Last week's decision by the European Commission's to throw the rule-book at Google has already been dubbed the defining competition case of the internet era and is the biggest anti-trust case since the EU took on Microsoft over a decade ago but is Google's growing stranglehold on consumers around the world crushing competition for online retailers?

From its search engine to YouTube and its cloud storage, e-mail, calendar and maps, its online services are used on a daily basis by millions of people. Last week, fearful that the Californian tech giant is abusing its dominance, the European Commission laid formal charges against Google, accusing it of distorting competition on the internet by favouring its own shopping services over rivals.

Across the pond, the investigation is being seen as a desperate measure by protectionist Europe to keep Silicon Valley's dominance on the ICT sector at bay. The fear in Europe is that the EU's 28-country bloc is being dominated by a small number of American digital businesses and that more home grown companies are needed to compete.

With Google's search engine now responsible for 90 per cent of internet searches in the EU, the main question is whether businesses and consumers are actually being harmed by Google's dominance.

A five-year inquiry by the EU's executive arm - which got underway following complaints from companies such as Microsoft, TripAdvisor, Expedia, Streetmap and Foundem (the British company that, in 2009, was the first to allege monopoly abuse by Google) - found that, regardless of the relevance of a search query, Google gave undue prominence to its own comparison shopping services and thus diverted traffic away from potential competitors.

The Commission's allegations have been given greater weight by a leaked report from America's Federal Trade Commission which concluded that Google deliberately demoted rival websites from internet searches.

This appears to be borne out by the falling number of unique UK visitors to product-comparison websites such as Shopzilla and Nextag which, between 2007 and 2009, dropped 41 per cent while the number of visitors to Google's own product service, launched in 2007, jumped by 125 per cent.

Peter Mowforth, chief executive of Glasgow-based e-commerce providers Indez which looks after a fifth of Scottish e-commerce platforms, believes that - while some of Google's services could be accused of unfairly promoting its own products - the Commission's decision to take Google to task over its Shopping channel ( which he describes as a "dating website that puts businesses in contact with consumers") is misguided and could hamper growth in the crucially important and burgeoning e-commerce sector.

Dr Mowforth points to Scottish government figures that value e-commerce's contribution to the national economy at £38 billion a year.

If the figure is correct, it would mean that e-commerce amounts to almost a third of the Scottish economy and is worth more than the country's oil, gas and whisky industries combined.

"E-commerce the biggest thing in business today by a mile and tools like Google's Shopping channel play a pivotal role in online trade and in allowing smaller SME Scottish businesses to grow wealth, jobs and exports, without having to pay out a major slice of their margin to marketplaces like Amazon or eBay", said Mowforth.

The worry for Mowforth is that the Commission's decision to go after Google could lead the tech giant to close down some of its services in Europe.

A precedent for this occurred in Spain last year when the company closed its Spanish news search product after the introduction of a tax requiring it to pay licensing fees to newspapers it aggregated. "The result of that is that Spain does not now have a good news aggregation service," says Mowforth.

The Commission is also investigating incentives offered to smartphone manufacturers such as Samsung, HTC and Sony to pre-install and bundle Google apps and services on its Android operating system, which is run on over 80 per cent of all smartphones. The allegation is that Google forces phone manufacturers to give Google apps preferential treatment, forcing makers to install around 20 of its own apps and services.

The investigation is needed, the Commission believes, because current arrangements between Google and smartphone manufacturers are discouraging the development of competing software from app developers or the manufacturers of mobile phones and tablets.

Announcing the investigation on Wednesday EU competition commissioner Margrethe Vestager said that it was clear that Google's commercial products are not subject to the same algorithms as other comparison shopping services.

"Consumers may not necessarily see the most relevant results in response to their queries, and Google's competitors may not get the commercial opportunities that their innovations deserve," she said. "The commercial importance of appearing prominently in Google search results is obvious: if you can't be found, you can't do business".

Vestager said that while the investigation would focus on shopping-related results, the EU is also examining Google's conduct in other so-called "vertical" areas such as internet searches for hotels, flights and maps.

Scottish IT entrepreneur Ian Ritchie, chairman of the cloud computing company Iomart, believes that search engines need regulation if they are to work in the public interest and should be obliged to publish their search algorithms so that the world can see that search recommendations are based on purely objective data.

Ritchie is in favour of search engines being regulated, perhaps by the regulator Ofcom, in the same way as Ofgem regulates the UK's gas and electricity market and Ofwat regulates water provision.

"Google is a utility in the same way as public transport or other essential services," he told the Sunday Herald. "These are things that make the world go round and need to be regulated in order, in the case of search engines, to make sure that searches are fair."

"If Google is favouring its own comparison sites and its own services that would become quite disruptive as Google has become so ubiquitous. It would mean that Google could use its market dominance to favour its own affiliated companies."

Ritchie also backs the Commission's investigation into Android, citing the demise of Netscape Navigator - the dominant web browser of the 1990s - that was "wiped out of the market" by Microsoft's dominant Internet Explorer software in the early 2000s.

Android phones should not, according to Ritchie, come automatically pre-loaded with Google apps: the decision on which apps to install should be made by consumers.

But Polly Purvis, of the digital sector trade body ScotlandIS, believes that, while the "EU is right to question monopolies and needs to protect consumers", the majority of computer users are sufficiently internet savvy to be able to recognise sponsored links thrown up by search engines and that these paid-for links are sufficiently clearly marked.

Like adverts on television channels, these paid-for listings have become a commercial fact of life for search engines which are run by commercial companies.

While Google has not published details of its ever-changing search engine algorithm, the company openly provides advice on how to maximise company visibility for search results, says Purvis.

Google now has ten weeks to respond to the Commission's charges, over which it could be fined up to 10 per cent of its annual income which would amount to $6 billion (£4bn). If it does not convince the EU's competition authorities (which have lost only one case over alleged abuse of dominance in the past 25 years) Google also risks a damaging legal battle that could run on for years.

The EU's investigation has been welcomed by the European consumer organisation BEUC which said that it would help citizens get commercially unbiased results from search engines.

BEUC's director general Monique Goyens said: "Manipulating search results leads to broader problems for Europe's digital economy as Google's market share means it essentially decides which companies go in the shop window. Such control restricts access, thereby reducing competition and resulting in less consumer choice."

A similar view is taken by Labour MEP Catherine Stihler who says that consumers have the right to expect "neutral and fair" search results when they trawl the internet for information and products. "This is about trust and it is big issue for consumer confidence," Stihler says. "It is also an important issue if we want SMEs around Europe to be able to sell goods and services."

Establishing clear rules for internet search engines is a "pivotal issue" for the rolling out of an EU-wide single digital market for goods and services, the MEP believes.

Many internet users are not aware of how search results are manipulated by Google and are also unaware of the commercial relationship between Google and retailers which effects page rankings, says Stihler who is the vice-chairwoman of the European Parliament's influential internal market and consumer protection committee.

The investigation into Google's Android platform is also important. "As people move away from search engines to apps the issue is going to become ever more central," she said.

Europe is far from being the only part of the world to be worried by Google's increasingly tight grip on the most commonly used internet services, says Stihler who points to competition-related investigations into the company's activities by national authorities in Argentina, India, Brazil, Russia and Taiwan.

Meanwhile, SNP MEP Alyn Smith is more concerned by the Google's apparent hampering of access to its Android mobile phone platform than he is by the Commission's investigation into Google's Shopping channel, over which he has "philosophical reservations" over whether the EU's competition rules are "fit for purpose" when it comes to trying to regulate the fast-evolving IT sector.

"In broad terms I am supportive of what the Commission is trying to achieve but there are a lot of people who look at Google and use it as if it was a public library providing a public service but it is a private commercial American corporation," he said.

"There might be some dubious practices and anything that sheds light on how Google operates is to be welcomed but I am not convinced that it has actually broken any laws."

The investigation into whether Google unfairly leans on smartphone manufacturers to pre-load Google apps is important, says Smith, as Android is supposed to be an open-source platform that should be open to all developers and competition should not be stifled.

Commercial companies who operate search engines need some way of making a return on their investment and that is not possible if they are not able to monetise at least some search engine listings.

The Commission insists that its investigation into Google is purely a competition issue, but it clearly has political and economic significance beyond legal technicalities.

The most likely options include self-regulation of the sector with search engines being required to clearly mark listings that have been paid for; the imposition of a national or a pan-European regulator to police the impartiality of search engines or perhaps even the creation of a publicly-funded search engine that has no need to attract advertising. But would a search engine run by civil servants be used by the public?

When Google entered Skyscanner's airspace

An example of a Scottish business that has been squeezed by Google's growing domination of online commerce is the Edinburgh-based travel website Skyscanner. Anyone using "flights" as a search term on Google will, it is true, be shown a prominent link to the Skyscanner website which appears and is clearly marked as an "Ad" which indicates that the company has paid Google for its position in the rankings.

However, Skyscanner's non paid for ranking on Google (its so-called "organic" listing) appears lower down the listings and below Google's own flight comparison service which was introduced to Europe in 2013.

Not only does Google's flight aggregation service appear above Skyscanner, search terms are embedded on the landing screen, allowing potential users to enter their departing and arrival airports directly without having to open a new webpage. This makes it more likely that someone landing on the page will use the Google service.

What is Google accused of doing wrong?

When using Google to search for a product such as a "Dyson cleaner", Google will show at the top of the page a number of so-called "sponsored" photos which compare prices between various suppliers such as Currys and Selfridges. These illustrated links are generated by the Google Shopping specialist search engine which is paid by retailers when people follow the links and make purchases.

The European Commission says that by providing an unsolicited shopping comparison service when someone makes a general web search and that by featuring it at the top of the search results means that Google is abusing its monopoly.

Under EU rules, running a monopoly is not of itself illegal but taking advantage of a monopolistic market position to crush competition is.

Google does not deny that it has a dominant position in the market or that it promotes its own services but argues that its business model is not harming online competition and that the existence of large online retailers such as Amazon and eBay proves that there is both competition and innovation in the sector.

Google can also point to the fact that there plenty of alternative search engines available to anyone at the click of a mouse such as Bing, Yahoo and DuckDuckGo.