Microsoft Launches Antitrust Complaint Against Google

Microsoft today will formally launch an antitrust complaint against Google in Europe, alleging that the Internet giant has worked unfairly and illegally to prevent competition in online search. Microsoft has chosen to bring its complaint to the European Union (EU) first, because regulators there are already in the midst of an antitrust investigation against Google, and have proven to be far more aggressive in curbing anti-competitive corporation behavior than their counterparts in the United States.

"Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law," Microsoft Senior VP and General Counsel Brad Smith wrote in an open letter to customers. "Our filing today focuses on a pattern of actions that Google has taken to entrench its dominance in the markets for online search and search advertising to the detriment of European consumers."

The Microsoft complaint raises a number of issues, both for Google (which, Microsoft says, has acted illegally in many areas) and for Microsoft itself: As antitrust experts point out, companies that launch such complaints are typically those that have already lost in the market in question. In other words, while governments may launch antitrust investigations, companies that attempt to trigger such investigations are, by definition, also-rans.

And while I cringe in anticipation of the inevitable use of the word "irony" in various blog posts and even mainstream news stories about this event, let me be very clear about one point: Microsoft's complaint is hardly ironic. In fact, if Microsoft is right about Google, it's overdue. And aside from IBM, there isn't a single company in the tech industry that knows more about the nuances of antitrust than Microsoft. If this company is complaining along those lines, it knows the complaint will bear scrutiny and that its charges are compelling.

What are those charges, exactly? Although I don't have the full Microsoft complaint to study at the time of this writing, Microsoft's many complaints about Google fall into three broad areas: Internet search, online advertising, and smartphones.

Internet search. In Internet search, Microsoft's Bing is one of the only competitors in a market that once housed numerous players, and it's being beaten badly by Google. In the United States, Google has a dominant 65 percent usage share. But it's worse in Europe, where Google often controls an unassailable 90 percent or more of the market. Of course, market dominance doesn't equate to an antitrust violation, although it's often one of many preconditions. Microsoft's issue is that Google actively prevents its Bing service from indexing information stored on Google sites and services, including the popular YouTube service. In this way, Google is illegally preventing a competitor from offering a more compelling offering, artificially hindering consumer choice.

Advertising. In advertising, Microsoft says that Google's ad contracts prohibit advertisers from using third-party software that could compare results from multiple ad platforms—a capability that might cause many to more aggressively target competing ad platforms, like Microsoft's, that give better results. It also prevents advertisers from easily moving off of Google's dominant ad platform, Microsoft says.

Smartphones. Microsoft also complains that Google has withheld the technical information it needs to create a YouTube client for handsets running its Windows Phone OS. Such software is readily available on Android (which Google makes) and on the iPhone, a device that Google once closely partnered with Apple on. (Maybe too closely partnered: As Microsoft notes, Google CEO Eric Schmidt was on the Apple board at the time and only resigned after the FTC launched an informal investigation.)

Microsoft isn't currently formally complaining about Google in the United States, but the hope is that its EU complaint will raise some eyebrows in the United States as well. Google is currently involved in a number of high-profile deals in the United States, including a controversial attempt to purchase travel information provider ITA (which could and should be prevented by antitrust concerns) and its recently thwarted settlement with book publishers—part of Google's attempt to scan every book ever published.

"Google ... shouldn't be permitted to pursue practices that restrict others from innovating and offering competitive alternatives," Smith's letter concludes. "That's what it's doing now. And that's what we hope European officials will assess and ultimately decide to stop."