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MacRoberts Competition Law e-update 13/12/10

If (competition = undesirable) Then {abuse dominant position}
COMMISSION TO INVESTIGATE GOOGLE OVER ALLEGED ANTI-COMPETITIVE ALGORITHM

In a recent press release, the European Commission has announced an investigation into allegations that Google has abused its dominant position in online search, contrary to EC competition law.

The investigation follows complaints by a number of smaller search providers who allege unfavourable treatment of their services by Google's search facility.

The complainant firms provide what are known as "vertical search services"; with searches focused on specific parts of online content, allowing for the provision of a particular service. Complainants include, for example, price comparison site, "Foundem"; legal search engine; "ejustice.fr"; and shopping site, "Ciao" (owned by Microsoft).

Google's search facility shows two types of results - unpaid results, which are the result of Google's complex search algorithm; and sponsored, paid results, which appear prominently at the top and side of the search results page.

The Commission are to investigate whether Google lowered the unpaid, algorithmic ranking of competing vertical search services, whilst giving favourable placement to its own similar services.

The investigation will also look into allegations that Google lowered the "quality score" of vertical search services. Google's quality score is a key factor in determining the price required to be paid by advertisers in order to secure a certain ranking for its sponsored results.

However, some commentators have pointed to legitimate reasons that may explain these sites' poor rankings, including the high percentage of content from other websites that is often simply duplicated by vertical search services.

The Commission have stressed that the current investigation does not imply any wrongdoing on behalf of Google. Instead, "it only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority". A spokesperson for Google has emphasised the company's willingness to co-operate with the investigation and to address any concerns raised.

The investigation will not be an easy one, as it will require thorough analysis of the various computer algorithms employed by Google, which are often subject to change. As such, it will be difficult for the Commission to find a "smoking gun" or any other evidence of wrongdoing; if indeed any infringement has occurred at all.

The European Commission Press Release is available here.

MacRoberts can advise on all aspects of Competition and IP/IT law. For further information, please contact David Flint or John Reid on 0141 303 1100.

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