Google could take $500 million hit to deal with anti-trust probe

While Google had a ton of good and exciting news to talk about on Tuesday during its I/O conference, there's apparently a bit of a dark lining in their silver cloud today. Venture Beat reports that Google has admitted that the US Department of Justice is currently investigating the company, specifically with a look into Google's massive online ad business.

In a filing with the US Securities and Exchange Commission, Google stated that the Department of Justice was conducting a probe "into the use of Google advertising by certain advertisers". No other details on the investigation were revealed and Google said in its SEC filing that "we cannot predict the ultimate outcome of this matter". However that isn't stopping Google from hedging its bets. The company said that because of the probe, "we accrued $500 million for the three month period ended March 31, 2011." That likely means that if the probe goes against Google, it might have to work out a settlement deal with the government in relation to that investigation and is already preparing to pay out big bucks to do so.

As a result of this move, Google has already announced that its net income for the first quarter of 2011 will be reduced greatly, from a previously predicted $2.3 billion down to just $1.8 billion. Even with that cut in its quarterly income, Google claims, "we believe it will not have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows."

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13 Comments

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Looking back at the Microsoft's probe I can propose the following:
* Split Google and AdSense into a separate companies. (Like the proposal to split Windows and Office into separate companies)
* Disable Gmail, Google Talk and Google Docs integration. (Like MS was forced to do with the media player, mail client and web browser integration in Windows)
* Show users a ballot screen so that they can select another search engine when they search on google.com. (Like MS was forced to do with their browser)
* Force Google to stop distributing Android since it contains non-compliant Java VM. (Like MS was forced to do with several versions of Office, Visual Studio and Windows).

RealFduch said,
Looking back at the Microsoft's probe I can propose the following:
* Split Google and AdSense into a separate companies. (Like the proposal to split Windows and Office into separate companies)

AdSense is an integral part of Google's search business. Microsoft's browser and office suite are completely separate entities from the WIndows OS itself. Hell, if the DOJ didn't break up Microsoft, there's no chance of it happening to Google.

RealFduch said,

* Disable Gmail, Google Talk and Google Docs integration. (Like MS was forced to do with the media player, mail client and web browser integration in Windows)

Microsoft was shipping these things with the OS to destroy competition; I see no such thing happening here.
RealFduch said,

* Show users a ballot screen so that they can select another search engine when they search on google.com. (Like MS was forced to do with their browser)

You're getting silly now. People choose to go to Google to search, they aren't forced to like users are forced to use IE, including the bing default and its results ripping data mining.
RealFduch said,

* Force Google to stop distributing Android since it contains non-compliant Java VM. (Like MS was forced to do with several versions of Office, Visual Studio and Windows).

Microsoft was doing its usual EEE (Embrace, Extend, and Extinguish) strategy against Java to bastardise, and eventually kill it. The dalvik VM is used by apache as well, it's not Google's goal to destroy Java. Did you ever see Sun Microsystems sue Google as a result? No, only Oracle, a patent tyrant worthy of Microsoft's crown, is more interested in monetising Java patents than actually producing a product out of it.

RealFduch said,
Looking back at the Microsoft's probe I can propose the following:
* Split Google and AdSense into a separate companies. (Like the proposal to split Windows and Office into separate companies)
* Disable Gmail, Google Talk and Google Docs integration. (Like MS was forced to do with the media player, mail client and web browser integration in Windows)
* Show users a ballot screen so that they can select another search engine when they search on google.com. (Like MS was forced to do with their browser)
* Force Google to stop distributing Android since it contains non-compliant Java VM. (Like MS was forced to do with several versions of Office, Visual Studio and Windows).

I'm all for equal treatment, but the industry is very different from when Microsoft was in it's reign of terror. Google today has a lot of strong competition that Microsoft didn't have: Microsoft, Apple, Sony, Amazon. I think the DOJ should take a modern approach to handling this, whatever that is, they can figure it out. But they won't I guess so idk...

Flawed said,
People choose to go to Google to search, they aren't forced to like users are forced to use IE, including the bing default and its results ripping data mining.
I am running Windows while using a different browser (ironically, Google Chrome). I went to Microsoft and got their OS. I used their browser to download a different one. Good thing it had one, or I'd have had a pain getting a different one. The day that companies in America are forced to pre-install competitors products is the day that it is no longer America.

Not to mention the results data mining is only if you install the Bing toolbar, which is not installed by default. Users opt-in to have all searches data mined. Google noticed Microsoft doing this, and entrapped them by using multiple machines to artificially search for something so specific--and non-existant--that it actually effected Bing's results because it had results where there previously were none. This was Google pushing Search Engine Optimization (SEO) onto its competition, which is something it cries foul about and attempts to stomp out regularly with their search algorithm changes. The fact is, Google used click fraud--just like when people use machines to automatically click competitor's ads--to make its claim. Microsoft was scanning Google search results simply because Microsoft was (is?) scanning results, period. Any result. That's just smart and Google clearly does the same with Chrome as it forwards things back to Google. I have no problem with this because it helps to improve their algorithms with real-world usage.

Flawed said,

Microsoft was doing its usual EEE (Embrace, Extend, and Extinguish) strategy against Java to bastardise, and eventually kill it. The dalvik VM is used by apache as well, it's not Google's goal to destroy Java. Did you ever see Sun Microsystems sue Google as a result? No, only Oracle, a patent tyrant worthy of Microsoft's crown, is more interested in monetising Java patents than actually producing a product out of it.
This is quite true with regards to Microsoft, and it led to a very good cross-licensing agreement between Sun and Microsoft. Still, Google is definitely questionable at best with its own version EEE with their "clean room" implementation of the Java VM. Regardless of what the courts end up saying, mostly because judges apparently have no idea about technology whatsoever (see just about every patent troll case ever, specifically the recent XML case against Microsoft where they lost to a patent that boiled down to using XML as it was intended--generically with meaning applied when you provided a schema (DTD at the time)), I do believe that Google was a little less than genuine with their implementation of Java.

Still, I agree that it's not Google's goal to kill Java. It would be rather silly since their own development tools (Eclipse) are based on it, as well as so many of their other major development tools (GWT).

lordcanti86 said,
Welcome to the club, Google!
Get used to it because it's only going to get worse.

Sincerely,
Microsoft


The DOJ antitrust action against Microsoft was a joke. Look at the outcome. Microsoft is still bundling IE with the OS (even in the EU too), it's still dominating OEM's with the Microsoft tax and other questionable business practises, and yet, the DOJ does nothing, and even recently declared that MS is no longer under investigation lol! Microsoft should have been broken up long ago to prevent these monopolistic abuse practises.

If Google has been abusing its position, then the same sanctions should be applied. However, it should be noted that in the US, it only has about 65% marketshare, with bing + yahoo at 30%. What percentage does Microsoft still enjoy in the desktop OS market, 80%+ ? I'm all for equal treatment, but the DOJ seriously needs to look at Microsoft again, and sharpish.

Flawed said,

The DOJ antitrust action against Microsoft was a joke. Look at the outcome. Microsoft is still bundling IE with the OS (even in the EU too), it's still dominating OEM's with the Microsoft tax and other questionable business practises, and yet, the DOJ does nothing, and even recently declared that MS is no longer under investigation lol! Microsoft should have been broken up long ago to prevent these monopolistic abuse practises.

If Google has been abusing its position, then the same sanctions should be applied. However, it should be noted that in the US, it only has about 65% marketshare, with bing + yahoo at 30%. What percentage does Microsoft still enjoy in the desktop OS market, 80%+ ? I'm all for equal treatment, but the DOJ seriously needs to look at Microsoft again, and sharpish.

But the thing is they just don't bundle anything with the OS, what else should they do to allow competitiveness? You get the OS, and that is it. And don't tell me all laptops should come without an OS, because that is absurd.

Flawed said,

The DOJ antitrust action against Microsoft was a joke. Look at the outcome. Microsoft is still bundling IE with the OS (even in the EU too), it's still dominating OEM's with the Microsoft tax and other questionable business practises, and yet, the DOJ does nothing, and even recently declared that MS is no longer under investigation lol! Microsoft should have been broken up long ago to prevent these monopolistic abuse practises.

If Google has been abusing its position, then the same sanctions should be applied. However, it should be noted that in the US, it only has about 65% marketshare, with bing + yahoo at 30%. What percentage does Microsoft still enjoy in the desktop OS market, 80%+ ? I'm all for equal treatment, but the DOJ seriously needs to look at Microsoft again, and sharpish.

It's called customer demand, as much as a tiny minority complains the average windows user doesn't want to jump through hoops just to be able to get online and check facebook, a base Windows install is all they need and want, and you can cry about it all you want but it's the way it should be

Flawed said,

The DOJ antitrust action against Microsoft was a joke. Look at the outcome. Microsoft is still bundling IE with the OS (even in the EU too), it's still dominating OEM's with the Microsoft tax and other questionable business practises, and yet, the DOJ does nothing, and even recently declared that MS is no longer under investigation lol! Microsoft should have been broken up long ago to prevent these monopolistic abuse practises.

If Google has been abusing its position, then the same sanctions should be applied. However, it should be noted that in the US, it only has about 65% marketshare, with bing + yahoo at 30%. What percentage does Microsoft still enjoy in the desktop OS market, 80%+ ? I'm all for equal treatment, but the DOJ seriously needs to look at Microsoft again, and sharpish.

To this day I will never understand how the act of bundling completely functional software hurts the consumer or hurts competition. The real problem is that Microsoft was originally making it harder for the others to compete by simply not providing them access to APIs, or putting intentional bugs in place to break their competitors (Lotus anyone?). That should have been criminal, and fortunately times have changed (not to mention Microsoft can't put the bugs in because they'd lead to security issues, which they don't need anymore of).

The competition still exists. They still have the ability to produce a better product. Look at Google Chrome: I am typing this from Chrome, which I use on my personal MacBook Pro (with its bundled iLife applications and Safari), Windows 7 home desktop, and work Windows XP machine.

Netscape didn't fail because Microsoft bundled IE. Netscape failed because they had such a strong lead that they thought they could take the time to rewrite much of their code base. Oops.

The conversation about Google being investigated for anti-trust reasons deals completely with their ad dominance. It has very little to do with their search dominance. However, I will say, your marketshare numbers are bogus (see: http://getclicky.com/marketshare/us/search-engines/ ).

I don't think Google has a monopoly on search, even with the dominating market position, but they may have a controlling monopoly with online ads, not to mention a corrupt standpoint on how they use them throughout their business (harvesting user data, as well as questionable usage; see other comments). I use Bing occasionally (never for programming questions because it is terrible at finding the right answer for that). Identically, Microsoft does not have a monopoly on the OS. Just look at Apple's market dominance and consistently growing market share.

Their ads service was a joke anyway, they ban you for stupid reasons and keep the money you made. Not to mention their ads are full of "click here to get a free virus" stuff.