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Google Lodges Gripes About Microsoft Search

Posted on: Tuesday, 2 May 2006, 09:00 CDT

By Elise Ackerman

Google on Monday accused Microsoft of not playing fair in its quest for a bigger share of the $10 billion online advertising market and revealed that it has shared its concerns with antitrust regulators in the United States and Europe.

Google's gripe: An upcoming release of Microsoft's Internet Explorer Web browser will contain a search box that in some cases defaults to the MSN search engine.

As a result, Microsoft might be able to persuade more people to use its search technology and potentially win a larger share of the extremely lucrative market for Internet advertising.

Someone who wants to use Google to find information on the Internet would be forced to choose the Mountain View-based company from a list of almost two dozen other search providers.

"Our biggest concern is for the users," Marissa Mayer, vice president of search products and user experience, said in a written statement. "The market favors open choice for search, and companies should compete for users based on the quality of their search services."

The dispute illustrates how the importance of the browser has diminished in the wake of the epic antitrust battles involving Microsoft and the rest of the tech industry. Now, the focus is on search technology, which matches advertising with search results.

Still, Google's protest puzzled some observers, who noted that the objectionable feature was nearly identical to the search box of Firefox, an open-source browser with 10 to 13 percent of the U.S. market.

Last week, Google took the unusual step of promoting the Firefox browser, which defaults to Google's search engine, on its home page. People who use Firefox who want a search powered by MSN have to choose it from a list that includes rival search engines, as well as Wikipedia's online encyclopedia and Merriam Webster's online dictionary.

Gary Schare, the Microsoft executive overseeing marketing for the new browser, Internet Explorer 7, said in an interview that Microsoft had consulted with search engines around the world and received "universal positive feedback" -- except for Google.

Schare also noted that the new browser is built to default to whatever search engine a person is currently using, whether it is Google or Ask.com. People who download the new browser, which is now available for testing, might not even realize that the controversial default exists, he said.

In addition, people who buy personal computers pre-loaded with Microsoft's software, will also not necessarily encounter the MSN default when they click the small search box built into the top of their browser. That is because computer manufacturers are free to set the default to any search engine they choose in accordance with deals they have struck with companies like Google and Yahoo.

In February, Dell confirmed it was trying out a partnership with Google to bundle Google's toolbar and desktop search software on its machines.

Keith Hylton, professor at the Boston University School of Law, said such deals showed "there's a lot of room for competition here."

But Ralph Palumbo, a Seattle attorney who has sued Microsoft twice for anti-competitive practices, said default settings "are tremendously important" and that Google was right to raise concerns before Microsoft's new browser is released.

In October 2005, Microsoft agreed to pay RealNetworks $761 million in response to allegations that Microsoft had used its monopoly power to keep computer makers from installing RealNetworks' media player.

In 2001, a federal appeals court ruled that Microsoft had abused its monopoly over operating-system software. Since then, Microsoft has paid hundreds of millions of dollars to companies and individuals who claimed they were hurt by its business practices.

And the legal battles continue. Last week, Microsoft's lawyers appeared in front of the European Union's highest court to challenge a 2004 antitrust ruling by the European Commission that included a record $613 million fine.

"Microsoft is vulnerable because of bad behavior," said Joe Wilcox, an analyst with Jupiter Research.

However, in the dispute over search defaults, both Google and Microsoft appear to be vying for any advantage they can get over the other.

While Microsoft remains the undisputed leader in operating system and browser software, its MSN search engine lags both Google and Yahoo, handling only 11 percent of U.S. searches in March, compared with Yahoo's 22 percent and Google's 49 percent, according to Nielsen/NetRatings.

Yet Google Chief Executive Eric Schmidt has said repeatedly that he views Microsoft as Google's main foe. If Microsoft could increase its share of searches, it has the ability to deliver advertising to an audience that is segmented not only by geography but by age.

Contact Elise Ackerman at eackerman@mercurynews.com or (408) 271-3774.

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