Google pays the price of being top dog

Google's growing power on the web has set off a round of fears among ecommerce and online media companies over the search engine company's role as “gatekeeper” with potential control over a large slice of online activity.

Last week Eric Schmidt, chief executive, was forced to issue an unusual public denial after reports spread that the search engine company was about to launch an online payment system to rival PayPal, which is owned by eBay, one of the biggest purchasers of advertising on Google.

While he said Google was planning some form of payment service, he said it was not one designed like PayPal a comment apparently intended to appease eBay, which relies for an increasing part of its web “traffic” on Google.

Meanwhile, the American Publishers Association says it is seeking a meeting with the search engine company over concerns about plans to create digital copies of all the books held in a number of big university libraries.

That plan could create a precedent that would result in publishers losing control of their work, says Allan Adler, vice-president for legal and government affairs for the trade association.

Other recent Google initiatives have also aroused fears in some quarters over how the company will exert its influence as a powerful new intermediary on the web.

For instance, the company was sued this year by Agence France Presse after the news agency objected to Google's news service providing links to its reports, and some entertainment industry executives express concerns privately about the long-term impact on TV viewing habits when people are able to use search engines to find more video on the web.

The fears about Google's growing power echo the anxiety caused by Microsoft's dominance of the web browser business in the late-1990s, says Dave Edwards, an analyst at American Technology Research.

At that time, media companies and ecommerce sites feared that the software giant would be able to use its control of the browser to control where traffic went on the internet and to charge a “toll” to ecommerce and online media and entertainment companies.

“We've surpassed the browser as the gatekeeper now the search engine is the gatekeeper,” he says.

Suranga Chandratillake, co-founder of Blinkx, which was the first to launch a TV search engine, adds: “The media companies don't want to be just a provider[of content], they want to be the place people go to [online].”

Google executives contend that, rather than “disintermediating” other media and ecommerce companies, their search engine actually benefits them by helpingthem attract a bigger audience.

The company would not comment on the AFP lawsuit, but says: “We allow publishers to opt out of Google News. Most publishers, however, want to be included in Google News because they believe it is a benefit to them and their readers.”

Commenting last month on Google's ambitions to create a search service for video clips online something that could one day provide an alternative distribution channel for TV shows and movies Mr Schmidt said: “I don't believe this displaces any of the current forms [of watching video].

“I think it's in fact additive, it generates extra demand.”

Mr Chandratillake says that the owners of video content will be in a strong position to dictate how the service is used online, since they could simply refuse to release it to distributors such as Google if they feel they are not being paid enough.

“Everyone is waiting fora good way to reacha new set of customersin a way that provides appropriate compensation for all the parties,” said Mr Schmidt.

“It's just not been invented yet. People are experimenting, I'm sure it will come.”