Google built up position with 'illegal network of agreements', claims Microsoft-backed industry group

Google uses anti-competitive practices to extend dominance from desktop to mobile operating systems, claims Microsoft-backed group

An industry group called the Initiative for a Competitive Online Marketplace (ICOMP) has claimed that Google's dominant position in online search and advertising was generated as a result of a "broad-ranging and illegal network of agreements with partners from across the IT sector" in a formal complaint to the European Commission.

ICOMP, though, is backed by Google rivals, including Microsoft, which only last week launched an advertising campaign that claimed that Google spies on users by reading their Gmail emails.

However, ICOMP claims that Google search results are skewed towards its own products and services - for example, providing a link only to Google Maps when someone inserts a place name as a search query. As a result, the organisation claims that Google is abusing a near-monopoly position, especially in the UK where it claims just under 90 per cent of the search market.

ICOMP goes further, though, claiming that Google has entered into anti-competitive agreements in a bid to shut out rivals. It claims the company is contravening Articles 101 and 102 of the Treaty on the Functioning of the EU. ICOMP is accusing Google of breaching Article 101 rules on anti-competitive agreements rather than claiming that it is abusing its dominance in the market.

"Google partnered with computer manufacturers to ensure that every new computer they manufactured would have a search-enabled Google toolbar exclusively pre-installed," said ICOMP in a statement.

It added: "It agreed with web-browsers that Google would be the exclusive default search engine offered to their subscribers. Google paid computer manufacturers to make it the exclusive default search engine for [Microsoft] Internet Explorer. It also agreed with major software providers that the Google toolbar would be bundled into their most popular consumer software products."

Microsoft, though, could equally be accused of anti-competitive practices in the terms and conditions of its Windows operating system licensing, while using Internet Explorer itself to push Microsoft online services to users.

The ICOMP complain also extends to mobile. It claims that the strategy that Google has pursued on the desktop is now being used in mobile, in which Google holds an even more commanding position thanks to its authorship of the Linux-based Android operating system.

"Partnership arrangements with major mobile internet providers gave it massive coverage in the early days of mobile internet. Google capitalised on this by developing its own mobile handset operating system, Android. Android is now offered to millions of European users through exclusive agreements with manufacturers, carriers, input manufacturers and software developers. Google has even moved into handset manufacture, by acquiring Motorola (and its key patents)," it added.

It's most inflammatory claim, though, was that Google created an "illegal network of exclusive relationships" with these important partners. In this way, "Google achieved its key objective: gaining scale for itself while preventing its rivals from doing the same. As a result, rival search engines do not have access to the data that they need to improve their algorithms and attract more users."

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Google built up position with 'illegal network of agreements', claims Microsoft-backed industry group

Google uses anti-competitive practices to extend dominance from desktop to mobile operating systems, claims Microsoft-backed group

"Google is already reaping the benefits of its anti-competitive network of agreements," ICOMP said. "It overpays its key partners for the privilege of exclusive access to as many users as possible, but it tends to underpay smaller customers (both advertisers and publishers) who have little bargaining power and no real choice of provider."

It added: "Things will only get worse if Google is allowed to consolidate its current position as the quasi-monopoly gateway to the internet. In due course, consumer welfare as a whole will also deteriorate. Innovation in search and online advertising will be stifled, and the European digital economy will suffer."

At the same time, though, Microsoft has also scored a big victory over Google in the US law courts when a District Court ruled in its favour in a battle over the H.264 codec.

The intellectual property battle involves three patents, 7,310,374, 7,310,375, and 7,310,376, that Google subsidiary Motorola Mobility licenses to Microsoft for use in the Xbox 360, Windows operating system and Windows Phone smartphone operating system.

Motorola was claiming an improbably high $4bn (£2.55bn) over the patents, while Microsoft argued that such a claim violated fair, reasonable and non-discriminatory (FRAND) standards. It has offered just $1m (£640,000) instead.

In a 28-page ruling, though, US district judge James Robart ruled that many of Motorola's claims were invalid because the language used in the supporting patents was not sufficiently clear. Microsoft, he added, had sufficiently demonstrated that many of the technologies affected amounted to "general purpose devices indistinguishable from the general purpose computer".

Not only does the ruling restrict the level of payments that Google will be able to claim from Microsoft, but calls into question the $12.5bn (£7.96bn) value that Google placed on Motorola Mobility when it acquired Motorola's mobile phone business.