Calling the Kettle Black: Microsoft Sues Google for Antitrust Violations

As if Google did not have enough lawsuits to defend against, Microsoft added yet another lawsuit to the pot, when it filed an antitrust lawsuit with the European Union on March 31, 2011. Ironically, the tech giant alleges that Google is guilty of leveling competition with its dominance, similar to the same way that Microsoft’s rivals attacked the corporation with antitrust lawsuits just over 5 years ago.

Analysts suggest Microsoft strategically attacked Google through the European Union to produce faster legal results. Currently, Google has not been sued for antitrust issues in the United States, although it has faced both bad publicity and FTC reprimands for mishandling users’ private information.

According to the European Commission, corporations are subject to investigation for antitrust, when they violate two laws: 1) form cartels that engage in price fixing production manipulation and 2) misuse market dominance to create unfair prices or impede development in prejudice towards consumers. The goal of antitrust is to promote innovation, development, and fair prices for consumers without negatively impacting competition between corporations.

Essentially, Microsoft raises concerns over Google’s control over the content of rival corporations on its search engines and on YouTube, which has operated as a subsidy to Google since 2006. Allegedly, Microsoft claims Google reduces users’ access to content from competitors, when it modifies search algorithms that seem to make Google advertisements more prominent, and it restricts the amount of opposing materials found on its search engine.

Perhaps, the European Union would not have found it necessary to investigate Google for antitrust law violations, but for the fact that Google controls over 92% of the search engine market in Europe. Under international law, questions over antitrust are flagged, when corporations control over 60% of the marketplace.

The most application laws that would apply to Google relation to “limiting the production of markets or the technical development to prejudice consumers” and “applying dissimilar conditions to equivalent transactions with other trading partners creating a competitive disadvantage.” Seemingly, Microsoft does have a valid argument, if it can prove that Google’s tactics prejudice consumers towards Google products.

Microsoft alleges Google controls and restricts the content its competitors can display on alternative search engines, because it has made contracts with European telecommunications companies forcing these corporations to only use Google search boxes. Microsoft argues this restriction on its search box distribution denying Microsoft the right to adequately compete with its Bing search engine in the marketplace.

Further, without knowledge of how Google calculates its search algorithm and search results rankings, Microsoft’s allegation of competitive disadvantage gains credence, because coincidentally Google’s products and sponsored search results tend to appear higher in user searches. However, the law may prevent Microsoft and other competitors from learning Google’s search engine algorithm, if it is classified as intellectual property protected under patent law.

Also, critics wonder whether Microsoft is simply exhibiting the qualities of poor sportsmanship in the marketplace, since its Bing search engine has failed to topple Google’s dominance. Google not only owns YouTube and the search engine market, but also the Android platform, which consumers recently ranked higher than Apple’s operating system.

If the European Commission finds Google guilty of antitrust law violations, Google could be fined up to 10% of its billions in profits for the European Union violation. From a business tactical standpoint, Microsoft benefits from Google losing profits and Google’s legal costs in defending itself from legal battles.

Still, some Google fans may believe that Microsoft is “calling the kettle black,” after enjoying and still enjoying years of dominance for its PC Windows operating system. Only time will tell whether Microsoft is complaining for losing at its own game, or whether Google is actually engaging in unfair business practices.

Sources:

Brad Smith. “Adding our Voice to Concerns about Search in Europe, ” Microsoft TechNet Blog.

James Kanter. “Google Plays Down Microsoft’s Antitrust Complaint in Europe,” NYTimes.com.

Jay Greene.”Why Microsoft is taking on Google in Europe,” CNET.com.

Stan Schroeder. “Microsoft Slams Google with Antitrust Compliant,” Mashable.com.