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Google is blowing money fast on antitrust offenses...  (Source: Flickr)

Google is facing inquiries in the European Union and the State of Texas. The U.S. Department of Justice is expected to soon jump in the fray with an investigation of its own.  (Source: ZDNet UK)
Do no evil?

Google Inc. (GOOG), like Microsoft Corp. (MSFT), was born out of a rebellious enterprising attitude.  Unsatisfied with the status quo, the company proceeded to rewrite the way people experience the internet.  But, much like Microsoft, as the company has aged and matured its behavior has been increasingly called into question.

I. A Huge Fine Incoming?

According to a filing with the U.S. Securities and Exchange Commission, Google is setting aside a whopping $500M USD to cover antitrust settlements stemming from a pending U.S. federal antitrust inquiry.  The U.S. Department of Justice is reportedly in the preliminary stages of launching an investigation into whether Google abused its dominant competition to crush smaller competitors in the fields of search and online advertising.

That's not catastrophic, but it's no small chunk of change for the internet giant, who earned $2.3B USD in profit in calendar Q1 2011.

This week was supposed to be a happy one for Google.  The company is currently holding its I/O Conference for developers, announcing partnerships with appliance manufacturers, a joint venture with Ford to improve fuel economy, an upcoming version of the company's mobile device Android operating system, a new cloud storage service -- Google Music -- and more.

II. To the Cloud -- the Antitrust Cloud, That is...

But it's hard to ignore the anti-trust cloud that has blown over Google.

Aside from the pending DOJ probe, there's an ongoing probe into Google's internet activities by the European Union, whom previously levied billion dollar fines against Microsoft and Intel Corp (INTC) for antitrust violations.  

And in the U.S. some states have also launched their own inquiries, compelled by complaints from local businesses.  Greg Abbott, Texas's attorney general, has launched an investigation into the giant's behavior.  The inquiry would be worrisome enough for Google were it coming from a pro-antitrust liberal, but Mr. Abbott, a conservative official who is in the process of challenge the Obama administration's National Health Care plan, is generally seen as a business-friendly official.

The Department of Justice was among the first to latch on to Google as a possible antitrust target.  The DOJ struck down a court settlement that would give Google exclusive rights to publish out of print books.  It also only approved Google's recent acquisition of online travel software giant ITA after tacking on strict terms requiring Google to continue to offer competitors equivalent service.

III. A Unique Position -- Tempting Abuse?

Google is in a unique position, given that it controls over 80 percent of the world's search traffic.  Some accuse it of leveraging that position illegally to preferentially direct customers to its services, such as email and online office software.  Others say Google is gaming its ad system to artificially raise prices.  Ads are Google's primary source of revenue -- it made $8.3B USD off them in Q1 2011 alone.

Concerns are also growing about Google's increasingly dominant position in the smart phone industry.  A location-tracking software service provider, Skyhook Inc. recently sued Google in Massachusetts federal court, claiming that the company threatened hardware partners Samsung Electronics Co., Ltd. (005930) and Motorola Mobility Solutions, Inc. (MMI), getting them to drop Skyhook's service for Google's own offering.

However all of these private and governmental court disputes pan out, there seems a great potential for damage to Google's bottom line and reputation.

Investors have hammered Google stock in recent weeks, fearing that the investigations will hurt its ability to compete with small challengers and surging young powers like Facebook.  Facebook recently passed Google to become the most used site on the internet.  The social networking site is increasingly looking to rely on its own internal advertising and services platform, a threat to Google's internet dominance. 

Google refused comment concerning the detail in its filing with the SEC.

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GOOGLE just laughed about this fine
By TheJian on 5/11/2011 8:45:29 PM , Rating: 3
Same as Microsoft or Intel did recently. Microsoft got fined 1.4B or so and probably popped the top on a champagne bottle. I would too if I made 16Bil, killed a competitor illegally, and all you did was ask for 1.4Bil back. You can sue me every year for 1.4Bil (heck 15Billion - go ahead), as long as I'm guaranteed to make 16Bil (oops, they'll make 20bil+ this year, guess I have to up the laughter). I still make money, and one of my competitors is dead. It's a great deal. Until that fine is like 40Bil (monopoly fine should always be more than the company is worth - they stole it after all correct?), they'll break the law and crush competition EVERY chance they get. Yes Google does it too. Everyone does. Because there IS NO PENALTY IF YOU'RE RICH.

Microsoft did it 3 times. Once with DOJ. Laughed. States (11 sued the rest caved IIRC, all under 25mil I think - LOL). Again, laughed. Again with the EU. In total I think they've been fined less than 5Bil and probably made 100+Bil all while killing the competition and strengthening your own positions.

500Mil set aside for the fine. I think that was google just letting them know who they're up against and the DOJ can't win (we probably line your pockets anyway...hehe). You can take us to court for 10 years, fine us 5bil, and we'll still just laugh at you. Oh and here I am setting aside 500mil in laughter even before you get going. Just because I can. Heck I made 4x that just this last 3 months. Your fine is a few weeks work morons! You'll spend the next who knows how many years grinding your noses into the pavement chasing us, and we'll just whip out a check in the end and light a cigar. Heck, we pay the door man to light an illegal cuban for himself, as we head up for more champagne and a ridiculously expensive dinner paid for by that company we crushed....I heck I can't even remember who you sued us over. Never mind, here's your check. Now get out of our face so we can get back to breaking more laws, stifling competition.

Intel did the same with Nvidia and AMD. During the time the shenanigans went on (last 10 years) Intel raked in 60Bil+. Got fined less than 5B. If it's worth more to break the law, expect every company that's big to continue to do it over and over again. I can't believe anyone in here actually calls this a FINE. Only in america can you be a monopoly, be convicted and fined as a monopoly, and still end up a monopoly for years to come after conviction.

I'm all for google as long as they are HELPING us and screwing anyone that tries to stop US from getting said help. Microsoft on the other hand gives us what they want us to have instead of what we want.

In that vein, I hope google gets with Nvidia/Arm and puts the hurt on WINTEL. Can't google just make windows games work on chrome and take the suing that will come 10 years later? It's just a fine...LOL. Pay the next 1.5b (set it aside now...ROFL), and steal directx already (or reverse engineer it), along with about 50% Microsoft's customer base OVERNIGHT.

Wishful thinking?

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

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