FTC Pushes Back Against Criticism Of Its Inquiry Into Google’s Search Practices

26 Mar 2015 | Author: | No comments yet »

Capital Journal Daybreak: Google’s White House Ties | U.S. Boosts Tikrit Role | House Moves on Budget.

The Federal Trade Commission (FTC) published a comment today pushing against a rising media narrative that it may have gone too easy on Google during its multi-year antitrust probe on the search company’s ranking of results to benefit its own products.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.Google executives have met with White House officials an average of once a week since US President Barack Obama took office in 2009, according to a new report. Those meetings included discussions between Google co-founder Larry Page, Google Chairman Eric Schmidt, chief Google lobbyist Johanna Shelton, Google General Counsel Kent Walker and Google’s chief legal officer David Drummond.

While the issue was resolved between the government and Google in the first days of 2013, the issue came roaring back to life after, using the FTC’s own wording, a chunk of an internal file from the agency fell victim to “inadvertent disclosure.” The Wall Street Journal published the document, which caught fire over lines from its pages stating that, at least in the view of some FTC staffers, “Google’s conduct has resulted – and will result – in real harm to consumers and to innovation in the online search and advertising markets.” The first Wall Street Journal report was followed by a second piece from the publication detailing Google’s ability to attain meetings at the White House, attempting to paint a mix of interests: Pointing out that on election night in 2012, Google’s Eric Schmidt “was personally overseeing a voter-turnout software system for Mr. The collection of top-tier Google reps met with high-level White House staff including former interim chief of staff and White House counselor Pete Rouse, Council of Economic Advisers Chairman Jason Furman, senior White House adviser Valerie Jarrett, then-White House Chief of Staff Bill Daley and FTC Chairman Jon Leibowitz. Many of the meetings occurred within days or hours of one another in November and December of 2011 and 2012, while the FTC was wrapping up an investigation into a swath of anticompetitive behavior by Google. Other reports detailing administration’s relationship with Google have surfaced routinely in years past, and WikiLeaks publisher Julian Assange writing a book on the corporation’s ties with the US government in 2014. “Nobody wants to acknowledge that Google has grown big and bad,” Assange wrote. “But it has.” The tenure of its former CEO, Eric Schmidt, “saw Google integrate with the shadiest of US power structures as it expanded into a geographically invasive megacorporation,” Assange wrote. 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.

Google’s access to high-ranking Obama administration officials during a critical phase of the antitrust probe is one sign of the Internet giant’s reach in Washington. When the FTC announced its Google settlement over complaints brought by Microsoft, eBay, Yelp, and others, was it going against its staff’s recommendations? In January 2013, the commission uncharacteristically went against the recommendation of the staff report and closed the probe — a decision the agency had made by the end of November, according to emails obtained by the Journal.

The agency says that it “raised concerns” about “other Google practices,” which appear to align with the documentary record, such as we have it. According to Mullins, Obama has mentioned the company in half of his annual State of the Union addresses, including the one he gave this past January when he hailed the company as a job creator. 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? In between, the paper uncovered, a lobbyist and a lawyer working on behalf of Google met with one of the president’s tech advisors during one of the literally hundreds of meetings between the two camps. 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 big question for the 2016 presidential campaign is whether small-donor fundraising — particularly email solicitations — can counterbalance the vast sums of money being raised through outside groups and at high-dollar fundraising events. 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. AFTER MUCH JOCKEYING, HOUSE GOP SET TO PASS BUDGET: House Republicans will consider their 2016 budget today, in a test of the GOP leadership’s ability to strike a balance between dueling defense and deficit hawks.

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. SURVEILLANCE PLANES AID FIGHT BY IRAQ, IRANIAN-BACKED MILITANTS FOR TIKRIT: The U.S. has started providing Iraq with aerial intelligence in the stalled battle to oust Islamic State from Tikrit, drawing the American military into closer coordination with Iranian-backed militias spearheading the offensive. But the intelligence will be used to help some 20,000 Iranian-backed Shiite militia fighters who make up the bulk of the force that has been struggling for weeks to retake the strategic city. 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. SLOWS PACE OF AFGHAN TROOP WITHDRAWAL: President Obama delayed the planned departure of nearly half the remaining U.S. troops in Afghanistan, extending a military presence that he hopes will prevent a repeat of Iraq, where American forces left only to return last year. The so-called search bias issue that the FTC investigated relates primarily to “Universal Search” or “OneBox,” in which Google prominently blends its vertical offerings into its plain vanilla search results.

Obama said the dynamic in Iraq—where Islamic State militants seized territory—had influenced his thinking as he recalibrated the timetable in Afghanistan. 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? OBAMA SEES NO MIDEAST PEACE DEAL DURING HIS TERM: President Obama, citing conflicting comments in the past week from Israeli Prime Minister Benjamin Netanyahu, predicted that there would be no peace agreement between the Israelis and Palestinians during the remainder of his time in office. 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. Google has repeatedly said that any changes it makes to its search engine are to benefit the consumer, even if they happen to harm Google’s competitors, and the FTC reports that Google made this argument to its investigators as well.

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.

But before the former Florida governor announces his haul, possibly in April, opponents are trying to turn his fundraising prowess and political pedigree into liabilities. French search helicopters Wednesday ferried police officers and emergency personnel to the area where an Airbus A320 slammed into the French Alps leaving all 150 aboard feared dead, as authorities said a recovered black box was damaged but its vital data could be analyzed, pointing to an early break in the investigation into what caused the crash. These experiments were not, according to the report, conducted in connection with the promotion of Google’s OneBox results, so Google did not appear to be rigging the experiments to the explicit benefit of its verticals. Warren Buffett’s Berkshire Hathaway and private-equity firm 3G Capital Partners are key backers of the deal and are funding a special $10 billion dividend for Kraft shareholders.

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. In Detroit’s labor negotiations, generous health-care benefits for about 135,000 unionized auto-factory workers are at risk of being cut to prepare for the Affordable Care Act’s “Cadillac” tax. American universities are enrolling unprecedented numbers of foreign students, prompted by the rise of an affluent class in China and generous scholarships offered by oil-rich Gulf states such as Saudi Arabia.

John Kasich is thinking about running for president, but he faces a question: In the crowded field of Republicans preparing to run, is there room for one more? The White House’s pick to take the No. 2 spot at the Justice Department fielded mostly friendly questions at her confirmation hearing, while the political standoff over the next attorney general looks to stretch into at least next month. 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. As the administration turns its focus to revamping the way doctors and health systems are paid, he is expected to say that paying doctors, hospitals and other providers based on coordinated and improved care rather than treatment volume will mean healthier patients and lower U.S. health-care spending.

CONGRESS: Afghanistan’s President Ashraf Ghani will address a joint session of Congress at 10:45 a.m. … The House will consider its 2016 budget late in the day … The Senate Banking Committee holds a hearing on the Dodd-Frank law’s process for pulling in risky financial firms for stricter oversight. Look for a focus on whether firms like MetLife and GE Capital can ever find a way out of the stricter rules … FCC Chairman Tom Wheeler testifies before the House Judiciary Committee on the FCC’s net-neutrality rule at 2 p.m. SUPREME COURT: The Court considers an industry challenge to EPA air-pollution regulations limiting mercury emissions from coal- and oil-fired power plants. By continuing to support a route to citizenship for at least some illegal immigrants, Jeb Bush will test “whether support for comprehensive immigration reform that includes a pathway to citizenship is a poison pill in the GOP primary,” writes Ronald Brownstein in National Journal.

He would rather sit at his desk, placing calls to donors or studying spreadsheets, than be seen with the candidate at her latest fundraiser,” writes Ruby Cramer of BuzzFeed. A big part of Vice President Joe Biden would still like to run for president, writes the Los Angeles Times’ Doyle McManus, but Biden can’t escape the fact that he is Hillary Clinton’s “understudy — the backup player, there to step in only if the first string falters.” The New Yorker’s George Packer chronicles a Moscow meeting of the International Russian Conservative Forum, a gathering of “fringe political characters from Germany, Italy, Britain, the U.S., and other countries” who gathered to express support for Vladimir Putin and his assault on Ukraine.

In the WSJ’s Think Tank, Jim Manley writes that a series of budget deadlines just ahead may finally be forcing Congress to get beyond governing by crisis and do some business in an orderly manner.

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