EC antitrust probe is latest clash in Google-Microsoft war

The EC has launched a case based on complaints from two companies connected to Microsoft.

The European Commission's decision to launch an antitrust investigation into Google Inc's activities has intensified that company's already heated competition with Microsoft Corp.

The EC announced late last month that it had initiated an antitrust probe into Google based on complaints from three European companies, two with connections to Microsoft.

Microsoft CEO Steve Ballmer last week acknowledged his company's role in pushing government regulators to pursue such investigations.

"We're not being silent; we're expressing some of the issues and frustrations we see. Certainly, sometimes that is unsolicited, but oftentimes, it's because we've been asked," Ballmer told an audience at the Search Marketing Expo in Santa Clara, Calif.

Microsoft's complaints to the EC are just the latest skirmish in an escalating battle between Google and Microsoft on several fronts, including the operating systems and enterprise apps markets, and the online search business in particular.

According to industry analysts, the EC investigation could slow Google's momentum by forcing its executives to shift their focus from developing new tools and moving into new markets to defending the company against the antitrust allegations.

"At the very least, this will force Google to spend time and resources complying with the investigation and mounting a legal defense," said Dan Olds, an analyst at Gabriel Consulting Group Inc.

"Google has to take this seriously, [though] at this point, we don't know whether it's going to be a mountain or a molehill," Olds added.

Over the past year or so, Microsoft has been spending a lot of money and development resources trying to poach some of Google's 60% share of the search market.

Efforts to outdo Google in the search business "could take [Microsoft] a lot of years and a massive investment," said Rob Enderle, an analyst at Enderle Group. "The disparity in market share is simply too large for them to close the gap unless Google makes a massive sustained mistake or is hit by a successful antitrust action."

Using legal maneuvers to distract Google "potentially shortens the time and the investment needed," he added.

Julia Holtz, Google's top antitrust lawyer, questioned Microsoft's motives in seeking an antitrust probe via complaints made to the EC by Ciao GmbH, a Munich-based company acquired by Microsoft in 2008, and Foundem, a Bracknell, England-based price comparison site and a member of the iComp trade group, which is largely funded by Microsoft.

"Microsoft is our competitor, and that explains many actions," Holtz said.

Dave Heiner, vice president and deputy general counsel at Microsoft, countered in a blog post that "Google hasn't been shy about raising antitrust concerns about Microsoft in the last few years. Ultimately, what's important is not who is complaining, but whether or not the challenged practices are anticompetitive."