Are U.S. antitrust regulators fighting to investigate Google?

Search giant shares slide on reports that federal government is seriously considering probe

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Shares of Google fell 18.69, or 3.2 percent, to 569.09 on Tuesday in response to rumors that the search giant will be the subject of a federal antitrust investigation.

This rumor has been kicking around for awhile now, but the drop in share price indicates that investors are taking it seriously.

As they should. The federal government, if reports are accurate, appears to be way past deciding whether to launch an antitrust probe. It's now determining who gets to be the lucky investigating agency.

From Reuters:

U.S. antitrust regulators may investigate Google's dominance of the Web search industry, and will settle on the agency to launch a probe once scrutiny into the company's plan to buy ITA software is done, a source told Reuters.

The Federal Trade Commission and Justice Department will decide which has more expertise and whether to launch a formal investigation once the latter wraps up the ITA probe, the source said.

Google announced last July 1 that it would buy travel-industry specialist ITA Software for $700 million. The deal sparked an outcry from travel web sites that argued Google would be able to use ITA Software -- the dominant player in the online air-travel industry -- and its own search software to monopolize online travel. For its part, Google has said it has no intention of competing with the likes of Travelocity, TripAdvisor or KAYAK.

The ITA Software investigation has been going on for at least eight months. In part that's because both Google and FairSearch.org, the coalition opposing the ITA purchase, have a lot of lobbying power in Washington. But it's also gone on because Google has yet to get a clean bill of antitrust health. Now it's inviting a larger, more sweeping U.S. probe. No wonder investors are edgy.

This is on top of a four-month-old antitrust investigation of Google by the European Commission. As BGC Partners analyst Colin Gillis told Reuters, "Google is definitely in the regulatory crosshairs."

The FTC and Justice Department are keeping mum about Google, which leaves the rest of us free to speculate. So here's my speculation: Google's dominance of the U.S. search market has earned it the "right" to be subjected to an antitrust probe, and I think the federal antitrust regulators really want to go ahead with the investigation. But they're being held back by the Obama Administration, which is palpably afraid of being seen as anti-business, especially as an election year approaches.

Maybe I'm way off, but I bet my Google theory is more accurate than Glenn Beck's.

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