How will antitrust investigation impact Google and SEM?

The US Federal Trade Commission has officially opened an antitrust investigation into Google's search and advertising practices.

Last week it was speculated that US regulators were preparing to issue Google with a number of subpoenas as part of a wide-ranging formal probe into whether the internet giant abused its dominance of the web search advertising space.

The Financial Times also said that a handful of the largest US states had likewise begun their own similar investigations. Attorneys-general in California, New York and Ohio have all started reviews of the potential threat to online competition posed by Google’s market dominance, following in the footsteps of Texas, which began the first of such probes last year.

Google has now confirmed that the FTC investigation is taking place - although it insists its practices will stand up to scrutiny.

The FTC’s civil antitrust investigation will not be the first that Google has faced, but in the past they have been mainly limited to reviews of its acquisitions. This new inquiry, on the other hand, will examine fundamental issues relating to the firm’s core search advertising business, which is its largest money-spinner.

At the heart of it will be the allegation that Google manipulates its search results to direct disproportionate amounts of traffic to its own growing number of websites such as YouTube at the expense of rivals. Some companies have complained about how the vendor ranks its own services in ‘natural’ search results and the amount they are charged for placing adverts, claiming that the company’s market power enables it to determine whether other businesses succeed or fail.

Watershed moment

According to the Wall Street Journal, many policy watchers believe that an FTC probe could be as much of a watershed event for antitrust policy as the US Department of Justice’s landmark lawsuit against Microsoft in the 1990s, however.

Although Microsoft avoided being broken up, the case put a break on its ability to use its dominance of the PC operating system market in order to exploit other tech sectors. The long-running case also served as a distraction from its core business and tarnished its reputation, which is a risk likewise faced by Google.

But antitrust lawyers believe that Google would not be an easy target for prosecution. Under US antitrust law, it is not illegal for companies to have a monopoly – only to acquire one unlawfully or abuse it – while the courts have significantly narrowed the scope of legislation in recent years.

Marshall Sponder, an independent web analytics and SEO/SEM specialist, says: "This antitrust case has been in the making for a while; and, I wrote about it in 2008 in a post titled The Google Economy. I heard predictions that Google would be reigned by the government about two years ago, as sentiment towards the search giant has changed. But we still don't know the impact this case will have; though, we are sure to get much more information about Google's inner workings, including its algorithms, and that will slow the search giant down somewhat, and give a boost to Microsoft."

Speaking to Internet Retailer, Kevin Lee, CEO of search marketing firm Didit, has speculated about the impact that the investigation may have. "In the short term, I don’t see any impact on retail advertisers, but I do think Google may revise some policies as the probes go deeper into the company," he said.

Suggestng that the investigation may look into areas of search including Google's methods of punishing what it views as 'black hat' SEO tactics such as paying for inbound links from other websites to increase that retailer’s search rankings, Lee added: "Google can of course change its organic search algorithm at any time. However, when folks buy or trade to get links to manipulate the results, most people believe that Google must simply attempt to invalidate the links it believes are gamed rather than punish the organisation it believes purchased links. Otherwise an incentive to further game the ecosystem exists - for example, Wal-Mart could buy links to Target to get Target penalised or punished."

For its part, Google is defiant in the face of the investigation, although the search giant insists that it respects the FTC's process.

In a blog post, Google Fellow Amit Singhal wrote that while Google was "unclear" what the FTC's concern was, "we're clear about where we stand". Singhal then listed principles that guide Google, including being transparent and doing what's best for the customer, adding: "These are the principles that guide us, and we know they’ll stand up to scrutiny. We’re committed to giving you choices, ensuring that businesses can grow and create jobs, and, ultimately, fostering an Internet that benefits us all."

Marketing expert Tim Peter predicted two years ago that Google would be facing an antitrust investigation, and offered some tips on how to prepare for just such an event. In a blog post he noted that that "you should plan ahead in case it distracts Google and makes room for some upstart down the road", and therefore ensure that firms don't put all their eggs in one basket. He said preparation should include:

• Direct navigation – Customers find your business lots of ways. One is to type your name directly or visit a bookmark. And make sure it’s displayed prominently on all your printed materials.
• Referred – These are links that point to your site. They’re good for both search engine optimisation and for traffic from potential customers. Link-building campaigns are very worthwhile. Check out SEOmoz for some great tips on link building (this one’s good, too). Oh, and recommendations/links from social sites by your customers count here, too.
• Email – Yes, email traffic is fantastic. Read Brent Doud’s 8 easy ways to increase your email opt-in list to learn why you want more business from email.
• Paid and natural search – Look at how you rank on places other than Google and also look at piloting high-performing campaigns on other paid search sites as well.

Sponder ultimately predicts: "At the end of it, perhaps in another three years, we'll probably end up seeing Google, more or less, unscathed, I suspect. My belief is Google has become such a persuasive presence in  the internet economy that taking it down would create more harm than good - and at the end of the day, Google will manage to walk away with a slap on the wrist, as usual. But... the case will also make it easier to regulate companies in the internet space (which is ultimately, a good thing)."