Wednesday, May 11, 2011

Google Under Investigation by US Justice Department

This Tuesday had both, good and bad news for and from Google.

The good news are the new music and movie services announced at Google's annual developers conference in San Francisco. The service is called "Music Beta" and will allow select users to store up to 20,000 songs at the company's servers. The users will be able to stream the music to their computers and some smartphones. Access to movie rental service has been added the Android mobile operating system.  

The bad news is that Google is under investigation from the US Department of Justice. Specifically, Google's advertising system is being investigated. The investigation targets to find how the automated advertising system treats some unnamed advertisers, while a separate study is being conducted by the European Commission.

After reporting a net profit of $2.3bn for the first 3 months of the year, Google's Tuesday report US financial watchdog, the Securities and Exchange Commission reported a decrease to $1.8bn, after putting aside $500m to cover any potential fines resulting from the investigation of the charges.

None of the spokesmen, Google's or Justice Department's refused to make further comments. Google only stated: "Although we cannot predict the ultimate outcome of this matter, we believe it will not have a material  adverse effect on our business, consolidated financial position, results of operations, or cash flows."

After the refuse to comment by the Google spokesman, questions rise, could the investigations be the consequence of complaints by rivals ? The Europan Comission began its investigation following accusations from Google search engine rivals, including Microsoft's Bing, accusations that mention manipulations of search results in order to promote Google's own services and to discourage advertising with other search engines.

Now, if we sit back and review other major events involving Google this year, inevitably Panda comes in mind.  Once Panda was introduced, Google has been accused of bringing Microsoft-owned company visibility down by 94%. Is this investigation a consequence of Panda, or Panda's target was to actually "fix" the previous algorithm and to basically put away the tricks that hit Google's rivals.