Google is facing imminent legal battle against US antitrust regulators, which is reminiscent of Microsoft’s protracted antitrust lawsuit that lasted for two decades.
According to Google, the US Federal Trade Commission (FTC) started investigating its business and raised concerns among its investors.
When Larry Page, Google’s founder, together with Eric Schmidt, its executive chairman, refused to testify before the Senate Judiciary Committee’s antitrust hearing on competition in the Internet search industry, some raised concerns that this is Microsoft all over again and would sap Google of its time and money.
It might be recalled that Microsoft underwent and suffered the legal fight against the US State Department when Microsoft was charged of abusive monopolistic practices in manufacturing, managing and selling of operating systems. The US State Department argued that Microsoft’s behavior opted to crush competition. Microsoft has relented in 2002 and only recently has it allowed government oversight.
How Google will deal with this remains to be seen. Page, 38, is known to be stubborn and would champion technology innovations the financial returns of which are not always clear.
Google’s investors are expressing concern over the matter and fear that Page’s and Schmidt’ refusal to attend the hearings will lead the company into a protracted legal battle that will damage Google over time. The investor concerns are further aggravated by other pressures such as the increasing competition presented by Facebook among others.
Shares of Google began the year above $600 but its shares on Nasdaq ended down 1.11 percent at $474.88.
Google said that it will work with the FTC in reviewing its business practices but remains firm believing it did not violate antitrust regulations even if there are complaints from its rivals who accused Google for favoring Internet search results of its own services. Google’s Internet searches, accounts for almost 69 percent of web traffic worldwide and can determine a company’s Internet ranking.
On a related issue, the European Commission together with Texas’ attorney general launched similar investigations last year after companies that specialize in specific market searches filed complaints.
Whatever strategies Google’s Page and Schmidt have in mind, they need to employ them fast, especially now that the EU and the FTC are at its doorstep.