After 19 months of investigation, political maneuvering, lobbying and intense speculation the FTC has closed its antitrust investigation of Google. The outcome is almost exactly as we reported yesterday and it’s probably legally correct.
Google comes away largely unscathed from the process. Once can hear the celebrations getting started in Mountain View.
The settlement has three components. Henceforth there will be no involuntary scraping of third party content for inclusion in “specialized” (vertical) Google search results (the Yelp case). Google will also enable easier exporting of AdWords campaigns to Bing and other platforms. And Google (through a consent decree) will be required to fairly license Motorola’s “standards-essential” patents and stop using them in an anti-competitive way to block rival products.
Here’s what the settlement requires according to the FTC:
Under a settlement reached with the FTC, Google will meet its prior commitments to allow competitors access – on fair, reasonable, and non-discriminatory terms – to patents on critical standardized technologies needed to make popular devices such as smart phones, laptop and tablet computers, and gaming consoles. In a separate letter of commitment to the Commission, Google has agreed to give online advertisers more flexibility to simultaneously manage ad campaigns on Google’s AdWords platform and on rival ad platforms; and to refrain from misappropriating online content from so-called “vertical” websites that focus on specific categories such as shopping or travel for use in its own vertical offerings.
FTC Chairman Jon Leibowitz said the settlement “follows an exhaustive investigation into Google’s business practices.”
The commission chose to close its investigation into alleged “search bias,” which was Google’s rivals’ main area of interest. Leibowitz said the decision of the FTC was unanimous on this point and that there wasn’t enough factual evidence under the law to support any sort of complaint.
Leibowitz also pointed out that Bing and Yahoo (both by implication) do some of the same types of things that Google was criticized for doing: showcasing specialized content on SERPs at the expense of third party organic results. Leibowitz said that while there was “some evidence” of SERP manipulation by Google (he didn’t elaborate), the FTC found that most of the actions Google undertook were for the benefit of its consumer-user base.
Leibowitz emphasized, “The law protects competition not competitors.”
He was somewhat defensive throughout the press conference, explaining repeatedly that the commission’s investigation had be extremely thorough and lengthy. He added that Google’s voluntary commitments on the search side will be monitored and will be subject to enforcement if they’re violated.
Leibowitz characterized the commission’s decision and actions as being consistent with the law and in no way a capitulation to Google. He lead with the tougher-sounding announcement of the consent decree in the patent case and argued that “We stopped [Google's] abuse” of Motorola’s patent portfolio to harm competition in the mobile market.
On the search side Leibowitz repeated that Google would be monitored and that the FTC would take action if the company not fulfill the terms of its voluntary agreements. “We’re in a trust but verify” mode, said Leibowitz.
Google said the following about the FTC settlement on its blog:
- More choice for websites: Websites can already opt out of Google Search, and they can now remove content (for example reviews) from specialized search results pages, such as local, travel and shopping;
- More ad campaign control: 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.
The company also said, “We’ve agreed with the FTC (PDF) that we will seek to resolve standard-essential patent disputes through a neutral third party before seeking injunctions. This agreement establishes clear rules of the road for standards essential patents going forward.”
I think what can be definitively said is that this is a major victory for Google (capital M). The settlement requires Google to make some relatively minor changes to its AdWords practices and to the way it deals with the indexing and presentation of third party content. Google will also discontinue some of its patent litigation. All of these are simple actions that involve little or no expense on the company’s part.
By the same token, there are no fines and no continuing litigation.
Critics and competitors who still firmly believe that Google is abusing its dominant market share position will be bitterly disappointed and will have to look to other venues, especially Europe, for potentially tougher penalties.
On that note, in response to a reporter’s question, Chairman Leibowitz said that he believed the Europeans were “making progress in their negotiations with Google.” However regarding the notion that the US Department of Justice might now take up an antitrust case against Google, Leibowitz essentially dismissed the idea.
Postscript: Here’s anti-Google lobbying group FairSearch.org’s highly critical reaction to the settlement announcement:
“The FTC’s decision to close its investigation with only voluntary commitments from Google is disappointing and premature, coming just weeks before the company is expected to make a formal and detailed proposal to resolve the four abuses of dominance identified by the European Commission, first among them biased display of its own properties in search results.
The FTC’s settlement is by no means the last word in this case, leaving the FTC without a major role in the final resolution to the investigations of Google’s anti-competitive practices by state attorneys general and the European Commission. The FTC’s inaction on the core question of search bias will only embolden Google to act more aggressively to misuse its monopoly power to harm other innovators.
State attorneys general who reportedly disagreed with today’s announcement by the FTC have an important role to play in ensuring both that Google is not allowed to continue practices that hurt every American business through artificially high advertising costs, and to demand that whatever changes Google is forced to make in Europe also apply for U.S. consumers who risk losing innovation because of Google’s aggressive abuse of its dominance.
FairSearch and its members will continue work with authorities in the U.S., Europe and elsewhere who are investigating Google. Our members also plan to participate in the European Commission’s market testing of any proposed binding remedies to Google’s harms. FairSearch will continue to fight to restore truly competitive conditions to the market for search and related online services. No less than the future of innovation and small business on the Internet is at stake.”