Italy's Antitrust Authority has opened an investigation into Google Italy for alleged abuse of its dominant position in the Internet search market, the Authority announced Thursday.
The inquiry has been launched in response to a complaint from the Italian Newspaper Publishers Federation (FIEG) that the use of its members' content on Google News Italia has a negative impact on their ability to attract users and advertisers, the Antitrust Authority said in a statement.
"Italian publishers, who obtain no direct remuneration for the use of their content on Google News, are allegedly unable to choose whether or not to include the news published on their Internet site on the [Google] portal," the Authority said.
"Google allegedly makes it possible for a publisher to not appear on Google News, but that allegedly involves the exclusion of the publisher's content from the Google search engine. That is a highly penalizing condition," the statement said.
The Authority provided a more detailed analysis of FIEG's complaint in a preliminary ruling published on its Web site. The document said Google News Italia provided a constantly updated news digest drawn from 250 online newspapers, magazines and news agencies, enabling visitors to click on a hypertext link and thus bypass the Italian news organization's home page, where most of its advertising is likely to be concentrated.
FIEG also complained of the lack of transparency over the algorithms that determined the ranking of the stories on Google News and could favor one media company over another. The lack of transparency harms Italian publishers who are attempting to compete with Google in the online advertising market, the document said.
"According to FIEG, Google uses the professional content produced by the publishers at huge cost, indexing it and visualizing a part of it on its pages, gathering advertising on those pages and deriving revenues thanks to that content," the Authority's report said. FIEG's complaint acknowledged there was as yet no advertising on the Google News Italia pages, but pointed out that advertisements appear on Google News pages in other countries.
It is estimated that 90 percent of Internet searches in Italy use Google's search engine, enabling Google Italy to earn revenue of €13 million (US$18.5 million) in 2007, the Antitrust Authority document said. Google's dominance of the online advertising market, both directly and as an intermediary for third parties belonging to its AdSense advertising network, potentially distorts the market, the document said.
Such dominance is liable to interfere with trade among nations belonging to the European Union and could therefore constitute a violation of article 82 of the European Community Treaty, the document said.
Google Italy Thursday confirmed it had been notified of the Authority's investigation. "We are gathering further details, but we know that the notification concerns Google News, a service that brings traffic and users to the newspapers' websites," the company said in a statement.
The antitrust investigation is due to be concluded by Oct. 15, the Authority said.
Google has other legal troubles in Italy. Four Google executives are on trial in Milan, charged with defamation and violation of Italy's privacy law for failing to prevent the posting on Google Video of a film showing the harassment of a teenager with Down syndrome by some of his classmates.