FTC Playing Antitrust Poker With Google And Looking For A Way To Save Face

Last week there was a report that “four out of five FTC commissioners” favored going forward with an antitrust case against Google. The Reuters article in which the claim appeared mentions but doesn’t emphasize the litany of “vertical search” complaints against Google raised by competitors.

Those “Google favors its own results” claims have been at the center of the European antitrust inquiry and, perhaps until now, at the heart of any potential US case against Google. Yet the article seems to suggest that the FTC is looking elsewhere for Google liability  — or vulnerability.

Reuters writes, “the FTC commissioners have given weight to other complaints that Google refuses to share data that would allow advertisers and developers to create software to compare the value they get on Google to advertising spending on Microsoft’s Bing or Yahoo.” There’s also mention of “Google’s handling of valuable patents” or standards-essential patents, which the company acquired when it bought Motorola, and the question of whether it is licensing them on fair and reasonable (“FRAND”) terms.

The problem with grounding an antitrust case in the “Google favors its own results” argument is that it’s both legally and practically challenging to pursue:

  • It cuts to the heart of Google’s ability to innovate with its own product and faces “political” objections
  • It’s a difficult argument for the FTC to make legally and win on the merits
  • Any potential remedy (other than “labeling“) involving intervention in the SERP is highly problematic for the FTC

The FTC is thus probably looking at other areas to press in any case against Google — hence the discussion of “other complaints” such as standards-essential patents and AdWords data-sharing. The patent-licensing issue is easily resolved. And while the AdWords data sharing question is a bit more complex it’s also another issue that can be resolved relatively straightforwardly.

Resolving the FRAND patent and AdWords data sharing issues would, however, fail to satisfy Google’s rivals and especially anti-Google lobbying organization FairSearch.org whose raison d’être is the vertical search issue. Yet it appears that the FTC is being very careful here, trying to apply public pressure on Google while looking for “openings” where it can gain concessions or “wins” without actually embarking on costly and potentially unsuccessful litigation.

It would appear that there’s very much a realpolitik calculation going on at the FTC, as much as any principled legal evaluation of the case against Google. Indeed, the FTC is playing a kind of public poker with Google. It’s quite possible that the FTC itself leaked the claim that “four out of five” FTC commissioners favor an antitrust case to put more negotiating pressure on Google. The hiring of celebrated litigator Beth Wilkinson earlier this year may have been part of that larger poker game as well.

In his recent remarks at the Google Zeitgeist conference, CEO Larry Page said, “We’ve had a pretty good debate with the regulators [about antitrust issues].” He added that Google has “taken the approach to work with them; I think that’s been working. I’m hopeful that will continue to work well.”

Page decried the idea that regulators potentially want to “lock things down” with rules that could prevent future product development and innovation. He cited Google Now as a product that wouldn’t have been possible prior to the introduction of Google’s new unified privacy policy and the combining of user data across properties (PC and Android).

In contrast to the picture presented of an agency being gung-ho about antitrust litigation the FTC is probably looking instead for a way to “save face.” After an involved and very high-profile investigation it politically can’t walk away and say “nothing to see here.” However it would also be taking a big chance in litigating a case that it has a better than 50 percent chance of losing.

Most of the saber-rattling, such as the “four out of five” claim in the Reuters article, is probably about negotiating leverage. The FTC would much rather settle with Google and be able to claim a win — even if that’s in more peripheral areas of the case — than go to court, expend considerable resources and potentially be embarrassed by a defeat.

In the video below of the Page Zeitgeist interview, he starts speaking about antitrust issues at 9:10 in response to a question from Wall Street Journal reporter Amir Efrati.

Related Topics: Channel: Industry | Features: Analysis | Google: Antitrust | Google: Legal | Legal: Patents | Legal: Regulation

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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  • http://twitter.com/HyperTexted Kevin Gerding

    The problem for the FTC, and the many small businesses in the United States, is that the FTC must rely on antiquated antitrust laws dating back to the late 1800s. Such laws originated at a time that horse and buggies still were a popular form of transportation.

    You bet Google is favoring its verticals. But the FTCs failure in pursuing revisions to laws to better enable them to protect our economy in the digital age is a fault that falls right in their own laps. Legislators, to concerned about being re-elected and pleasing lobbyists, have also ignored antitrust laws and have allowed what began as a fair marketplace to become Google’s pot of gold.

    We now live in a time when many businesses have dumped their $10,000 a month Yellow Page book listings because few consumers use the book anymore. Consumers use Google. With one algorithm update, or a stroke of a key, Google can set standards and set policy that significantly impacts businesses not just in the USA, but across the globe as well. I’m surprised Google does not have a seat at the World Trade Organization to be honest.

    Although reports vary, Google controls 65% of the search market. Combine this with the other properties that Google owns (YouTube, etc.) and the amount of traffic under Google’s control is so substantial that it can’t be ignored by any responsible Federal agency or legislator that is concerned about free markets.

    Despite the fact that the FTC has outdated laws that leave them at a disadvantage, it’s important that they pursue the complaints of small business owners that Google’s verticals have pushed them out of the search results. This can be witnessed not by just Adwords ads, Google images and Google shopping, but the many clustered YouTube videos that dominate the first page of the search results for many queries.

    One thing is certain. Google will capitalize on the upcoming holiday shopping season in the United States. Many small businesses, which depend on these holiday sales to keep them going throughout the year, will surely fail. If the FTC does nothing, consumer choice and innovation outside of what Google dictates to the world will erode even further.

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