FTC And Google Reach Antitrust Settlement
January 4, 2013

Google Agrees To Antitrust Settlement With FTC

redOrbit Staff & Wire Reports - Your Universe Online

The Federal Trade Commission (FTC) announced on Thursday that it has concluded its 19-month antitrust investigation of Google, finding that the company did not unfairly use its Internet search business and mobile patents to harm rivals.

The Commission said it had reached a settlement with the online search giant that requires it to change its business practices in the areas of online search, smartphones, games and tablets.

“This was an incredibly thorough and careful investigation by the Commission, and the outcome is a strong and enforceable set of agreements,” said FTC Chairman Jon Leibowitz.

Under the terms of the settlement, Google's Motorola subsidiary will license its standard-essential patents (SEPs) to rivals on a fair and reasonable basis, stop scraping competitors´ content, and give advertisers more flexibility to use rival search engines.

“The changes Google has agreed to make will ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy,” Leibowitz said.

On the patent issue, Google will be prohibited from seeking injunctions on products from companies that are willing to sign licensing deals. The FTC was particularly concerned about devices that utilize so-called standard-essential patents (SEPs), which are vital to the operation of a technology, owned by Motorola, such as those involving wireless connectivity.

Rather than asking the court to take offending products off the market, Motorola must now, under the settlement, license their technology on a “fair, reasonable, and non-discriminatory (FRAND)” basis.

Google inherited the Motorola Mobility patent problems after it acquired the company in 2011. Ironically, Google sought the $12.5 billion acquisition primarily to bulk up its patent portfolio, nabbing more than 24,000 patents and patent applications in the deal.

On the issue of Google´s data scraping, which the FTC began investigating in 2011, the Commission found that Google's practice of highlighting its own products or altering how it displays search results did not amount to antitrust violations.

"Although there was some evidence that Google was trying to eliminate competition" Google's main reason for altering its search products "was to improve the user experience," Leibowitz said.

"Changes to algorithms that had the effect of demoting websites had some plausible connection to improving Google search results, especially when competitors tried to game Google's algorithm.”

"On balance, we don't believe the evidence required an FTC challenge.”

However, the FTC did take issue with Google's "scraping" of content from rivals and passing it off as its own.

Jeremy Stoppelman, chief executive of Google´s rival Yelp, complained about these practices during a Capitol Hill hearing in 2011, alleging that Google penalized businesses that complained by removing them from Google´s search results entirely.

Under the FTC settlement, sites like Yelp can now opt out of having their content scraped without fear of being eliminated from Google´s search results.

Google has also agreed to remove restrictions that made it difficult for AdWords customers to run online ad campaigns across multiple platforms.

"Advertisers can already export their ad campaigns from Google AdWords. They will now be able to mix and copy ad campaign data within third-party services that use our AdWords API," Google said.

In a blog post discussing the FTC settlement, David Drummond, Google's chief legal officer, said the main takeaway of the FTC´s probe is that "Google's services are good for users and good for competition."

"As we made clear when the FTC started its investigation, we've always been open to improvements that would create a better experience," Drummond wrote.

The company also wrote a formal letter to the FTC, in which it agreed to the Commission's requirements under the settlement.

"We've always accepted that with success comes regulatory scrutiny. But we're pleased that the FTC and the other authorities that have looked at Google's business practices ... have concluded that we should be free to combine direct answers with Web results," Drummond wrote.

"We head into 2013 excited about our ability to innovate for the benefit of users everywhere."

Perhaps anticipating some public disappointment over the settlement, Leibowitz acknowledged that there would likely be some who think the FTC should have done more.

Indeed, critics of the agreement had hoped that more stringent measures would be imposed on Google.

The FTC "failed to use their authority for the betterment of the marketplace and to the advantage of consumers by declining to take action against the dominant company," said Steve Pociask, president of the American Consumer Institute Center for Citizen Research, in an interview with USAToday.

However, Leibowitz said the FTC had conducted an "exhaustive" review of Google, and believes "companies like Google ... want to honor their commitments.”

The FTC noted that there would be a 30-day comment period on the patent issue.

When asked about a recent $22.5 million fine assigned to Google for failing to comply with a previous FTC order, Leibowitz said he believes Google does not want to "go through that again."

"I want to believe the best about people,” he said.

However, should Google defy the terms of the current settlement, the FTC will act, Leibowitz said, since the commitments are "legally enforceable.”