The City Herald

Microsoft and Google scrutinized over dominant position

European regulators are mounting pressure on Microsoft and Google to ensure that both American giants do not abuse their dominant position to suffocate competition. From Monday March 1st, more than 100 millions users of Internet Explorer in Europe will be prompted with the option to keep Microsoft’s browser or dump it for a rival.

Microsoft has decided to offer Windows users with a ballot screen to settle claims by Brussels’ antitrust authorities that the binding of Internet Explorer with Windows dumps competition. Microsoft’s operating system has 92.5% of the global market share, followed by Apple’s MAC OS X with 5.27% according to Net Applications. Bill Gate’s company has a long-running antitrust dispute in Europe, with penalties totaling almost US$2 billion.

Google is also facing claims by a handful of competitors who accuse the search engine of abusing its dominant position. The European Commission wants to examine whether Google deliberately gives websites low rankings to hamper competition. The company denies, saying results produced by its algorithm – the magical formula considered to be the secret behind Google’s business – can only be changed by legal requirements, such as in the case of child pornography or viruses.

Google is considered to have revolutionized online search by mathematically analyzing more than 200 factors – including the content of websites and how many links it has on other web pages – to present users with the most relevant results. The advertisements are placed according to a bid system in which the company that pays more receives more prominence. But Google may interfere in this ranking by an assessment of the quality of the website being advertised. By doing it, the search engine maximizes the chances of offering exactly what users was looking for.

Although much has been said about Google’s algorithm system and its efficiency, subjectivity is considered to play a significant role thus raising questions about how manipulated results can affect the ranking of competitors’ websites. By pressuring Google, the European Union hopes to gain access to how these judgments play out in hindering competition. In the meanwhile, Google remains, as Microsoft does in the operating system market, the sole leader in web searches. According to comScore, Google accounts for 70% of the global market share for online searches.

While Bing (Microsoft’s new search mechanism) and Yahoo struggle to gain more traffic, Google improves its search algorithms and firm its position in a market forecast to continue growing rapidly in the next decades. The more users it has, the easier it is for Google to refine results and deliver more relevant links. The better its search system gets, the more the Californian company can improve its advertisement targeting. This exponential cycle will guarantee Google a dominant position for business in the online search and advertising market for years to come.