UPDATE 2-EU launches Google investigation after complaints

* Three companies complained to EU Commission in February

* Google says will work with Commission to address concerns

* Commission can levy fines up to 10 pct of sales

* EU’s Almunia says premature to say Google a problem

(Recasts, adds Almunia, Google comments)

By Foo Yun Chee and Bate Felix

BRUSSELS, Nov 30 (Reuters) - EU regulators opened a formal investigation into Google GOOG.O on Tuesday, putting pressure on the world's top Internet search engine to offer concessions to settle antitrust complaints and avert a lengthy battle like Microsoft.

The move by the European Commission came more than nine months after British price comparison site Foundem and French legal search engine alleged Google’s search algorithm demoted their sites in Web search results because they were rivals.

Microsoft-owned MSFT.O Ciao, from Bing, also filed a complaint with the European Commission about Google's standard terms and conditions.

“The (European) Commission will investigate whether Google has abused a dominant market position in online search by allegedly lowering the ranking of unpaid search results of competing services,” the EU executive said in a statement.

But Competition Commissioner Joaquin Almunia said it was premature to say there was a problem with Google’s business practices.

“I want to be very clear that this does not mean that there is definitely a problem -- it is far too early to say that,” he told a European Parliamentary hearing.

Google said it would cooperate with the regulator.

“There is always going to be room for improvement, so we will be working with the Commission to address any concerns,” a Google spokesman said.

The company defended its formula for ranking websites and said it had stopped using exclusive contracts almost two years ago.

“We built Google for users, not websites, and the nature of ranking is that some websites will be unhappy with where they rank,” the spokesman said.

“Those sites have complained and even sued us over the years, but in all cases there were compelling reasons why their sites were ranked poorly by our algorithms.”

The Commission said it would also look into allegations that Google sets exclusivity obligations on advertising partners, preventing them from placing certain types of competing ads on their websites, as well as on computer and software vendors, with the aim of shutting out competing search tools.

It would also investigate suspected restrictions on the portability of online advertising campaign data to competing online advertising platforms.

In January, Microsoft ended a decade-long battle with the Commission by agreeing to give European consumers better access to rival Internet browsers in its Windows operating system.

It has been fined a total 1.68 billion euros ($2.4 billion) for antitrust infringements in Europe.

The Commission can fine companies up to 10 percent of their global turnover for breaching EU rules. It has slapped a record 1.06 billion euros in fine on Intel INTC.O in the past for abuse of market dominance.