Google warned by watchdog

16 December 2010

PARIS: Google has challenged a French investigation which criticised the search giant's dominant market position in the online ad sector.

The Autorité de la Concurrence made it clear that there was no evidence of Google abusing its position.

But its report listed a number of potential problems emanating from the firm's stranglehold on search ads - the market from which it derives the vast majority of its revenues.

The authority said it was worried that advertisers who buy key search words on Google may face restrictions in transferring their ads to other search engines.

It added that Google might lock content owners such as libraries into long-term contracts, thereby making it harder for other search engines to deliver similar deals.

Responding to the announcement, Google said: "Search ads are one of many options for advertisers.

"If the price of search ads rises, advertisers can and do switch to other formats, both online and off line. That's the sign of a competitive and dynamic industry."

Elsewhere in its report, the body, which is France's anti-trust watchdog, said search ads target consumers in a way that no other advertising can and should be considered as a standalone market in itself.

It also said that 90% of internet searches in France were made using Google's search engine, and mentioned the firm's high prices and profit margins.

The watchdog's report is non-binding.

But there are also growing signs that the firm faces a regulatory clampdown in France.

The European Commission is also conducting an investigation into the market, and the French government, which commissioned the watchdog's investigation, could tax online ads in future.

Last December, Google's plans to create a huge digital library were scuppered when a French court found the company guilty of copyright infringement.

Google said at the time that it regretted the court's decision and would appeal.

Data sourced from Financial Times; additional content by Warc staff