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March 26, 2015

FTC Denies it Was Pressured by White House to Go Easy on Google

Google's Larry Page, Sergey Brin and Eric Schmidt.

The Federal Trade Commission (FTC) is being accused of dropping an anti-trust investigation into Google after being pressured to do so by the White House.

A new report from the Wall Street Journal paints a picture of Google schmoozing with top officials in a bid to make the probe go away.

Google co-founder and CEO Larry Page met with top FTC officials to discuss settlement talks, visitor logs and e-mails reviewed by The Wall Street Journal have revealed. Google Chairman Eric Schmidt, meanwhile, met in the White House with a senior adviser to President Barack Obama, Pete Rouse, the report revealed.

Although the documents obtained by the WSJ do not reveal what was discussed, the FTC did suspend its probe into Google not long after. That decision came despite a 2012 FTC report into Google’s actions revealed the search engine firm was, in fact, using its dominance as a search engine to snuff out the competition.

The FTC is denying allegations that it buckled under the pressure of the Obama administration, however, and slapped back at the Wall Street Journal saying the article is full of “misleading inferences and suggestions about the integrity of the FTC’s investigation.”

“The article suggests that a series of disparate and unrelated meetings involving FTC officials and executive branch officials or Google representatives somehow affected the Commission’s decision to close the search investigation in early 2013,” reads the FTC response. “Not a single fact is offered to substantiate this misleading narrative.”

The FTC said it regreted “the inadvertent disclosure of confidential documents and information in response to a Freedom of Information Act request.”

The documents the FTC is referring to is the 2012 report obtained by the Wall Street Journal that revealed the FTC recommended suing Google for violating anti-trust rules and causing “real harm to consumers and to innovation.”

The report was an unflattering one, portraying Google as a bully willing to bulldoze the competition.

The search engine firm’s conduct, the report said, “helped it to maintain, preserve and enhance Google’s monopoly position in the markets for search and search advertising.”

Although the FTC opted not to take action against Google, the 2012 160-page report revealed Google was boosting links to its own services even when those of its competitors would have better served its users. Yelp, for instance, may have been the more relevant search result, but Google Local would appear at the top of the results.

Other examples of poor conduct listed in the WSJ report included:

  • Google Shopping ranking above other comparison-shopping sites even when the rival site was a better choice for users.
  • Google copying and “scraping,” content from TripAdvisor and Amazon.com and told the rival companies their sites would be removed from its search listing if they objected. In one instance, Google used Amazon’s sales rankings to determine how it ranked products for its own listings, it said.

“It is clear that Google’s threat was intended to produce, and did produce, the desired effect,” the report said, “which was to coerce Yelp and TripAdvisor into backing down.” Google also said it would “use its monopoly power over search to extract the fruits of its rivals’ innovations.”

The report was penned a year before the FTC unanimously ruled there was not enough evidence to support allegations that Google was giving its own services preferred billing in search results.

The FTC, in its statement yesterday, said it had conducted “an exhaustive investigation” into Google’s actions.

“Based on a comprehensive review of the voluminous record and extensive internal analysis, of which the inadvertently disclosed memo is only a fraction, all five Commissioners (three Democrats and two Republicans) agreed that there was no legal basis for action with respect to the main focus of the investigation – search,” the FTC said. “As we stated when the investigation was closed, the Commission concluded that Google’s search practices were not, ‘on balance, demonstrably anticompetitive.’ Contrary to recent press reports, the Commission’s decision on the search allegations was in accord with the recommendations of the FTC’s Bureau of Competition, Bureau of Economics, and Office of General Counsel.”

The FTC, at the time, convinced Google to change some of its business practices such as promising to license under more reasonable terms the hundreds of the patents it acquired with the purchase of Motorola. The change meant rivals would have access to patents on critical standardized technologies needed to make popular devices such as Smartphones, laptops, tablets and gaming consoles.

Google also agreed to limit its use of bits and pieces from other websites and to give online advertisers more flexibility to simultaneously manage ad campaigns on Google’s AdWords platform and on rival ad platforms.

Google has, in the past, been fined by the FTC. It had to pay out $22.5-million in August of 2012 to settle accusations it broke a privacy policy by “improperly tracking Apple Safari users.” The penalty remains the biggest fine the agency has imposed against a corporation for breaching a previous agreement with the agency.

 

 


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Jennifer Cowan is the Managing Editor for SiteProNews.

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