Google raised advertising rates by 50x for some ads placed by its search rival Microsoft, and now the FTC is looking into the matter as one example of how Google might favour its own properties over those of rivals in its search results.
According to BusinessWeek, in September 2007 Microsoft bought an ad for Windows Live on the search term “Hotmail.”
Windows Live is a set of Microsoft Web properties and related software — including its competing search engine (before it was named Bing).
The ad originally cost 10 cents per click. But at some point, Google raised the rate to $5 per click.
According to BusinessWeek’s source, Google says it did this because the Windows Live page was a low-quality page. Google balances relevance, quality, and bid amount among many other factors when it determines how to place ads. But the exact algorithm by which it does this is a closely guarded secret — call it Google’s secret sauce — and rivals suspect that Google sometimes deems competing sites to be “low quality” to keep them out of search results or make advertisers pay more dearly for ads.
A source familiar with the matter confirmed that the FTC is looking at these ads, but said that it’s not the sole or primary focus. Rather, it’s part of a much broader investigation into how Google conducts its search business.
Google denies the allegations.
Earlier today, Google Chairman Eric Schmidt testified before the U.S. Senate about how Google operates, and said that the company had learned from Microsoft’s own antitrust troubles over the last 20 years (without ever calling Microsoft by name).
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