Inside Google

“You may well see something soon from the U.S. agencies, but I can’t promise anything,” said Melanie Sabo, Assistant Director for Anticompetitive Practices at the FTC’s Bureau of Competition.

Speaking at a Consumer Watchdog conference called “The Future of Online Consumer Protection,” Sabo said her comments reflect her own views and not those of the FTC. The conference, held in Washington, D.C., was webcast over the Internet.

Sabo made her comments a day after the European Union’s antitrust authority began a formal investigation of Google that focuses on its core search and advertising businesses. The E.U. investigation will look at whether Google manipulates search results to disfavor providers of Web services, such as price- comparison tools, that Google competes with.

European regulators are also investigating allegations that Google restricts the advertisements that can be displayed by website operators who use some of its services.

Sabo said the fact that European regulators had announced a Google investigation before their U.S. counterparts was not extraordinary or unusual. For example, she noted that Europe moved first in launching its antitrust case against chip giant Intel Corp.

Sabo made her comments after panelist Gary Reback, a lawyer at Carr & Ferrell LLP who is generally credited with spearheading the efforts leading to the U.S. government’s prosecution of Microsoft Corp, blasted the U.S. for failing to take action against Google.

“It is so troubling that we have to go to Europe to ask them to protect Americans from manipulated search results,” he said, noting that he was primarily directing his comments at the Department of Justice, which shares antitrust responsibilities with the FTC.

The investigation by the E.U.’s antitrust watchdog could lead to a finding that Google is breaking antitrust laws. The E.U. has vast power to impose fines- -it has hit Microsoft and Intel with penalties in excess of $1 billion–but recently has had a harder time compelling a company to fundamentally change its ways.

Google responded to the E.U. investigation by saying it has never intentionally hurt competing services and that there are “compelling reasons” why complaining sites were “ranked poorly by our algorithms.”

The company has said that to confound spammers and make results more relevant, it regularly makes changes to the search formula that ranks sites. As a result, Web sites may find that their ranking can change suddenly. Google said it would work with the commission to address any concerns.

The complaints that prompted the investigation came from Ciao.de, a German subsidiary of Microsoft; Foundem.co.uk, a U.K. price-comparison site; and Ejustice.fr, a French site specializing in law-related queries, Google has said.

Shares in Google were up 2.2% at $568.00.

Contact Scott Morrison, Dow Jones Newswires, at 415-765-6118  or  scott.morrison@ dowjones.com