US regulators have launched a probe into Google's lucrative search and advertising business in a move that could pose the most serious legal challenge yet to the Internet giant. Google confirmed the US Federal Trade Commission (FTC) inquiry in a blog post and a filing with the US Securities and Exchange Commission (SEC) and expressed confidence it could withstand the scrutiny.
"Yesterday, we received formal notification from the US Federal Trade Commission that it has begun a review of our business," the Google blog post said. The Mountain View, California-based company, which controls around 65 percent of the US Internet search market and earns billions from search-related advertising, said it was "still unclear exactly what the FTC's concerns are."
But in the SEC filing, Google said it had received a subpoena from the FTC "relating to a review by the FTC of Google's business practices, including search and advertising." "Google is co-operating with the FTC on this investigation," it said.
According to The Wall Street Journal, the FTC is looking into whether Google is abusing its dominance on the Web and if it "unfairly channels users to its own growing network of services at the expense of rivals." As it has grown from a scrappy startup into an Internet titan, Google has branched out into various businesses including online mapping, shopping and travel and providing operating systems for mobile phones and tablet computers. But Google makes most of its money from search-related advertising and that is why an FTC investigation targeting its core business is seen by analysts as a potentially serious risk to the company.
Silicon Valley analyst Rob Enderle compared it to the anti-trust troubles of Microsoft in the 1990s over its dominance of the personal computer industry. "They're on that non-enviable Microsoft path to being regulated," Enderle said of Google.
According to digital marketing firm eMarketer, Google's share of US search advertising revenue will grow 38.9 percent this year to $10.92 billion, giving Google a 75.9 percent share of overall US search revenue. In the blog post, Google's Amit Singhal said the company is "focused on putting the user first" and stressed that "the competition is only one click away."
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