Google faces Texas AG inquiry, settles privacy suit

Google co-founder Sergey Brin participates in a panel discussion in Mountain View, California February 9, 2010.

SAN FRANCISCO (Reuters) - Google Inc said on Friday it was the target of an investigation by the Texas Attorney General's office into the fairness of its search engine rankings.

The world No. 1 search engine company said the probe is the first by a U.S. legal authority into the fairness of its rankings, which can make or break commercial websites.

Google faces a similar probe by the European Commission, prompted by complaints from some small websites that felt they were unfairly hurt by low Google search rankings.

Texas Attorney General Greg Abbott has asked for information about complaints from a number of companies, Google said on its website. Google specifically mentioned websites operated by Foundem, TradeComet and myTriggers as challenging its results, saying they competed with the search giant.

A spokeswoman for the Texas Attorney General confirmed the probe, but would give no further details. Google said it looks forward to answering questions from the Texas attorney general.

"We recognize that as Google grows, we're going to face more questions about how our business works," Deputy General Counsel Don Harrison said in a blog post. Harrison was not available for further comment.

In its statement on Friday, Google pointed out that two of the companies are represented by attorneys who also work for Microsoft Corp, which has publicly encouraged companies to challenge Google's business practices. Microsoft did not immediately respond to a request for comment.

TradeComet CEO Dan Savage said in an email that Google is trying to "distract from its own antitrust problems by pointing to others and their lawyers."

A myTriggers spokesperson added that its concern "is just the harm to myTriggers done by Google's anti-competitive conduct and bullying tactics."

Foundem did not respond to a request for comment.

PRIVACY SUIT SETTLED

Separately, Google has settled a federal lawsuit accusing it of privacy violations in connection with its Buzz social networking service, according to a court document filed on Friday.

To settle the lawsuit brought by a Gmail user, Google will set aside $8.5 million for attorneys fees and donations to organizations focused on Internet privacy, according to the court filing.

In addition, "the settlement requires that Google undertake wider public education about the privacy aspects of Buzz," the filing said.

Launched in February, Buzz initially used an individual's email contacts from Google Gmail to build a social network of contacts that the rest of the world could see, which led to privacy concerns. Google then changed the settings so that contacts were kept private by default.

The settlement filing comes as Google also said it would simplify and update its privacy policies, according to Associate General Counsel Mike Yang on the company's website (here).

The case is: In Re Google Buzz User Privacy Litigation, 10-cv-00672, U.S. District Court, Northern District of California, San Francisco.

(Reporting by Dan Levine; Editing by Matthew Lewis, Leslie Gevirtz and Richard Chang)