stop."
Google did not immediately respond to an email requesting comment.
The complaint filed with European Union regulators, the first time Microsoft has formally alleged antitrust violations by a competitor, comes as Google is under increased scrutiny back home — from the Justice Department, the Federal Trade Commission and among state attorneys general.
Last week, a federal judge validated some of the claims of Google antitrust critics by blocking the company's plans to create a universal digital library, partly because those plans would preclude competitors from doing so. DOJ has spent months scrutinizing how Google's $700 million purchase of travel software firm ITA would affect the online travel market.
Texas last year launched a broader investigation into whether Google manipulates its search results to hurt competitors.
On Wednesday, the FTC announced a settlement with Google over the launch of the company’s Buzz social network. Under the settlement Google will have to submit to outside monitoring of its privacy policies over the next two decades.
Now the fight intensifies in Europe, where regulators since late 2010 have eyed Google for potential threats to industry competition.
A number of small but notable players have weighed into that battle, but Microsoft's new filing is likely to add an even more heightened level of intensity to the European Commission's antitrust investigation — the first of any sort targeting Google internationally.
In his 1,500-plus-word blog post describing Microsoft's concerns, Smith directly challenged Google's common retort to critics: that consumers are "a click away" from using a different search engine if Google disappoints. There are numerous other ways, Smith argued, that Google can entrench its dominance in both search and search advertising.

"Their defense ignores the hugely important fact that there are many other important ways that search services compete," Smith wrote.
"Search engines compete to index the Web as fully as possible so they can generate good search results, they compete to gain advertisers (the source of revenue in this business), and they compete to gain distribution of their search boxes through Web sites,” Smith continued. “Consumers will not benefit from clicking to alternative sites unless all search engines have a fair opportunity to compete in each of these areas."

According to Smith, Google maintains a 95 percent share of the European market -- and, as a result, has immense leverage over search and advertising. Even efforts in Washington to check Google's growth have failed to stop "the spread by Google of new and disconcerting practices in the United States," Smith wrote, noting the marketplace is "worse" in Europe because Microsoft in the United States "serves one quarter" of searches through both Bing, its network and its partnership with Yahoo!

Smith said there are several ways in which Microsoft believes Google is impeding competition -- from degrading access to YouTube for Bing and Windows Phones, to making it difficult and expensive for companies to format their advertising campaigns on Google to Bing and other search advertising platforms.
Other instances of unfair play by Google, Smith added, include search bias, or the manipulation of search algorithms so that competing sites rank lower. He also charged that Google uses exclusivity agreements to ensure that popular European websites use only Google-powered search boxes.
Microsoft also took aim at the Google Books settlement, recently nixed in federal court, charging that it threatened to lock out competitors from the e-book industry. Moreover, the Redmond giant alleged Google "discriminates against would-be competitors by making it more costly for them to attain prominent placement for their advertisements" -- an argument similar to criticism levied by opponents to the merger of Google and travel-software company ITA.
The remarkable turnabout for Microsoft -- from antitrust poster child to antitrust complainer -- was not lost on the company.
"Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly," Smith wrote. "This is the first time Microsoft Corporation has ever taken this step. More so than most, we recognize the importance of ensuring that competition laws remain balanced and that technology innovation moves forward."

by TONY ROMM & MIKE ZAPLER taken from http://www.politico.com/news/stories/0311/52290_Page2.html#ixzz1IB89AGb8