Google Hands Justice Department Antitrust Gold -- Invests in WhaleShark Media

The day after Google acquired Dealmap, which shows Groupon-like deals on Google maps, its venture arm Google Ventures invested in Austin-based coupon/deal marketplace WhaleShark Media.

Given Google’s failed attempt to buy Groupon and the U.S. Justice Department's interest in Google's search practices, to what extent will Google incorporate Whale Shark's offers into its search results?

If this all sounds very familiar, it might be because it is. Google famously tried to buy Yelp, and after failing pushed Yelp’s results half-way down the page by putting Google Places up top. Now, Google will argue it didn’t change the “organic search results,” but adding a section above or at the top of search results, or redirecting folks to your local service, is the same as changing the sort order (nice try, Google -- we know you’re a bunch of smarty-pants, but we’re all on to your tricks).   

A disturbing trend is emerging for entrepreneurs and consumers if Google intends to own not only the search results and the advertisements around the search results, but also the destination that the search sends you to (as well as the advertisement on that page).

Google will, of course, argue that creating a decision engine (hat tip, Bing) is what consumers want. Category by category it seems Google is seeking to kill entire swaths of startups. First it was comparison shopping sites, then local and now deal sites.

Loren Bendele, CEO of Savings.com, told LAUNCH that he thinks everyone will watch the situation closely.

"The deal space is such a lucrative vertical and with Google being both judge and jury of who ranks highly and investing in individual companies, everyone will be watching to make sure they stay honest," says Loren.

The Google Ventures investment in WhaleShark is part of a $10M round that included previous WhaleShark investors Austin Ventures, Norwest Partner Ventures and Adam Street Partners.

Cotter Cunningham, founder and CEO of WhaleShark Media, told LAUNCH by email that he met the Google Ventures people last year and "really grew to appreciate the team they have built and the additional services they provide," listing things like UI and recruiting consulting.

WhaleShark has now raised nearly $130M since late 2009, allegedly spending most of a then freshly raised $90M round on acquiring Australia-based online coupon site RetailMeNot in December 2010.

The company is following the roll-up model of its Austin neighbor HomeAway, which owns VRBO.com and a number of vacation rental websites and raised over $200M when it IPO'd in late June. HomeAway also had backing from Google Ventures, and HomeAway CEO Brian Sharples, a WhaleShark investor, just joined WhaleShark's board.

As you can see from the screen shots below, HomeAway's playbook seems to be flooding search results -- paid and organic -- with its multiple sites (VRBO.com, vacationrentals.com, homeaway.com).

WhaleShark will likely take the same approach with RetailMeNot, Deals.com and its four other brands, and its flooding of Google’s search results would result in Google making money off the entire user experience: search, advertisements and destination (not to mention its equity in WhaleShark appreciating).

LAUNCH asked Matt Cutts, head of Google's web spam team, if Google search was aware of one company owning multiple sites and flooding search results, and if there were duplicate penalties issues based on this -- or if Google even tracked this aggressive strategy. We will publish his comments if, and when, he gets back to us.

This is an absolutely bone-head at best, arrogant at worst move by a company under government scrutiny. Why would you poke the antitrust tiger?

LAUNCH asked both Google Ventures and Google’s general PR group to discuss these issues but they have yet to respond. 

Disclosure: Our founder Jason Calacanis was on the board of Savings.com for a brief moment in time and owns a tiny number of shares in the firm. He also has angel investments in a number of local and deal sites.