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U.S. States Start Google Antitrust Probes

A handful of the biggest U.S. states has started antitrust investigations into Google, adding to the mounting regulatory pressure on the search company as federal authorities move closer to a full-blown inquiry of their own.

Attorneys-general in California, New York and Ohio have all recently begun reviews of the potential threat to online competition from Google's search dominance, according to people familiar with the investigations. The moves come in the wake of an investigation launched last year by the Texas attorney-general's office, which became the first regulator in the U.S. to weigh in.

The gathering regulatory clouds around Google in the U.S. echo the mounting inquiries against Microsoft (MSFT) that began more than a decade ago. The first investigation into the software company was also launched by Texas, before a group of other states and the Department of Justice became involved.

Microsoft eventually reached a settlement with the administration of George W. Bush and a group of states after a judge had ordered that the company be broken up.

The widening number of jurisdictions where Google is facing competition probes threatens to stretch its resources and distract its senior management in similar ways to Microsoft, one person familiar with the inquiries said. The European Commission launched its own in-depth review last year.

The states that have recently joined the inquiries into Google are still at an early stage in their deliberations, according to three people familiar with their thinking. State antitrust laws differ from federal statutes, and each other, adding to the potential legal complexity.

The European case was triggered by complaints that Google had unfairly penalized some Web sites by pushing them down the rankings in search results, and abused its dominance of search advertising.

The complaints spread to the U.S. last year when some companies complained that a move into the travel search business with the acquisition of ITA Software would give Google an unfair advantage over other travel information services on the internet.

While the Department of Justice approved the ITA deal this year, the Federal Trade Commission almost immediately began a preliminary, broad-ranging investigation into Google's power.

People who have talked to the FTC have anticipated for weeks that the agency would soon begin issuing information requests, known as civil investigative demands. Such a move would signal that its inquiries had entered a new, formal phase.

Adding to the pressure on Google in Washington, the leading Republican and Democratic figures on the Senate antitrust subcommittee have called for the company to send Larry Page, chief executive, or Eric Schmidt, chairman, to testify in a hearing about the company. Google is negotiating with the committee over sending David Drummond, its top lawyer, instead, according to a person close to the discussions.

Google refused to comment on the widening investigations, as did the FTC and the attorneys-general of New York, California, Ohio and Texas.

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