In its roadshow presentation released online today, the Vegas-based company, which manages 42,000 hotel rooms, said one of the biggest opportunities it had going forward was on the Internet, including social games and real-money gaming.

Mitch Garber, the CEO of the company’s interactive division, said it recently launched Caesars Casino in beta on Facebook, making it the first time that a brand name was used to compete in the casino genre.

Garber believes that the game, which includes video slots, blackjack and roulette, will displace Double Down Casino as one of the category leaders. The developer of Double Down Casino, Double Down Interactive, was recently acquired by video poker giant International Game Technology for $500 million.

Garber said over the past 13 months, so much of the business has changed.

With the sale of Double Down, and the visibility into social games leader Zynga, which went public in December, and the release of more information this week by Facebook in its public filing, there are lots of verifiable signs that this is a big business.

For instance, on Wednesday, Facebook revealed that Zynga made up 12 percent of its overall revenues. Zynga’s Poker game is the leading casino-based game on Facebook, and more recently, it launched Bingo as part of a casino series.

Over the past two days, Zynga’s stock price has soared based on the Facebook news, rising 8.11 percent today alone to close at $13.39 a share.

Caesars said yesterday it was applying to be listed on the Nasdaq market under the symbol “CZR,” and that it was planning to sell 1.8 million shares between $8 and $10 apiece.

Caesars Chairman, CEO and President Gary Loveman was positive about a number of aspects of the business, as he should be in a presentation to potential investors, but one of the highlights was online gaming.

“This is a big deal for us,” he said, calling out the opportunity for gambling online, across both mobile and social networks and across multiple languages.

In addition to launching Caesars Casino on Facebook, the company has been building up its online gaming chops for some time.

Garber said this past year the company purchased Israel-based Playtika, which operates Slotomania, a very popular slots game on Facebook, iPhone and iPad. It also has two software partners that will enable it to expand into online gambling in the U.S. as soon as it becomes legal.

“We aren’t aware of any other bricks and mortar company that has the online experience that is preparing themselves as we are,” he said.

However, Zynga told All Things D it was currently seeking partnerships to pursue real-money gaming, and MGM Resorts also recently unveiled a plan to partner with online poker company Bwin.Party Digital Entertainment.

Of course, the big driver for everyone is that the laws are changing in the U.S., which makes it nearly a foregone conclusion that online gambling — at least some games — will become legal over the next year.

Late last year, the Department of Justice issued a new interpretation of the Wire Act of 1961. Under the new ruling, it interprets the act as only outlawing bets on sporting events — not all events and contests.

With that clarification in place, it will now be up to every state to pass legislation outlining operating procedures.

“We see the odds being close to 100 percent,” Garber said. “It’s just a matter of whether it will be federally regulated or state by state. The states are already doing it, but the federal government is getting their act together, too.”

The company has confirmed to All Things D that it is actively investigating several opportunities, and is in talks with several partners about gambling on the Internet.

A Zynga spokesperson provided this statement to AllThingsD:

“We build games and experiences that our players want and love. Zynga Poker is the world’s largest online poker game with more than 7 million people playing every day and over 30 million each month. We know from listening to our players that there’s an interest in the real money gambling market. We’re in active conversations with potential partners to better understand and explore this new opportunity.”

As with any new entrant in the space, Zynga will have to fulfill several requirements, meaning any major rollout is still months away.

The San Francisco-based social games maker will have to wade through a maze of state, national and international regulations. It will have to secure the correct licenses, and it also needs the right technology to make betting over the Internet secure.

For either of these last two requirements, a partnership or acquisition of an online gambling organization or other technology would make the most sense, instead of starting from scratch.

However, the effort could easily pay off.

Zynga was one of the first online gaming companies on Facebook, and continues to dominate the platform today. If it is able to get its toe in the door, just as the laws change in the U.S., it could be a leader yet again.

Back in October, Zynga first started showing broad interest in the casino category.

Zynga founder and CEO Mark Pincus announced at a press event that the company was going to launch Zynga Casino, which would serve as a single destination on Facebook to build off its strong brand in poker.

Its first new game, which has not launched yet, will be bingo.

Until now, the company’s efforts have been limited to building social and mobile games that are given away for free and monetized through the sale of virtual goods.

Getting users to make bets and part with real money could prove difficult, even for a company that has so many dedicated fans.

One thing Zynga has going for it is that social games are frequently compared to gambling because of their addictive nature — both lure consumers into spending a few more dollars to continue playing.

The casino genre has also been quietly racking up big numbers on Facebook.

Besides Zynga Poker, which is the most popular poker game on Facebook, and one of the company’s longest standing titles, there are many other sleeping giants. Sean Ryan, Facebook’s director of game partnerships, has even called them “unbelievable monsters.”

Said Ryan: “It turns out that people are completely okay winning virtual currency that they can never cash out.”

If players actually have the chance to win money, who knows the size of the opportunity?

A Facebook spokesperson said the company does not necessarily see a future for gambling on the social network. “We don’t have any plans to get into real-money gambling,” she said.

It’s unclear if that eliminates others from experimenting. In the meantime, it hasn’t stopped game makers from exploring the category or the concept.

Last week, Seattle-based Double Down Interactive, which was named by Facebook as one of the most popular game makers of 2011, was acquired by video poker giant International Game Technology for $500 million. It has 4.7 million monthly active users playing a variety of games, including blackjack, slots, video poker and roulette.

The deal closely followed Caesars Entertainment’s purchase of Playtika, an Israeli game company known for its Facebook title Slotomania. Caesars bought the company in two stages, the first of which was rumored to be purchased for up to $90 million.

Caesars, which filed to go public in November, declined to comment because it is currently in its quiet period.

However, some of its plans were revealed in a document filed with the Securities & Exchange Commission. It said its Caesars and World Series of Poker brands are dedicated to online gaming, and will take advantage of real-money gaming as it becomes legalized. Right now, Caesars Entertainment offers games “for fun” in jurisdictions where online gambling is not yet legal, but has identified the legalization of online poker in the U.S. as “the largest opportunity in online gaming in the near term.”

Still, the biggest hurdle is the law.

Internationally, several countries have permitted gambling for some time, and those areas represent the most immediate opportunities.

But there are signs of the U.S. beginning to open up, too. On the day before Christmas, the Department of Justice gave the online gambling community an early present, according to a blog post written by Nelson Rose, a professor and lawyer.

“President Barack Obama’s administration has just declared, perhaps unintentionally, that almost every form of intra-state Internet gambling is legal under federal law, and so may be games played interstate and even internationally,” Rose wrote.

Essentially, what the Justice Department did was to issue a new interpretation of the Wire Act of 1961. Under the new ruling, it interprets the act as only outlawing bets on sporting events — not all events and contests, according to an article in the San Francisco Chronicle.

With that clarification in place, it will now be up to every state to pass legislation outlining operating procedures. So far, Nevada and the District of Columbia have moved quickly to enact laws. To get other state laws passed could be a lengthy process, especially during an election year.

In the meantime, launching games only in Nevada and D.C. doesn’t represent the big opportunity everyone was hoping for.

To be competitive against Caesars and IGT, Zynga may have to partner or acquire companies that already have the licenses in place or the necessary expertise.

Some of the more obvious candidates include Bwin, which operates PartyGaming.com and is traded on the London Stock Exchange; Betfair, and other operators, like Bodog, Bet365 and 888.com. Many are based in the U.K. and handle a variety of casino games and sporting contests there.

The entrance into a new market, such as gambling, would take substantial resources, and Zynga has them thanks to its public offering. In December, it raised $1 billion, making it the largest Internet IPO since Google.

So, will Zynga be the next “unbelievable monster?” Clearly, it is willing to try.

With the Federal Communications Commission threatening to block the deal, and the Justice Department already suing to do the same, AT&T last month pulled its application before the FCC, in hopes that a court would take its side in the DOJ case. The company said it would deal with the FCC once a court heard its case with the Justice Department.

However, the DOJ one-upped the telecom giant on Friday, arguing that the court case should be put on hold, now that AT&T has yanked its application to the FCC to acquire T-Mobile’s licenses.

Check.

Your move, AT&T.

Update: For its part, AT&T general counsel Wayne Watts says the company is “anxious to bring to the American consumer the benefits of increased wireless network capacity and efficiencies that can only arise from combining the resources of AT&T and T-Mobile USA,” and is “eager” to present its case in court.

Industry sources expect the Department of Justice, who had been reviewing the $400 million transaction for antitrust violations, to approve the deal in the next couple weeks, perhaps as early as this Friday.

It’s unclear whether the DOJ will impose any restrictions on the deal. But Web ad players, reading tea leaves and DOJ body language, are betting the sale goes through unhindered. No comment from Google; I’ve yet to hear back from a Department of Justice rep. UPDATE: “Our investigation is ongoing,” a DOJ spokeswoman emails.

Admeld helps publishers sell their ads by negotiating bids from multiple buyers, and is a big player in the complicated and fractured display advertising business. Google, which has long been dominant in search advertising, has been steadily increasing its presence in display ads via acquisitions like DoubleClick and Invite Media.

So it was easy to see why regulators might give another big deal some scrutiny. In fact, at this point, every big deal Google makes will get a hard look from Washington, which is already pursuing a broad antitrust investigation. But so far regulators have yet to stop a deal, including Google’s $750 million acquisition of AdMob and its more recent deal for ITA. Next up: The $12.5 billion Googorola deal.

The DOJ first began looking at Google-Admeld six months ago, and in late July extended their review. At the time, Google published a blog post explaining why the company couldn’t dominate display ads, even while its executives told Wall Street it had big ambitions in display.

More recently, Google has gotten help making its case from competitors. Facebook, for instance, is already ahead of Google in the display ad market, at least by the estimation of some analysts.

And Yahoo, which still competes fiercely with Google for display ad dollars, has put together a battle plan designed specifically to take on Google: It has lined up a coalition of big Web players with AOL and Microsoft, and it has begun pulling back its inventory from third-party ad buyers, including Google’s Invite Media.

(Image credit: iStockphoto/alexsl)

The Department of Justice has already filed suit seeking to block the deal, which requires approval from both agencies.

FCC Chairman Julius Genachowski has circulated a draft opinion that would seek to have a hearing before an administrative law judge, though the commission is likely to hold that hearing only after the DOJ suit is decided. If the Justice Department is successful in its effort, the FCC move would be moot. However, AT&T now needs to go 2-for-2 if it hopes to complete the deal.

The decision is not shocking, given that the FCC had indicated it shared some of the Justice Department’s concerns.

However, what is noteworthy is just how strong the agency’s concerns are.

FCC officials said on Tuesday that the agency found in its review not only that the deal would hurt competition, but also that it represents an unprecedented reduction in competition. In every market except Omaha (where T-Mobile does not offer service), the agency found that the merger would reduce competition to a meaningful degree.

The agency staff also rejected AT&T’s claims that the deal would lead to a faster or more complete rollout of 4G. And, rather than create jobs, the FCC staff believes approval of the deal would actually lead to fewer U.S. jobs.

AT&T, naturally, said it was not thrilled with the decision.

“The FCC’s action today is disappointing,” said Larry Solomon, SVP of corporate communications. “It is yet another example
of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the U.S. economy desperately needs both. At this time, we are reviewing all options.”

In addition to setting up a possible second court battle, the FCC findings also mean that any proposed settlement would have to satisfy two agencies, both of whom seem to see little merit — and lots of harm — in the deal. Oh yeah, Sprint and C-Spire Wireless have also filed suits of their own.

In a regulatory filing, Motorola Mobility said: “On September 28, 2011, Motorola Mobility Holdings, Inc. and Google Inc. each received a Request for Additional Information and Documentary Material from the Antitrust Division of U.S. Department of Justice (DOJ) regarding the proposed merger between the companies. The companies intend to cooperate fully and respond expeditiously to the DOJ. The transaction is currently expected to close by the end of 2011 or in early 2012.”

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The department filed an amended legal complaint in a Washington D.C. federal court to indicate that state attorneys general from New York, Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania have joined the case.

“We are pleased that these states have joined the department in its lawsuit,” the department said in a written statement. “Together, we will seek to protect consumers from the anticompetitive harm that would result from this proposed transaction.”

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Sprint has already voiced its objections to the deal, and last week the Department of Justice filed its own suit seeking to block the deal. In a statement, Sprint said its suit is being filed as a related suit to the DOJ case.

In announcing the suit, Sprint reiterated its standard arguments against the deal, saying it would both hurt competition and harm consumers.

“Sprint opposes AT&T’s proposed takeover of T-Mobile,” Sprint litigation VP Susan Z. Haller said in a statement. “With today’s legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal.”

An AT&T representative was not immediately available for comment.

In the wake of last week’s move by the Justice Department, both AT&T and T-Mobile parent Deutsche Telekom vowed to fight on. In addition to needing to prevail in court in the Department of Justice suit, the companies also need approval from the Federal Communications Commission, which said last week that it too has serious concerns about the deal.

Update: In a statement, AT&T criticized Sprint’s suit and reiterated its case for the merger.

“This simply demonstrates what we’ve said all along – Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers,” AT&T said. “We of course will vigorously contest this matter in court as AT&T’s merger with T-Mobile USA will: help solve our nation’s spectrum exhaust situation and improve wireless service for millions; allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population; and result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.”

Also, here’s a copy of the suit:

Sprint Suit to Block AT&T – T-Mobile

In a surprisingly early and decisive move, the Department of Justice on Wednesday filed suit to block AT&T’s planned $39 billion purchase of T-Mobile USA. Justice Department attorneys said that they are concerned the deal will lessen competition, ultimately leading to higher prices for consumers.

Experts say the broad worry about the reduction in competition makes it tough to imagine what sort of sweeteners the companies could create to make the deal easier to swallow.

“Given the nature of the specific concerns articulated by the DOJ, those types of concerns are hard to address through concessions,” said Maury Mechanick, a telecommunications attorney with White & Case.

As a result, it would appear that AT&T and T-Mobile will have to weigh whether they are willing endure an all-out court fight to try to preserve the deal.

And oh, what a fight it would be. In order for the deal to go forward, AT&T would have to convince a federal court to see things its way as well as prevail on any appeals, a process that is uncertain, not to mention costly and time-consuming. Even if they ultimately prevail in court, the companies still need the approval of the Federal Communications Commission.

Both FCC Chairman Julius Genachowski and Commissioner Michael Copps issued statements on Wednesday saying that they, too, have concerns about the deal. While the FCC review is separate from the one being done by the Justice Department, the statements indicate the two agencies seem to be on the same page when it comes to the deal.

One FCC insider noted that the agency has never approved a deal that the Justice Department sued to block.

For now, both AT&T and T-Mobile parent Deutsche Telekom say they are willing to fight for the deal. AT&T has asked for an expedited hearing on the matter.

As reported in March around the time the merger was first proposed, T-Mobile, a division of Deutsche Telekom, stands to gain about $3 billion in break-up fees should the deal fail to close. AT&T would also give T-Mobile certain wireless spectrum that’s not needed for the rollout of its next-generation wireless network.

While AT&T has said it plans to fight the action in court, the sudden move by the Justice Department and the fact that the Federal Communications Commission — which would also have to sign off on the deal — has yet to weigh in on it, make it extremely unlikely that the merger will ever be consummated, says James Ratcliffe, a telecom analyst with Barclays Capital in a note to clients today. He points out that, historically, when they challenge mergers in court, the agencies tend to win about 60 percent of the time.

“We believe that the deal is by no means dead, as the DOJ has stated that the ‘door is open’ for AT&T to propose remedies, but the fact that the DOJ took this strong step this early in the process makes the probability of completion much lower,” he wrote. “We now view the probability of success at 35-40%, down from our previous 75% view.”

One of the primary arguments in the complaint (the original filing is embedded below via Scribd) focuses on government and enterprise customers. Where critics of the deal would charge that the only notable competitors to AT&T and T-Mobile are Sprint and Verizon Wireless, AT&T management would rebut that Leap and MetroPCS are also players. The DOJ complaint discounts that argument, especially with regard to business and government customers. Leap and MetroPCS are really regional players, the DOJ says, and so corporations and government agencies with many offices around the country can only realistically consider national carriers, the number of which would be reduced to three were the deal approved.

“T-Mobile makes its presence felt competing head to head with AT&T and other carriers for a number of accounts, winning business in some cases and often pushing prices lower when it does not,” the DOJ’s complaint reads. “The merger’s elimination of T-Mobile as an aggressive competitor would likely result in fewer choices and higher prices for enterprise and government customers.”

And while the DOJ has drawn its legal line in the sand, it’s not the only agency yet to be heard from. The Federal Communications Commission would also have to sign off on the deal for it to be approved. Its chairman, Julius Genachowski, issued a carefully worded statement that gives a strong hint that it will ultimately oppose the merger. “Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition,” Genachowski said.

In a conference call with reporters today, Harold Feld, the legal director of PublicKnowledge, a telecom advocacy group that has opposed the merger, speculated that the FCC will likely send the matter to an administrative law hearing, which he called “the kiss of death” for mergers. “By the time that procedure would be finished, T-Mobile would have taken its breakup fee and gone and built an entirely new network,” he said.

So on what legal basis might AT&T and T-Mobile fight the case? The DOJ is using some new market analysis techniques that haven’t been used in antitrust cases before, says Barclays’s Ratcliffe. “Traditionally, the DOJ has used regional impact analysis to study the impact of wireless mergers, and it does so here again,” he writes. “In addition, however, the DOJ is also viewing the market as being national, a comparatively new approach, which might be more open to challenge in the courts.”

AT&T CEO Randall Stephenson has promised to fight it, and continued to argue that the deal will bring real benefits to spectrum management nationwide, and create jobs. Deutsche Telekom said it will join the fight, too.

Justice-ATT-TMobile-Complaint

In television ads, the No. 4 U.S. carrier crafted an image of itself as an attractive woman in a pink dress, only too happy to aid customers with faster service and cheaper prices. AT&T and other rivals were portrayed as stuffy men in suits, literally looking to grab every nickel and dime from consumers. The ads were so popular that merger opponents even seized on the metaphor.

When it came time to argue in favor of the acquisition, AT&T painted a different picture, arguing T-Mobile was actually a weak player, lacking the needed resources and spectrum to compete. AT&T aimed to paint T-Mobile as just one of many competitors in a field that included a range of regional players such as Metro PCS and Cricket.

“Sprint, MetroPCS, and Leap are rapidly gaining customers while T-Mobile USA is losing customers, especially contract customers,” AT&T maintained in a June filing with the Federal Communications Commission. “Those providers — along with U.S. Cellular, Cellular South, and a host of others — can rapidly fill any competitive gap T-Mobile USA leaves upon the completion of this transaction.”

By bringing a suit to stop the deal on Wednesday, government regulators made clear how they saw things. Wednesday’s legal filing borrows much from T-Mobile’s positioning of itself as the scrappy carrier ensuring competition.

“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” Acting Assistant Attorney General Sharis A. Pozen said in a statement announcing the DOJ suit to block the deal. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”

To be sure, federal regulators had plenty of more substantive arguments against the deal, including filings from Sprint and a number of consumer groups. But much of the decision essentially boils down to whether T-Mobile is a significant fourth competitor, as its ad campaign had argued, or if, as AT&T was arguing, T-Mobile was a weak player whose acquisition would not substantially harm competition.

And, when forced to make that decision, regulators were clear. They went with the lady in the pink dress over the guy in the suit.

In a letter to the Federal Communications Commission and attorney general Tuesday, Franken said the deal would lead to “an effective duopoly” in the national wireless market and inevitably lead to both higher prices and job losses.

“My examination of this transaction has led me to conclude that AT&T’s acquisition of T-Mobile would substantially lessen competition in the already highly concentrated wireless communications market,” Franken said in the filing. “In addition to my antitrust concerns, I am convinced that this type of horizontal consolidation does not serve the public interest.”

Franken’s objections follow that of Wisconsin Democrat Herb Kohl, who went public with his opposition to the deal last week.

The deal needs the blessing of both the FCC and the Department of Justice. Sprint has vocally opposed the deal, along with a handful of public interest groups and smaller carriers, while AT&T has won backing from a number of high-tech firms, labor groups and others. AT&T said in its earnings call last week that it remains confident it will win approval for the deal.

After an antitrust review, the Justice Department concluded that Google’s potential ownership of the patents wouldn’t raise any major competitive concerns, these people said. The clearance could give Google’s bid a leg-up against rivals, part of its effort to acquire an arsenal of patents that could help it ward off lawsuits by rivals.

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AT&T is hoping Silicon Valley will come out in support of the deal—or at least not strenuously oppose it—as the Department of Justice and Federal Communications Commission get deeper into their review of the transaction.

Regulators likely will be interested in hearing how the acquisition could impact the Valley, a key source of innovation that has a lot at stake in the deal. Many large technology companies and start-ups alike are betting their futures on wireless technology.

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The Internet company disclosed in a cryptic regulatory filing earlier this week that it was setting aside $500 million to potentially resolve a case with the Justice Department. A payment of that size would rank high among the criminal or civil penalties paid by companies in disputes with the U.S. government.

Google gave virtually no details in its filing about the probe, saying only that it involved “the use of Google advertising by certain advertisers.”

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Microsoft’s legal eagle Brad Smith didn’t even bother to pretend the software giant’s filing of a formal antitrust complaint against Google with the European Commission wasn’t a wee bit ironic.

Wrote Smith in a blog post late last night:

“There of course will be some who will point out the irony in today’s filing. Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly. This is the first time Microsoft Corporation has ever taken this step.”

But take it the company did, noting: “Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law.”

Google, no surprise, disagreed, via a statement from a spokesman.

“We’re not surprised that Microsoft has done this, since one of their subsidiaries was one of the original complainants. For our part, we continue to discuss the case with the European Commission and we’re happy to explain to anyone how our business works.”

Here is the whole Microsoft post, in which Smith outlines Microsoft reasons for its action:

Adding our Voice to Concerns about Search in Europe

30 Mar 2011 9:00 PM

Posted by Brad Smith

Senior Vice President & General Counsel, Microsoft Corporation

Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law. We thought it important to be transparent and provide some information on what we’re doing and why.

At the outset, we should be among the first to compliment Google for its genuine innovations, of which there have been many over the past decade. As the only viable search competitor to Google in the U.S. and much of Europe, we respect their engineering prowess and competitive drive. Google has done much to advance its laudable mission to “organize the world’s information,” but we’re concerned by a broadening pattern of conduct aimed at stopping anyone else from creating a competitive alternative.

We’ve therefore decided to join a large and growing number of companies registering their concerns about the European search market. By the European Commission’s own reckoning, Google has about 95 percent of the search market in Europe. This contrasts with the United States, where Microsoft serves about a quarter of Americans’ search needs either directly through Bing or through our partnership with Yahoo!.

At Microsoft we’ve shown that we’re prepared to work hard and invest literally billions of dollars annually to offer Bing, a search service that many now regard as the most innovative available. But, hard work and innovation need a fair and competitive marketplace in which to thrive, and twice the Department of Justice has intervened to thwart Google’s unlawful conduct from impeding fair competition. In 2008 the DOJ moved to file suit against Google for its unlawful attempt to tie up and set search advertising prices at Yahoo!, causing Google to back down. And last year the DOJ formally objected to Google’s efforts to monopolize book content, a position affirmed by a federal district court in New York just last week. Unfortunately, even this has not stopped the spread by Google of new and disconcerting practices in the United States.

As troubling as the situation is in United States, it is worse in Europe. That is why our filing today focuses on a pattern of actions that Google has taken to entrench its dominance in the markets for online search and search advertising to the detriment of European consumers.

How does it do this? Google has built its business on indexing and displaying snippets of other organizations’ Web content. It understands as well as anyone that search engines depend upon the openness of the Web in order to function properly, and it’s quick to complain when others undermine this. Unfortunately, Google has engaged in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.

On PCs it is usually not difficult for people to navigate to any search engine. Google in fact makes this point virtually every time someone raises antitrust concerns about their practices. Their defense ignores the hugely important fact that there are many other important ways that search services compete. Search engines compete to index the Web as fully as possible so they can generate good search results, they compete to gain advertisers (the source of revenue in this business), and they compete to gain distribution of their search boxes through Web sites. Consumers will not benefit from clicking to alternative sites unless all search engines have a fair opportunity to compete in each of these areas.

Our filing details many instances where Google is impeding competition in these areas. A half-dozen examples below help illustrate some of our concerns.

First, in 2006 Google acquired YouTube–and since then it has put in place a growing number of technical measures to restrict competing search engines from properly accessing it for their search results. Without proper access to YouTube, Bing and other search engines cannot stand with Google on an equal footing in returning search results with links to YouTube videos and that, of course, drives more users away from competitors and to Google.

Second, in 2010 and again more recently, Google blocked Microsoft’s new Windows Phones from operating properly with YouTube. Google has enabled its own Android phones to access YouTube so that users can search for video categories, find favorites, see ratings, and so forth in the rich user interfaces offered by those phones. It’s done the same thing for the iPhones offered by Apple, which doesn’t offer a competing search service.

Unfortunately, Google has refused to allow Microsoft’s new Windows Phones to access this YouTube metadata in the same way that Android phones and iPhones do. As a result, Microsoft’s YouTube “app” on Windows Phones is basically just a browser displaying YouTube’s mobile Web site, without the rich functionality offered on competing phones. Microsoft is ready to release a high quality YouTube app for Windows Phone. We just need permission to access YouTube in the way that other phones already do, permission Google has refused to provide.

Third, Google is seeking to block access to content owned by book publishers. This was underscored in federal court in New York last week, in the decision involving Google’s effort to obtain exclusive and unfettered access to the large volume of so-called “orphan books–books for which no copyright holder can readily be found. Under Google’s plan only its search engine would be able to return search results from these books. As the federal court said in rejecting this plan, “Google’s ability to deny competitors the ability to search orphan books would further entrench Google’s market power in the online search market.” This is an important initial step under U.S. law, but it needs to be reinforced by similar positions in Europe and the rest of the world.

Fourth, Google is even restricting its customers’–namely, advertisers’–access to their own data. Advertisers input large amounts of data into Google’s ad servers in the course of managing their advertising campaigns. This data belongs to the advertisers: it reflects their decisions about their own business. But Google contractually prohibits advertisers from using their data in an interoperable way with other search advertising platforms, such as Microsoft’s adCenter.

This makes it much more costly for Google’s advertisers to run portions of their campaigns with any competitor, and thus less likely that they will do so. That is a significant problem because most advertisers figure that they have to advertise first with Google. If it’s too expensive to port their advertising campaign data to competing advertising platforms, many won’t do it. Competing search engines are left with less relevant ads, and less revenue. And while this restraint isn’t visible to consumers, its effects are nonetheless felt across the Web. Advertising revenue is the economic propellant fueling the billions of dollars needed for ongoing search investments. By reducing competitors’ ability to attract advertising revenue, this restriction strikes at the heart of a competitive market.

Fifth, this undermining of competition is reflected in concerns that go beyond Google’s control over content. One of the ways that search engines attract users is through distribution of search boxes through Web sites. Unfortunately, Google contractually blocks leading Web sites in Europe from distributing competing search boxes. It is obviously difficult for competing search engines to gain users when nearly every search box is powered by Google. Google’s exclusivity terms have even blocked Microsoft from distributing its Windows Live services, such as email and online document storage, through European telecommunications companies because these services are monetized through Bing search boxes.

Finally, we share the concerns expressed by many others that Google discriminates against would-be competitors by making it more costly for them to attain prominent placement for their advertisements. Microsoft has provided the Commission with a considerable body of expert analysis concerning how search engine algorithms work and the competitive significance of promoting or demoting various advertisements.

Over the past year, a growing number of advertisers, publishers, and consumers have expressed to us their concerns about the search market in Europe. They’ve urged us to share our knowledge of the search market with competition officials. As they’ve pointed out, the stakes are high for the European economy. On any given day, more than half of all Europeans use the Internet, and more than 90 percent of them look for information about goods and services on the Web. Indeed, the European Commission’s Digital Agenda made clear that commerce is moving online, where two-thirds of Europeans begin their shopping process. It’s therefore critical that search engines and online advertising move forward in an open, fair and competitive manner.

There of course will be some who will point out the irony in today’s filing. Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly. This is the first time Microsoft Corporation has ever taken this step. More so than most, we recognize the importance of ensuring that competition laws remain balanced and that technology innovation moves forward.

We readily appreciate that Google should continue to have the freedom to innovate. But it shouldn’t be permitted to pursue practices that restrict others from innovating and offering competitive alternatives. That’s what it’s doing now. And that’s what we hope European officials will assess and ultimately decide to stop.

Please see this disclosure related to me and Google.

The Amber Alert program has helped find 525 abducted children in the past 15 years. Its methods of communication include radio, television, digital billboards and text messaging. The idea of adding Facebook is to spread notifications to more people and more quickly in the crucial hours after a child is abducted.

You can find a directory of the Facebook Amber Alert pages here (it looks like there was a previous independently developed Facebook application of the same name that is still leading search results, for the time being). Facebook is also contributing 50 million advertising impressions to promote the program.

Please see the disclosure about Facebook in my ethics statement.

Completists will still need to hear from the Department of Justice, which is also reviewing the transaction, but since both Comcast and NBC announced yesterday that they expected the deal to close in January, it’s hard to imagine there’s much in the way of a surprise coming.

It would be great to tell you what restrictions the FCC wants, but the government agency won’t say so publicly, at least for now.

But since a document with the FCC’s proposed restrictions is currently being circulated to officials at Comcast and GE-owned NBC, the information should get out sooner than later.

The FCC also held a “background” press conference on the deal this morning, in which it asked participants not to quote government officials directly. That’s not uncommon in Washington, but that doesn’t make it any less astonishing: The FCC knows about Twitter, right?

Still, in this case, that works out just fine, since FCC officials didn’t provide direct answers to any questions.

The strategy is expected to be unveiled in a report being issued by the U.S. Commerce Department in coming weeks, these people said. The report isn’t yet final and could change, these people said.

In a related move, the White House has created a special task force that is expected to help transform the Commerce Department recommendations into policy, these people said. The White House task force, set up three weeks ago, is led by Cameron Kerry, the brother of Sen. John Kerry (D., Mass.) and Commerce Department general counsel, and Christopher Schroeder, assistant attorney general at the Department of Justice.

The initiatives would mark a turning point in Internet policy. Recent administrations typically steered away from Internet regulations out of concern for stifling innovation. But the increasingly central role of personal information in the Internet economy helped spark government action, according to people familiar with the situation.

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The official release below:

JUSTICE DEPARTMENT REQUIRES SIX HIGH TECH COMPANIES TO STOP ENTERING INTO ANTICOMPETITIVE EMPLOYEE SOLICITATION AGREEMENTS

Settlement Preserves Competition for High Tech Employees

WASHINGTON — The Department of Justice announced today that it has reached a settlement with six high technology companies–Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar–that prevents them from entering into no solicitation agreements for employees. The department said that the agreements eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities.

The Department of Justice’s Antitrust Division filed a civil antitrust complaint today in U.S. District Court for the District of Columbia, along with a proposed settlement that, if approved by the court, would resolve the lawsuit.

According to the complaint, the six companies entered into agreements that restrained competition between them for highly skilled employees. The agreements between Apple and Google, Apple and Adobe, Apple and Pixar and Google and Intel prevented the companies from directly soliciting each other’s employees. An agreement between Google and Intuit prevented Google from directly soliciting Intuit employees.

“The agreements challenged here restrained competition for affected employees without any procompetitive justification and distorted the competitive process,” said Molly S. Boast, Deputy Assistant Attorney General in the Department of Justice’s Antitrust Division. “The proposed settlement resolves the department’s antitrust concerns with regard to these no solicitation agreements.”

In the high technology sector, there is a strong demand for employees with advanced or specialized skills, the department said. One of the principal means by which high tech companies recruit these types of employees is to solicit them directly from other companies in a process referred to as, “cold calling.” This form of competition, when unrestrained, results in better career opportunities, the department said.

According to the complaint, the companies engaged in a practice of agreeing not to cold call any employee at the other company. The complaint indicates that the agreements were formed and actively managed by senior executives of these companies.

The complaint alleges that the companies’ actions reduced their ability to compete for high tech workers and interfered with the proper functioning of the price-setting mechanism that otherwise would have prevailed in competition for employees. None of the agreements was limited by geography, job function, product group or time period. Thus, they were broader than reasonably necessary for any collaboration between the companies, the department said.

The department said in its complaint:

Beginning no later than 2006, Apple and Google executives agreed not to cold call each other’s employees. Apple placed Google on its internal “Do Not Call List,” which instructed employees not to directly solicit employees from the listed companies. Similarly, Google listed Apple among the companies that had special agreements with Google and were part of the “Do Not Cold Call” list;

Beginning no later than May 2005, senior Apple and Adobe executives agreed not to cold call each other’s employees. Apple placed Adobe on its internal “Do Not Call List” and similarly, Adobe included Apple in its internal list of “Companies that are off limits”;

Beginning no later than April 2007, Apple and Pixar executives agreed not to cold call each other’s employees. Apple placed Pixar on its internal “Do Not Call List” and senior executives at Pixar instructed human resources personnel to adhere to the agreement and maintain a paper trail;

Beginning no later than September 2007, Google and Intel executives agreed not to cold call each other’s employees. In its hiring policies and protocol manual, Google listed Intel among the companies that have special agreements with Google and are part of the “Do Not Cold Call” list. Similarly, Intel instructed its human resources staff about the existence of the agreement; and

In June 2007, Google and Intuit executives agreed that Google would not cold call any Intuit employee. In its hiring policies and protocol manual, Google also listed Intuit among the companies that have special agreements with Google and are part of the “Do Not Cold Call” list.

The proposed settlement, which if accepted by the court will be in effect for five years, prohibits the companies from engaging in anticompetitive no solicitation agreements. Although the complaint alleges only that the companies agreed to ban cold calling, the proposed settlement more broadly prohibits the companies from entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, or otherwise competing for employees. The companies will also implement compliance measures tailored to these practices.

Today’s complaint arose out of a larger investigation by the Antitrust Division into employment practices by high tech firms. The division continues to investigate other similar no solicitation agreements.

Adobe Systems Inc. is a Delaware corporation with its principal place of business in San Jose, Calif., and 2009 revenues of nearly $3 billion. Apple Inc. is a California corporation with its principal place of business in Cupertino, Calif., and 2009 revenues of more than $42 billion. Google Inc. is a Delaware corporation with its principal place of business in Mountain View, Calif., and 2009 revenues of more than $23 billion. Intel Inc. is a Delaware corporation with its principal place of business in Santa Clara, Calif., and 2009 revenues of more than $35 billion. Intuit Inc. is a Delaware corporation with its principal place of business in Mountain View, Calif., and 2009 revenues more than $3 billion. Pixar is a California corporation with its principal place of business in Emeryville, Calif.

The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to James J. Tierney, Chief, Networks & Technology Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 7100, Washington D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

The disclosure, in an SEC filing, pertains to a long-running German investigation of allegations that HP, through a German subsidiary, paid bribes in Russia to secure a contract valued at €35 million, or about $44.5 million, with the office of the prosecutor general of the Russian Federation.

The contract spanned 2001 to 2006 and was for the delivery and installation of an information technology network.
U.S. authorities have joined in that probe, as The Wall Street Journal first reported in August.

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