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Report: FTC Likely To Abandon “Vertical Search” Antitrust Claims Against Google
There are now enough indications to suggest that any antitrust settlement between the FTC and Google — and the FTC would much prefer to settle than test its case in court — won’t involve “vertical search.” An earlier Reuters report, probably resulting from an internal FTC leak, suggested that vertical search wasn’t the core of the agency’s case against Google.
Today Bloomberg is reporting that the FTC is “wavering” on whether to pursue a formal action against Google. In particular the agency’s own people (anonymous sources) suggest they can’t make the “vertical search bias” claim stick legally:
Federal Trade Commission officials are unsure they have enough evidence to sue Google successfully under antitrust laws for giving its own services top billing and pushing down the offerings of rivals, said the people, who asked for anonymity because the discussions aren’t public. Regulators are also looking at whether the ranking system’s benefits to consumers outweigh any harm suffered by rivals including NexTag Inc. and Kayak Software Corp, the people said.
This is huge. The “search bias” argument is the core of FairSearch and other Google critics’ complaints against the company. While much of the antitrust wrangling playing out in the press is about public relations, there’s a misrepresentation of antitrust law behind Google’s most vocal critic’s arguments. The implication is that somehow antitrust law operates for their benefit — it doesn’t.
Antitrust law is intended to protect consumers rather than competitors. Protecting competition is the means to the end of promoting consumer interests. But protecting the position of individual companies in the market is not an aim or goal of antitrust rules, although when abuse of a dominant market position harms competition antitrust violations may be found. As a practical matter it’s often competitors who agitate for antitrust action, as in this case.
While it may seem deeply unfair to rivals that Google can use its search dominance and traffic to promote services like Google Maps, Google Shopping or Google Hotel Finder these services arguably benefit consumers. And when they’re weak consumers readily turn to others. For example, Kayak’s CEO reported to CNBC a couple of months ago that Google’s travel search services so far had “no impact” on its business.
The FTC would have enormous trouble making the case that Google isn’t entitled to “discriminate” between services with its algorithm — that’s the entire point of Google’s algorithm — or that its “promotion” of Google Maps instead of Mapquest, for example, harms consumers in any way. Then there’s the long-standing problem of remedies and the US intervening in the SERP.
FairSearch has tried to answer these issues and critiques with a list of “principles for evaluating antitrust remedies to Google’s antitrust violations.” Attorney Marvin Ammori, whose firm has been retained by Google, argues point by point that these principles are “ill conceived.”
In Europe Google faces similar claims, arguments and issues. Any decision not to pursue the “vertical search” angle in the US could influence the Europeans to reassess their position on that issue.
Decisions are due very soon on both sides of the Atlantic about whether to bring formal cases against Google. However both sets of regulators would much prefer to settle and avoid a protracted and potentially unsuccessful (and therefore embarrassing) legal battle — if they can.