FTC Investigating if Google Jacked Up AdWords Rates on Microsoft

ftc-logo-gifAs Google Executive Chairman Eric Schmidt prepares to testify before the U.S. Senate today, new details are out about the Federal Trade Commission’s investigation. Microsoft alleges that Google has illegally inflated advertising rates for Microsoft, Bloomberg reports.

Microsoft’s complaints:

  • Google raised the cost of advertising Windows Live, Microsoft’s search engine at the time, on searches for "hotmail", from 10 cents per click to $5 per click in September 2007.
  • Google “created technological hurdles to block advertisers from comparning (sic) the number of times potential customers click on the ads they run on Google versus those on competing sites,” reports Bloomberg.

On the first allegation, a Google spokesperson told Google that it was likely due to keyword relevance rather than an individual assault on Microsoft. On the second allegation, he said, “We never forbid advertisers from advertising on other platforms. We place no restrictions on advertisers transferring their own ad campaign data to other platforms.”

The timing on this news is hardly shocking, as it’s the perfect opportunity for Microsoft to make Google look bad in the public eye. Safe bet that “person familiar with the matter” is a friend of Microsoft?

Regardless of the timing, this allegation is part of the large Google antitrust probe that began earlier this year, as the FTC is attempting to determine whether Google has abused its power and violated antitrust laws, and no doubt will take Microsoft’s motives into account.

As we've previously reported, the FTC investigation of Google will mainly focus on whether Google has unfairly promoted its own content above competitors; unfairly demoted or removed competitors from its search index; prevented or prohibited smartphone manufacturers from using competing services; and unfairly taken information from other review sites for Google Places.

"While no company would request such a government investigation, we are confident that our business practices will stand up to scrutiny," according to Schmidt's written testimony submitted to the Senate Judiciary Committee's antitrust panel (as reported by Reuters).