In Major Victory, Google Dodges Federal Antitrust Lawsuit with FTC Deal

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Kim Kyung-Hoon / REUTERS

Internet search giant Google has agreed to make voluntary changes to its search business in order to avoid a major federal antitrust lawsuit after a nearly two-year government investigation. The agreement, which was expected, wraps up the Federal Trade Commission’s probe into whether Google has used its search market power to harm rivals unfairly.

“The conclusion is clear,” David Drummond, Google’s senior vice president and chief legal officer, said in a blog post. “Google’s services are good for users and good for competition.”

A group of Google’s competitors, including Microsoft and Yelp, had been lobbying the government for several years in an effort to prod federal officials to go after the search giant on antitrust grounds. Google dominates the Web search space, with about 70% market share.

Google’s agreement with the feds, which was announced Thursday, is a significant blow to its rivals, some of which were hoping the federal government would file a high-profile lawsuit against the company, as it did with Microsoft in the 1990s.

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As part of the deal, Google will make a set of voluntary commitments to change certain search practices. The company will also enter into what’s known as a consent decree — which is a binding judicial order — over allegations that it misused smartphone patents to thwart rivals.

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

The group FairSearch.org, which represents several Google rivals, including Microsoft, warned the FTC against moving too hastily, because the agency’s European regulatory counterparts are still crafting their plan to address Google’s search market power.

“If the FTC fails to take decisive action to end Google’s anti-competitive practices, and locks itself out of any remedies to Google’s conduct that are offered in Europe later this month, the FTC will have acted prematurely and failed in its mission of protecting America’s consumers,” FairSearch.org wrote in a blog post Wednesday.

(MOREWill Google Escape a Federal Antitrust Lawsuit Over Web Search?)

In response to its critics, Google has maintained that its search engine is simply more useful than rival services, and has repeatedly argued that competition — including Bing — is just “one click away.” Google also argues that the fundamental purpose of U.S. antitrust law is to protect consumers, not the competition.

“The evidence the FTC uncovered through this intensive investigation prompted us to require significant changes in Google’s business practices,” Beth Wilkinson, the FTC’s outside counsel, said in a statement. “However, regarding the specific allegations that the company biased its search results to hurt competition, the evidence collected to date did not justify legal action by the Commission.”

“Undoubtedly, Google took aggressive actions to gain advantage over rival search providers,” Wilkinson added. “However, the FTC’s mission is to protect competition, and not individual competitors. The evidence did not demonstrate that Google’s actions in this area stifled competition in violation of U.S. law.”

In fact, some experts have suggested that the FairSearch.org 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 highly-cited blog series on the topic.

In a blog post Wednesday, Microsoft lashed out against Google for what it called “antitrust offenses” committed by the search giant. The Redmond, Wash.-based software giant alleged that Google “continues to block Microsoft from offering its customers proper access to YouTube.”

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

“Hopefully, Google will wake up to a New Year with a resolution to change its ways and start to conform with the antitrust laws,” Microsoft VP and deputy general counsel Dave Heiner wrote. “If not, then 2013 hopefully will be the year when antitrust enforcers display the resolve that Google continues to lack.”

Reached by TIME late Wednesday, a Google spokesperson offered a response to Microsoft’s allegation about YouTube access.

“Contrary to Microsoft’s claims, it’s easy for consumers to view YouTube videos on Windows phones,” the Google spokesperson wrote in an emailed statement. “Windows phone users can access all the features of YouTube through our HTML5-based mobile website, including viewing high-quality video streams, finding favorite videos, seeing video ratings, and searching for video categories. In fact, we’ve worked with Microsoft for several years to help build a great YouTube experience on Windows phones.”

Note — Jan. 3 2:30 p.m. EST: This post has been updated to include statements from the FTC and Google.

4 comments
alexgilmore2000
alexgilmore2000

The funny thing is nowhere in the charges address the Sherman Antitrust which prime derective is "To protect the consumers by preventing arrangements designed, or which tend, to advance the cost of goods to the consumer". When you analyze what Google does, and I am a Search Engine Optimiztion professional, actually inflates consumer prices by penalizing one website in favor of another eccomerce site. If you read the Sherman Act of 1890 you will find that if your website for your business is penalized by Google, as a result of losing rank in SERPs, you would be able to file a claim against Google citing the Sherman Act. Now if a significant amount of business website did this the FTC would be forced to act.

Alex Gilmore

AllanHytowitz
AllanHytowitz

A quick comparison of Google Chrome versus Internet Explorer or Google search versus Bing will document to most users that Google is faster and gets more useful results.

If Google is allowed to use that argument to the FTC, it will raise it's market share to 90% from its current "monopoly" of (only) 70%.



AmberShoreman
AmberShoreman

Any man who shows more "concern" over his money that his customers seems to forget, he does not live in a "No Fly Zone" and especially one who brags about making more money from his lawsuits than he ever has selling his software in front of thousands seems to forget where he came from.  MS-DOS started as a stolen product from IBM.  Yes it took off an flew but the farther it flew the more greedy he became.  Now when a little competion, and I might aid good useful competion not a buch of games and such, he heads for his attorneys.  THIS IS THE VERY PROBLEM WITH THIS NATION!  Afraid of competition and ready to sue at the drop of a hat.  MAKE A BETTER MOUSE TRAP!.  But then again rats don't like mouse traps.  So Mr. (and iI use that address loosely)  Gates.  Don't get above your raising.  Compete not complain.