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Google starts new battle with Barry Diller's IAC

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Key Points
  • Google has hesitated to take action against marketing practices by media conglomerate IAC that it deemed to be deceptive because of fears it would exacerbate its own antitrust scrutiny, The Wall Street Journal reported Sunday.
  • Investigators inside Google found that IAC-made extensions for Google's Chrome web browser offered some functions they didn't follow through on and steered users toward additional ads, the Journal reported, based on documents it reviewed.
  • Google faces an antitrust lawsuit by the Department of Justice alleging it has illegally used its monopoly power to tie up distribution channels for competitors in the online search market.
Michael Newberg | CNBC

Google has hesitated to take action against marketing practices by media conglomerate IAC that it deemed to be deceptive because of fears it would exacerbate its own antitrust scrutiny, The Wall Street Journal reported Sunday.

Investigators inside Google found that IAC-made extensions for Google's Chrome web browser offered some functions they didn't follow through on and steered users toward additional ads, the Journal reported, based on documents it reviewed. Google's internal report recommended "immediate removal and deactivation" of the browser extensions, according to the Journal.

While Google removed five IAC browser extensions, the report says, others remain available. People familiar with the matter told the Journal that executives including Google's Chief Legal Officer Kent Walker feared penalties against IAC may be seen as anticompetitive at a time when Google faces an antitrust lawsuit from the Department of Justice and other antitrust investigations led by attorneys general from most states.

IAC responded to the report by saying Google had already approved the browser extensions and even worked closely with IAC to make them compliant.

"Google has taken hundreds of millions of dollars from us to advertise and distribute these products in the Chrome Store. There's nothing new here — Google has used their position to reduce our browser business to the last small corner of the internet, which they're now seeking to quash," an IAC spokesperson said in a statement. "Google exercises significant control over what we do with these products. Last year we collaborated closely with Google on an extensive review and approval of our entire Chrome product line — including how products are advertised and installed, down to the font size— and all our products were again confirmed and approved this year in conjunction with their renewal of our partnership agreement."

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IAC, which owns brands including Angie's List, Investopedia and The Daily Beast, has been a top spender on Google ads in recent history, the Journal reported, based on information from Kantar Media and current and former Google employees. Expedia, which shares a chairman with IAC in Barry Diller, is also a large spender on the platform. But Expedia, along with other travel sites, has expressed the need to become less reliant on Google in light of its own forays into the travel search space.

Google faces an antitrust lawsuit by the Department of Justice alleging it has illegally used its monopoly power to tie up distribution channels for competitors in the online search market. Walker called the complaint "deeply flawed," and Google's attorneys have indicated it would challenge the claims in court.

Google's Chrome browser has already attracted scrutiny for the company's decision earlier this year to phase out support for third-party cookies used to track users and target ads. Advertising groups pushed back heavily on the plan, saying it could "choke off the economic oxygen from advertising that startups and emerging companies need to survive." Still, several analysts have said the change is not likely to have as negative an impact on advertising competitors as investors may have initially feared.

Read the full report at The Wall Street Journal.

— CNBC's Julia Boorstin contributed to this report.

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