Microsoft Lodges Anti-Trust Complaint Against Google

Microsoft, which has itself been on the receiving end of multiple anti-trust actions by the European Commission, has filed a complaint with European regulators charging rival Google with anti-competitive behavior in the market for online search and search advertising.

The complaint, filed Wednesday, adds Microsoft's voice to an investigation the European Commission began into Google's online business practices in November.

"As the only viable search competitor to Google in the U.S. and much of Europe, we respect their engineering prowess and competitive drive," said Brad Smith, Microsoft senior vice president and general counsel, in a blog posted late Wednesday. "Google has done much to advance its laudable mission to 'organize the world’s information,' but we're concerned by a broadening pattern of conduct aimed at stopping anyone else from creating a competitive alternative.

"We've therefore decided to join a large and growing number of companies registering their concerns about the European search market," Smith said. "By the European Commission’s own reckoning, Google has about 95 percent of the search market in Europe. This contrasts with the United States, where Microsoft serves about a quarter of Americans' search needs either directly through Bing or through our partnership with Yahoo."

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The European Commission's investigation of Google follows complaints received by the Commission earlier last year from search engine and price compare service companies based in France, the United Kingdom and Germany. The complaints allege that Google gives its own services preferential placement and marginalizes competitors' ability to appear favorably in search rankings.

"At Microsoft we've shown that we're prepared to work hard and invest literally billions of dollars annually to offer Bing, a search service that many now regard as the most innovative available," Smith said in his blog. "But, hard work and innovation need a fair and competitive marketplace in which to thrive, and twice the Department of Justice has intervened to thwart Google's unlawful conduct from impeding fair competition.

"In 2008 the DOJ moved to file suit against Google for its unlawful attempt to tie up and set search advertising prices at Yahoo, causing Google to back down. And last year the DOJ formally objected to Google's efforts to monopolize book content, a position affirmed by a federal district court in New York just last week. Unfortunately, even this has not stopped the spread by Google of new and disconcerting practices in the United States.

"As troubling as the situation is in United States, it is worse in Europe. That is why our filing today focuses on a pattern of actions that Google has taken to entrench its dominance in the markets for online search and search advertising to the detriment of European consumers," Smith said.

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The lengthy blog details a handful of cases Microsoft said illustrate Google's anti-competitive behavior, including allegedly restricting Microsoft's Bing and Windows Phone access to YouTube videos and metadata, blocking access to content owned by book publishers, and restricting advertisers access to their own data.

"Finally, we share the concerns expressed by many others that Google discriminates against would-be competitors by making it more costly for them to attain prominent placement for their advertisements. Microsoft has provided the Commission with a considerable body of expert analysis concerning how search engine algorithms work and the competitive significance of promoting or demoting various advertisements," Smith said.

Google has not formally responded to Microsoft's complaint. A Google spokesman, in emailed comments to MarketWatch, said: "We're not surprised that Microsoft has done this, since one of their subsidiaries was one of the original complainants. For our part, we continue to discuss the case with the European Commission and we’re happy to explain to anyone how our business works."

Microsoft has itself been the subject of lengthy investigations by the European Commission, the executive body of the European Union, which began with a complaint from Novell in 1993 that Microsoft was engaging in anti-competitive practices. While Microsoft reached a settlement in that specific case in 1994, the EC's investigation of Microsoft went on for years, including a complaint from Sun Microsystems and other vendors that Microsoft did not disclose Windows interface specifications. The EC later took up a complaint that it unfairly bundled its Windows Media Player with Windows.

In 2009 Microsoft and the EC engaged in another tussle over whether Microsoft's practice of bundling its Internet Explorer browser with Windows constituted anti-competitive behavior. The two sides worked out an agreement that year under which Microsoft allows European users to choose a browser through a "ballot box" screen.

The investigations have resulted in the EC slapping Microsoft with fines totaling hundreds of millions of dollars.

In his blog, Smith acknowledged the incongruity of Microsoft finding itself in the position of complaining about another company's alleged anti-competitive behavior.

"There of course will be some who will point out the irony in today’s filing. 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 said. "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."