FTC set to probe Google's display-ads practices

Google already being investigated for antitrust violations by the EU, Canada and South Korea

Financial trends and news by Steven Loeb
May 24, 2013
Short URL: http://vator.tv/n/2fa9

(Updated to reflect comment from the FTC)

Here we go again.

After finally reaching a settlement with the  Federal Trade Commission in January over alleged antitrust violations with its search algorithms, the agency is now looking into potentially opening yet another inquiry, this time into how whether or not Google is using its dominant position in the online display-advertising market to curb competition, it was first reported by Reuters late Thursday.

The issue at hand is in regards to Google's 2007 purchase of display ad company DoubleClick, and whether or not Google has been using its own display ads to to push other companies, and websites, into using DoubleClick products, including Ad Exchange.

Other companies, which also specialize in helping Web publishers sell ads to put on their websites, have been complaining to the FTC about what Google has been doing, sources said.

The U.S. display ad market was a $15 billion industry last year, and Google was the leader, with a 15.1% market share, compared with Facebook 14.6%. Next year, Google is expected to widen its lead even further, to 20.7% of the market.

If Google did in fact use its own display ad business to try to push companies to use more of its other services, that could be illegal under antitrust laws.

When the FTC approved Google's $3.1 billion acquisition of DoubleClick in 2007, the commission made it clear that while "the evidence did not support the theories of potential competitive harm" they were still worried that the quickly evolving space would eventualy allow Google to use the purchase to edge out competition.

"We want to be clear, however, that we will closely watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the Commission intends to act quickly," the commission said at the time.

The inquiry is in the preliminary stages right now, and may not actually lead to a larger investigation, depending on what the FTC finds.

A spokesperson for the FTC declined to comment on the report.

Google antitrust violations

If the FTC does decide that it needs to do a formal investigation into whether Google has broken the law, this will the fourth investigation into Google antitrust violations going on at the same time!

The first one began in November 2010, when the European Union opened an investigation into Google, on charges of “unfavorable treatment of their services in Google’s unpaid and sponsored search results."

The European Commission received complaints from competing Internet search providers that Google has been placing their services lower in result rankings while giving preferential placing of its own. Additionally, the commission will investigate whether Google has prevented Internet companies from placing ads from Google competitors on their websites.

The complaints were brought forth by three companies: Foundem, a British price comparison service; Ciao, a Microsoft-owned German price comparison service; and eJustice, a French legal search service. 

The EU probe is still on-going, with the antitrust regulators just recently having given Google's rivals some more time to study its proposals to settle complaints, after the rivals complained that they were not being given enough time to formulate their responses.

The second began just last week, when Canada's Competition Bureau notified Google of its intentions to investigate the company's search practices in Canada. That investigation is in the early stages, and its exact nature is still unknown.

There was also an antitrust investigation opened against Google in South Korea in 2011. The country's two largest search companies, NHN Corp. and Daum Corp., accused Google of prohibiting local phone carriers from embedding their search applications on Android devices.  

The prohibition is being explicitly stated as a condition in their marketing contracts, the companies charged, adding that those carriers who violate the condition face retribution by Google in the form of delayed certification for the use of its software.

This case is also still on-going, but a decision by South Korea's Fair Trade Commission is expected to come soon

Google and the FTC are no strangers to each other either.

The FTC recently ended a probe into Google's search algorithms, specifically focusing on the introduction of “Universal Search," which prominently displays targeted Google properties in response to specific searches, to determine if  Google used it to eliminate competition.

Google was also accused of altering its search algorithms "to demote certain vertical websites in an effort to reduce or eliminate a nascent competitive threat."

The FTC and Google reached a settlement in January, in which Google agreed to give online advertisers "more flexibility to simultaneously manage ad campaigns on Google’s AdWords platform and on rival ad platforms."

The company also agreed to stop misappropriating online content from so-called 'vertical' websites that focus on specific categories such as shopping or travel for use in its own vertical offerings."

Vator has reached out to both Google and we will update if we here anything more.

(Image source: http://www.bestthinking.com)