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FTC to examine Google's dominance in searches and ads

SAN FRANCISCO — Google may be entering a make-or-break phase in its colorful history now that U.S. regulators have opened an investigation into whether the company has been abusing its dominance of Internet search and advertising to stifle competition.

The inquiry by the Federal Trade Commission, confirmed by the company Friday, will require Google to convince regulators that its closely guarded recipe for search results is designed to give people the best recommendations, not bury links to its rivals.

If you search for a local business, for example, Google might highlight its own listing, from a service called Google Places, instead of one on Yelp, a popular review site and Google competitor.

The inquiry also is expected to peer into Google's financial engine: the advertising links tied to the subject of each search request. Some of these commercial messages appear, shaded in color, at the top of the results page, while others are stacked in the right-hand column.

Even as Google has expanded into video, mobile phones and television, the text advertising that pops up alongside search results and other Web content generates most of Google's revenue — an amount expected to exceed $35 billion this year.

Some websites contend Google has rigged its system to drive up the ad prices, even though Google says the rate is determined by bids submitted in an auction. Others say Google purposely blocks ads from appearing because the company views them as competitive threats.

Google is expected to put up a fierce fight. "It's still unclear exactly what the FTC's concerns are, but we're clear about where we stand," one of Google's top search engineers, Amit Singhal, wrote Friday on the company's blog. "Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow."

FTC to examine Google's dominance in searches and ads 06/24/11 [Last modified: Friday, June 24, 2011 9:34pm]
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