The Google-FTC investigation

Google LogoGoogle has become as ubiquitous as Microsoft’s Windows Platform or Apple’s Mac. In June the Federal Trade Commission (FTC) opened an anti-trust investigation of the popular search engine company. There have been a Greek chorus of complaints from competitors, foreign governments, state attorneys general and other federal regulators that the company has become too dominant on the Internet.

We’ve been to this rodeo before with Microsoft and AT&T, just to name two gigantic companies that were targeted. Microsoft was sued in Federal court by United States Department of Justice (DOJ) and 20 U.S. states in 1998. The case revolved around Microsoft’s use of the Windows Operating System to cut out other browser competition to Internet Explorer. The trial judge who found for the plaintiffs was overturned by the D.C Court of Appeals. After some negotiations between Microsoft and the DOJ, the case was dropped by the plaintiffs.

In 1982 after an 8 year battle, At&T was forced to break up their national monopoly into individual companies. From one company AT&T became seven operating companies and several equipment and service companies. Since then their have been a number of mergers that have reunited several of the operating entities. The growth of wireless communications has spawned Verizon Wireless and AT&T Wireless. Att&T Wireless is now in a battle over its merger attempt with T-Mobile.

The Google-FTC Investigation could be the beginning of a long road of hearings, subpoenas, litigation and negotiation for the Mountain View, California based company.

Google was founded in 1998 by Larry Page and Sergey Brin, two Stanford University graduate students. In 1996 they built a search engine namedLarry Page and Sergey Brin “Back Rub” in order to determine the importance of Web pages. In September 1998 they incorporated their enterprise as Google. The popularity of their such engine is such that users now use the name of the company as verb, “Let’s google that”.

As they have grown in popularity and wealth, the company has expanded their range of offerings to the public. Some of the services that users work with everyday are: Gmail, YouTube, Picasa, Google maps, the Google Chrome browser, Google Docs, Google Earth and Google Reader. The list goes on and on. The interesting thing is that most are offered to users at no cost. Google makes much of its revenue from advertising on the search engine. In their financial statements, they showed income after taxes for the 2nd quarter of 2011 at $2.505 billion. Not a bad profit for the single quarter of a company that supplies the user with a vast library of free stuff.

The question then comes up: is this too good to be true? Is Google making themselves so indispensable now in order charge for the free stuff later? I think that the answer is a firm “we don’t know”. They have a ten part operating philosophy that is clear and open to the general public. Their first core principle mandates that they give the user the best experience possible. The rest of their philosophy follows from there.

I use Google search, Gmail, Chrome and several other Google services on a daily basis. As I’m writing this post I’m using Google search to verify my information. I would be at a loss without them. It would make my life more difficult which would violate their ten part philosophy.

It appears that the FTC will focus on Google Search. They handle about two-thirds of Web searches in the U.S. and 80% in Europe. “We are here to answer all questions from all authorities,” Amit Singhal, one of the company’s top engineers said. “We are going to answer everything they want to know.”

Could the FTC make Google divest themselves of the other services because they are unfairly leveraging the search dominance to push users into the other services? Or is this just an inquiry to satisfy the complainers in the Internet industry? Time will tell.

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