Google has been accused of throttling competition when TradeComet.com, a business-to-business search service that connects buyers of industrial products with suppliers, filed a suit in the US District Court accusing Google of eliminating competition using unfair trade practices that violated antitrust laws.
New York-based TradeComet.com filed the antitrust lawsuit against Google when the search giant refused to stop engaging in predatory conduct to block search traffic by imposing massive, unjustified price increases.
SourceTool.com, a subsidiary of TradeComet.com, operated a thriving global business-to-business search engine enabling buyers of industrial products to easily connect with suppliers. SourceTool.com focused on a specialised type of industrial search, which it positioned as a competitor to Google's general purpose search engine.
TradeComet.com alleges that within months of launching the site, it used to get 650,000 visits per day, where it was named a '2006 Rising Star of Specialised Search' by InfoCommerce and the 'Second Fastest Growing Internet Site in the World' by Comscore.
Google initially embraced its relationship with SourceTool.com, naming it Google's 'Site of the Week'; SourceTool.com was reinvesting approximately 80 per cent of its revenue by purchasing $500,000 per month or more in Google keywords.
''With no notice, Google changed from cheerleader to tyrant when it realised we were a competitive threat,'' said Dan Savage, founder and CEO of SourceTool.com and TradeComet.com
In its complaint, TradeComet.com provides details of how Google subsequently identified SourceTool.com as a competitive threat and then engaged in illegal conduct to diminish and ultimately extinguish SourceTool.com's platform.
Google raised SourceTool.com prices by 10,000 per cent, which strangled its business, virtually overnight, citing an ambiguous quality score determined by a secretive algorithm to justify the price increase.
Google refused to consider reductions even after SourceTool.com invested the company's savings to make the changes that Google said would rectify the supposed problems.
As a result of Google flexing its monopolistic muscle, SourceTool.com said in its 38 page lawsuit, that it currently averages about one per cent of the traffic it previously had and is no longer a competitively viable business.
''SourceTool.com offered a valuable service and TradeComet.com had a thriving business before Google decided to eliminate them as a competitor,'' said Rick Rule, chair of antitrust for Cadwalader, Wickersham & Taft, LLP, and former head of the US Justice Department Antitrust Division. ''We believe this complaint has strong merit and represents a serious antitrust violation.''
Google said the company has yet not reviewed the lawsuit but maintained that advertisers have a wide choice and options to choose from the online advertising market.
But this is not the first instance when Google has been hauled to the courts for antitrust violations as in 2007, American Airlines, had sued Google for selling search words involving its name, which was used unfairly by the airline's rivals to grab business. (See: American Airlines sues Google over search word)
The airline accuses Google of selling the right to use American Airlines' trademarks and service marks or "words, phrases, or terms confusingly similar to those marks" to competitors who then direct searchers to their own web pages. It has objected to the usage of search terms such as "American Airlines" or "AA.com" to other companies for advertising.
In the same year, Michigan-based networking company Cygnus Systems had filed a lawsuit against Google, Microsoft, and Apple alleging that all three tech giants violated a patent it owns on the use of document-preview icons - or thumbnails - in operating systems. (See: Google, Microsoft, Apple sued for patent infringement)
Then again in 2008, a group of Belgian newspaper publishers filed a lawsuit seeking €49.2 million ($77.5 million) in damages for violating copyright law by publishing their articles and caching their web pages. (See: Belgian newspapers seek $77 million damages from Google for copyright violation)