By Jason Llorenz, Esq.
July 7, 2011

For months now, speculation within the media has been high that Google will face a federal investigation into alleged anti-competitive behavior.  This week, the Federal Trade Commission (FTC) announced it is moving forward and will “hit Google Inc. with subpoenas, launching a broad, formal investigation into whether the Internet giant has abused its dominance in Web-search advertising”.

Unlike previous federal inquiries surrounding the company’s mergers and acquisitions, this new probe will focus on Google’s primary source of revenue: search-advertising.  The FTC – which shares responsibility for enforcing federal antitrust laws with the Justice Department – is expected to review Google’s search business practices with an eye toward determining whether those practices provide unfairly prominent placement of its services over those of competitors.

Companies have complained that Google ranks its own services in its “natural” search results, giving it an unfair advantage over other similar competing services.  Another area of speculation is what role its competitors will play in the federal investigation, many of whom have been rankled by Google’s aggressive business tactics or may be pleased to see a major rival distracted by an arduous legal battle. Those competitors, however, must also operate in whatever regulatory environment emerges.

While the investigation may take up to a year, the end result may not be any formal charges against Google.  The company’s success has come from offering high quality products that users prefer over rival services.  The FTC’s task will be to determine whether consumers have been harmed by Google’s practices.

The larger issue here is the potential impact on America’s high-tech sector if a case against Google emerges from the investigation.  The technology sector is a bright spot in the US economy – and a hotbed of innovation and job creation.  And so new regulatory mandates and protracted uncertainty in this space calls in to question potential affects on the digital economy.

As an innovator, Google is competing against companies such as Apple and Microsoft by developing its own online software tools, and of course it has entered the wireless handheld market in partnership with Verizon and by offering its Android operating system in a variety of handsets.  In the social media landscape, Google has launched its latest response to Facebook, “Google+”, trying to fill the market’s growing communication needs.  The move provides additional “cloud” functionalities bringing together social networking capabilities with online as well as mobile computing for those with access to the smartphone app.  Not to be left out of the fun, this week, Facebook made its own “awesome” announcement by adding a Skype video-calling feature to its service.

The sector’s innovation and competition continues to benefit all Americans – particularly Latinos,  who have adopted and use social media and wireless tools at a higher rate than other Americans. While the lengthy investigation takes shape, it will be important to balance the inquiry, and any emerging regulatory activity, with potential unintended consequences.

Jason A. Llorenz, Esq. is Executive Director of the Hispanic Technology and Telecommunications Partnership (HTTP).