Google to Microsoft: "Can't Touch This!"

Jason is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Score one for the litt- - I mean BIG guy.

Google has recently ducked charges in an anti-trust investigation by the Federal Trade Commission. CNN Money’s David Goldman reports: “Google was quick to claim victory. "The conclusion is clear: Google's services are good for users and good for competition," said David Drummond, Google's chief legal officer, in a prepared statement.”

But as I am sure you know, not everyone agrees that Google is so pristine and clean.

In a related article Goldman notes that Microsoft is speaking out against Google, claiming that it is unequally distributing its access to YouTube:

“Microsoft noted that Google released superior YouTube applications for its own Android platform and Apple's iPhone, but only offers a somewhat more limited YouTube website for Microsoft's Windows Phone platform. Microsoft said it wants to release its own high-quality YouTube app, but it requires access to YouTube's metadata to do that.”

"You might think that Google would be on its best behavior given it's under the bright lights of regulatory scrutiny on two continents," wrote Dave Heiner, Microsoft's deputy general counsel, in the blog post. "However, as we enter 2013, that is not the case."

But again Google is claiming no wrong doing and this time, it has a government ruling to stand on.

Shares of Google (NASDAQ: GOOG) saw a nice bump higher after the ruling; suggesting that investors have confidence that Google will walk away cleanly from its next challenge: Europe.

But are they right?

Goldman reports in another related article that “The European Commission said it had reached preliminary conclusions based on its 18-month antitrust investigation of Google. It found four ways in which Google potentially violates anti-monopoly laws in the region.”

That’s a lot to dodge without coming out with at least a scratch and you know what they say about blood in the water… A strong hit against Google in Europe could create a domino effect of negative implications.

If Google were to be found guilty of any of the four charges mentioned by the European Commission (which included references to Google’s advertizing, content gathering and listing services) then one of first sounds you would hear would be Microsoft (NASDAQ: MSFT) screaming “Hooray!”

The company, maker of Windows 8, rival search engine Bing and the Google-shunned Windows Mobile (more on this later) has been the captain of the cheering squad against Google’s business tactics. The squad also includes other companies whose services compete with Google. These companies’ services range from reviews and local listings to shopping and travel. If Google is dealt a swift blow to the head in Europe you can be assured these companies will cry out for an encore from the Federal Trade Commission hear in the Good ol’ U. S. of A. 

This could be why Google is in hopes for a settlement and investors who are long Google should hope for the same. If Google becomes open to heavier government regulation you can be sure the GOOG ticker will register the pain before the gavel falls.

Will a Google loss really mean a Bing Win?

The evidence doesn’t suggest so. Google is up over Bing "Big Time" in the search market here in the U.S. and abroad. Unless there is some severe spanking by the European Commission (which investors don’t seem to be fretting over at this point given the stocks current action) a minor reprimand would only serve as small hurdle to Google who is already laps ahead of Bing.

What should you and your portfolio do about this?

For now rejoice with those that rejoice and mourn with those that mourn. Until the European Commission or a damaging settlement says otherwise Google is an anti-trust busting champion whose is enjoying the spotlight and Microsoft is a struggling tech giant trying not to fall over. Investors would be wise to plan their long and short strategies accordingly.


MindOverMarket has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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