Google Dominance Attracts Investigations, Lawsuits

The latest knock on Google hasn't even come at Google directly. According to The New York Times, Google rival Microsoft plans to argue at a June hearing In Brussels, Belgium, that by acquiescing to the European Union's insistence that it promote other browsers on its Windows operating system, it would in fact be helping Google shore up Google's market share that much further.

Microsoft will meet with EU antitrust regulators from June 3 to 5. Microsoft will respond to charges made by the EU that by tying Internet Explorer to Windows, Microsoft has been violating European competition laws since 1996.

According to an unnamed source quoted in the Times, Microsoft plans to argue that rival search engines such as Mozilla's Firefox see healthy returns for driving traffic to Google for search.

"Not only would Google's browser Chrome suddenly be on all Windows PCs, but it would strengthen Google's dominance in search advertising," said the source to the Times.

Among other controversies, Google is currently being investigated by the Federal Trade Commission to determine whether the close relationship between Google and Apple is a potential antitrust violation. Along with other connections, Google CEO Eric Schmidt and former Genetech CEO Arthur Levinson sit on the boards of both Google and Apple, but Schmidt has contended there are no grounds for investigation, seeing as Apple and Google compete in Web browsers and other areas.

A publishing controversy just won't go away for Google, either. Google was sued in September 2005 by the Authors Guild, the Association of American Book Publishers and a number of authors and publishing houses over alleged copyright infringement stemming from Google's Library Project.

While Google and the book industry representatives agreed to an out-of-court settlement in October 2008, it's not exactly "case closed" just yet. Last week, the publishers were said to have been contacted by the U.S. Department of Justice to discuss the agreement with Google.

Expect antitrust lawsuits to become even more the norm and less the exception for Google as the Mountain View, Calif.-based company continues to rise as the economy improves.

At least one analyst on Friday suggested Google will see its profit margins go higher as the recession climate lifts, thus allowing it the flexibility to walk away from expensive AdSense deals with the likes of MySpace and AOL.

"Rather than agree to revenue guarantees and exceptionally high TAC [traffic acquisition cost] rates to partners such as AOL and MySpace, as it did in the past, we think Google will simply pass on these deals and allow a much larger share of this low margin and loss-making business to go to competitors such as Microsoft," wrote Sanford Bernstein analyst Jeffrey Lindsay in a research note. "This may result in some sensationally negative headlines such as 'Microsoft scoops the Xyz deal from Google,' but much of this business is either uneconomic or toxic or both. For example, consider Google's recent write-down of $726 million attributable to the 'strategic investment' tied to the AOL AdSense for Search deal."