Will Google Escape a Federal Antitrust Lawsuit Over Web Search?

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Miguel Medina / REUTERS

Google's Executive Chairman Eric Schmidt poses prior to a meeting at the Culture Ministry in Paris October 29, 2012.

The end is near! No, we’re not talking about the Mayan apocalypse, but rather the federal government’s nearly two-year antitrust investigation of Internet search giant Google. The Federal Trade Commission and the Web titan are nearing a deal that would end the government’s probe into allegations that Google has used its search market power to harm rival companies unfairly, according to multiple reports.

Google is poised to offer a set of voluntary concessions addressing complaints about its search practices, according to a D.C. source familiar with the matter. The agreement, which would mean that the FTC will not file a lawsuit against Google, would represent a huge victory for Google, and a major defeat for those rivals that have accused it of acting unfairly. A resolution to the FTC’s probe could come as early as this week.

Google will reportedly announce voluntary changes to the way it uses so-called “snippets” of user reviews in a number of consumer areas including travel and restaurants, in order to address complaints from rivals like Yelp and TripAdvisor, according to Politico. The search giant will also make it easier for its advertisers to use certain data on rival search engines like Microsoft Bing, Politico said.

Google and the FTC have been in talks for several weeks about avoiding full-on federal litigation. Google had been facing the prospect of an FTC lawsuit, in what would have been the most dramatic antitrust action taken by the U.S. government against a major technology company since the Department of Justice sued Microsoft in the 1990s. In recent weeks, federal officials have reportedly begun to waver about the strength of a possible antitrust lawsuit against Google. (For more details on the potential weaknesses of the FTC’s case, please see here.)

(MOREGoogle CEO Meets with Feds as U.S. Senator Blasts FTC Over Antitrust Probe)

As Google has come to dominate the Internet search space — with about 70% market share — several of its competitors have urged federal action against the tech giant. The anti-Google coalition includes the FairSearch consortium, which includes several of Google’s competitors, most notably Microsoft. FairSearch argues that Google has used its search power to harm rivals, particularly in high-traffic search categories like travel, jobs, health, and real estate. The consortium says that Google unfairly ranks its rivals in its search-engine results in order to steer users toward Google’s own competing products.

Google has responded by saying that its search engine is simply more useful than rival services, and has repeatedly argued that competition — including Bing — is just “one click away.” The company also points out that the fundamental purpose of U.S. antitrust law is to protect consumers, not the competition. Some experts have suggested that the FairSearch campaign amounts to sour grapes. “It’s an old D.C. adage that if you cannot win in the marketplace, try to win through political influence,” Glenn Manishin, a partner at the law firm Troutman Sanders and a leading antitrust expert, wrote in a recent blog series on the topic.

If the FTC allows Google to make voluntary concessions in order to avoid an antitrust lawsuit, it would represent a blow to Microsoft, which has been waging a not-so-clandestine campaign against Google for years. Lately, Microsoft has increased the intensity of its anti-Google campaign, hiring veteran political and public relations operative Mark Penn, who has a reputation for what The New York Times called “scorched-earth tactics,” to help spearhead the effort. Penn, a veteran of the Clinton White House and a former CEO of PR giant Burson-Marsteller, was partially responsible for Microsoft’s recent “Scroogled” campaign, which urged users to eschew Google in favor of Bing’s “honest” search engine results.

(MORESue or Settle? Feds Face Crunch Time Over Google Antitrust Decision)

In The Times article, Google spokesperson Jill Hazelbaker would only say that Google’s focus is “on Google and the positive impact our industry has on society, not the competition.” That quote prompted Microsoft’s PR honcho Frank X. Shaw to unleash a tirade on Twitter last Friday directed at Hazelbaker. “Don’t make me laugh [with] another silly NYT quote about ‘Our focus is on Google and ….not the competition,'” Shaw wrote. Hazelbaker did not respond.

In a statement emailed to TIME in response to questions about the FTC probe, Google spokesperson Adam Kovacevich repeated the line he has delivered to the press with highly disciplined, and almost comedic, regularity. “We continue to work cooperatively with the Federal Trade Commission and are happy to answer any questions they may have,” Kovacevich said.

In recent weeks, several prominent politicians have urged the FTC to think very carefully before suing Google on antitrust grounds. Last month, Sen. Ron Wyden, the Oregon Democrat, wrote a sharply worded letter to the FTC warning the agency against using its so-called Section 5 authority to charge Google with unfair or deceptive business practices. Earlier in November, Reps. Anna Eshoo (D-Calif.) and Zoe Lofgren (D-Calif.) said such an action would be “unwarranted, unwise and likely have negative implications for our nation’s economy.”

(MOREU.S. Google Antitrust Probe Spurs Internet-Regulation Debate)

It’s important to remember that having a monopoly in a market is not, by itself, illegal. What’s illegal is seeking to achieve or maintain a monopoly through anticompetitive practices. According to Google’s defenders, the company has built a dominating position not through anticompetitive methods but rather through the merits of its superior product. In his letter, Wyden wrote that it would be “troubling if the FTC sought to expand the use of its authority to target a company for simply being popular rather than engaging in unfair or deceptive practices that harm consumers.”

The FTC’s probe has now been going on for nearly two years. It’s high time for the agency to wrap this up. Another, less high-profile component of the federal probe concerning Google’s use of mobile patents is also set to conclude, according to multiple reports. But the antitrust piece of the investigation involving search has always been the Big Kahuna here. It’s clear that Google’s rivals and critics are dismayed by reports that the FTC probe will conclude without a major lawsuit. “If the FTC fails to take meaningful action after a nearly two-year investigation, Google will only be emboldened to act in ways that are more harmful to consumers and innovators,” FairSearch said in a statement to Bloomberg.

If Google and federal authorities wrap up the investigation without litigation, it will mean that the feds have accepted the argument that big-footing around the Internet — a highly dynamic and rapidly changing engine of U.S. economic growth — is not a great idea. It will also mean that they understand that the purpose of antitrust laws is to protect consumers, not hobble a successful market leader in order to bolster its competitors.

2 comments
AdamSmith1
AdamSmith1

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ukjaybrat
ukjaybrat

Whelp, if they can't do it with consumers or in the courtroom, looks like fairsearch and microsoft will have to find another way to earn money