Search "headphones" on Google and you'll see the massive ad spot taken up by Google Shopping. They've done similar things with the way they integrate Google Local/Zagat into local business searches.
That's the equivalent of the kind of deep integration Microsoft did with IE. IE wasn't just another application in Windows, it was built-in and inseparable. The same is true of Google's products, they're automatically highlighted, and at the top of, every relevant query.
It seems pretty obviously anti-competitive to me. I think their only defense is that they claim not to be a monopoly, but no one who's on the receiving end of Google traffic can agree with that claim.
I actually think they should spin off Google Search for their own sake. To maintain the integrity and long-term quality of the product.