FTC defends decision on Google search investigation

26 Mar 2015 | Author: | No comments yet »

FTC Members Regret Release of Documents in Google Antitrust Probe.

WASHINGTON: Three US Federal Trade Commission members said they regretted the inadvertent release of part of an agency report about its probe of Google Inc as the company continues to face antitrust scrutiny from European authorities.The FTC’s main charge against Google was that it was abusing its power by unfairly promoting its own vertical offerings at the expense of competitors.

The document, which was at the centre of a report by The Wall Street Journal, indicated that key staff members at the FTC were in favour of suing Google for allegedly breaking antitrust law. The agency settled with the search and advertising company in early 2013. “Contrary to recent press reports, the commission’s decision on the search allegations was in accord with the recommendations of the FTC’s Bureau of Competition, Bureau of Economics, and Office of General Counsel,” the commissioners said. The statement issued Wednesday by FTC Chairwoman Edith Ramirez and Commissioners Julie Brill and Maureen Ohlhausen was in response to the leak of an internal document, which suggested that the agency’s staff had concluded that Google’s business tactics had caused “real harm to consumers and to innovation,” and had recommended a lawsuit against the company. The agency said that it regretted the release of the documents, which were confidential and should not have been included in a response to a Freedom of Information Act request. The agency notes in its memo that a bipartisan group of commissioners agreed that there was no “legal basis for action with respect to [search]” at the time, as its view was that Google’s search activities “were not, ‘on balance, demonstrably anticompetitive.’” The FTC conducted an extensive investigation into allegations that Google had manipulated its search algorithms to harm vertical websites and unfairly promote its own competing vertical properties, a practice commonly known as “search bias.” […] [T]he FTC concluded that the introduction of Universal Search, as well as additional changes made to Google’s search algorithms – even those that may have had the effect of harming individual competitors – could be plausibly justified as innovations that improved Google’s product and the experience of its users.

When the FTC announced its Google settlement over complaints brought by Microsoft, eBay, Yelp, and others, was it going against its staff’s recommendations? The leaked staff report painted an image of Google as a bully that boosted links to its own services, and copied content from rival websites and threatened them if they objected.

The agency also tried to distance itself from a WSJ report that Google may have benefited from access to the White House, and pointed out that the FTC had settled a complaint over Google’s conduct with regard to certain standard essential patents on the same day it closed the search investigation. The agency says that it “raised concerns” about “other Google practices,” which appear to align with the documentary record, such as we have it.

Are the loudest Google critics, like original complainants Microsoft and Yelp, just expressing sour grapes, or did the FTC cave on real anti-competition issues? Given the continued importance of search capabilities, even as search itself becomes increasingly diverse, and siloed in some ways, how we determine what is fair from providers is a topic that matters. The Journal identified four issues over which the FTC found evidence of anti-competitive business practices by Google. (Disclosure: I used to work for Google and Microsoft, and my wife still works for Google.

I did not work on anything related to these four issues.) Only with one is there a substantive difference between the FTC staff report and the FTC’s previous public statements. This is the “exclusive agreements” issue, dealing with Google’s contractual restrictions on companies like Amazon that syndicated Google’s search results. While this issue is less major than the other three issues, the FTC should still clarify its official stance on exclusive agreements and why it apparently chose not to pursue a remedy.

First, it allowed advertisers to optimize campaigns across multiple ad networks simultaneously by removing restrictions on the use of its AdWords API. A company like Yelp originally had no choice but to let Google use its data in those verticals; its only other option was to not be included in Google search results at all. On this issue of search bias, Google did not make concessions, and the FTC did not take action (nor does the staff report recommend action, though it says it’s a “close call”). It’s not an exaggeration to say this issue gets at the heart of Google’s search engine: To what extent can Google push its own aggregated content into its searches, if these offerings are in competition with businesses that show up in the search results?

Because Google is the ultimate arbiter of the results it displays—and because its “relevance”-ranking algorithms are more or less a black box to anyone outside the company (and many within it)—Google’s responsibility has to be what the company itself has said many times: to provide the best search results for the user rather than search results that might privilege its business. Alongside a long list of “litigation risks,” the report notes that U.S. courts have tended to accept this argument, perhaps explaining why the FTC sought a settlement. The question—as Grimmelmann put it in the article “What to Do About Google?”—is whether Google was acting in bad faith, fiddling with its search results with the ulterior motive of harming its competitors. The evidence did not demonstrate that Google’s actions in this area stifled competition in violation of U.S. law.” You can see, however, why Yelp, TripAdvisor, and others originally complained to the FTC: If Google privileged its verticals in its results over your own sites, you’d want to be sure no fishy business was going on.

The report does, however, serve as good justification for the FTC sticking its nose into Google’s business, and the antagonistic tone of the report is refreshing compared to the Securities and Exchange Commission’s frequently hands-off attitude toward banks. Broadly speaking, however, I tend to agree with Search Engine Land’s Danny Sullivan when he says that Google’s Android mobile platform is of significantly greater concern than Google’s search engine. (Google Plus also would also have been a concern had it not utterly failed, since it locks users into a social network and user account.) Consumers are bolted into the Android platform to a far greater extent than they are to a search engine, and Ron Amadeo’s report in Ars Technica on the increasingly closed nature of the Android platform points at some real problems. The biggest claim—that of search bias—is also the one where the FTC appears to have found the least to act on and little grounds for renewed action, at least in this country. (Meanwhile, the European Union continues its four-years-and-running antitrust probe of Google.) Grimmelmann says the FTC’s ultimate decision still makes sense in light of the report: “The FTC will almost always take a negotiated outcome when they can get one instead of suing, whether it’s a two-bit spyware vendor or the biggest search company in the world.

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