Despite Report Finding Google’s Tactics Anti-Competitive, FTC Decided Not to Sue

Google AntitrustFollowing its investigation of Google in 2012, FTC staff issued a report recommending that the agency sue the tech giant for anti-competitive behavior. However, for the FTC decided against suing the tech giant. The report, which was confidential and not intended to be disseminated to the public, was inadvertently disclosed as part of a records request from the FTC according to the Wall Street Journal’s (“WSJ”) story. A lawsuit would have likely led to huge financial penalties and other restrictions on the company’s business practices.

In the report, FTC staff argued that Google demonstrated anticompetitive behavior in at least three areas: 1) improving its search results by copying content from websites such as Amazon and then threatening to remove those websites from Google if they objected; 2) forbidding companies from bolstering advertising campaigns on other websites by using data that they gathered from running advertising on Google’s ad platform; and 3) restricting websites from displaying search results from both Google and one of its competitors. Furthermore, Google also allegedly harmed companies such as Yelp and Orbitz by favoring its own shopping and travel services in search results, the FTC report said. This was the major issue in the investigation, but FTC staff wrote that bringing a case on this point would be difficult because Google could argue that its action led to a better interface for search-engine users.

Following the report’s release, the European Union levied its own anti-trust charges against Google. The EU’s charges come after years of investigation and three attempted settlements with Google. Specifically, the EU charged Google with abusing its dominant position in Internet search services in Europe by systematically favoring its own comparison-shopping product, Google Shopping.   As a result, Google faces a fine of up to $6 billion, which represents more than a quarter’s worth of profits, or up to 10 percent of the company’s annual turnover. This would mark the first time that formal charges are being brought against Google by the EU. Under EU rules, Google will have 10 weeks to respond to the allegations and call a hearing to present a defense. The new Competition Commissioner, Margrethe Vestager, said “It’s not based on the merits of Google shopping that it always comes up first in search. Dominant companies can’t abuse their dominant position to create advantage in related markets.” In addition to this antitrust lawsuit, the Commission has also opened a separate antitrust investigation into Google’s Android OS. The claim there is that Google is abusing its dominant position by requiring device manufacturers to bundle its own services and applications with the open-source operating system.

However, Google is not taking this news lying down. In fact, Google has gone on the offensive against the WSJ, the EU, and any other naysayers alleging that Google received preferential treatment by the FTC based upon its relationship with the White House. In addition to the FTC’s report becoming public, the WSJ has also alleged that Google received preferential treatment because of its close ties to the White House. According to the WSJ, Google has visited the White House approximately 230 times since President Obama took office in 2009, which included visits while the FTC was investigating the Internet giant for antitrust violations. In response to these allegations of preferential treatment, Google has responded that, “We think it is important to have a strong voice in the debate and help policy makers understand our business and the work we do to keep the Internet open, to build great products, and to fuel economic growth,” Niki Christoff, a Google spokeswoman, told the WSJ. The White House has also denied that any preferential treatment has been given to Google.

The FTC, in a very unusual move, was prompted to issue its own defensive press release regarding the allegations that Google received preferential treatment based on its relationship with the White House. According to the FTC:

Today’s Wall Street Journal article “Google Makes Most of Close Ties to White House” makes a number 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. Not a single fact is offered to substantiate this misleading narrative.

From its formal response, it’s clear that the FTC is not amused with the allegations levied by the WSJ. Google is similarly unimpressed. In a recent blog post on the company’s public policy blog, Google took shots at the WSJ and its owner, Rupert Murdoch with a laughing baby as its centerpiece. Google’s blog posting, authored by Rachel Whetstone, the company’s vice president of communications and policy, countered several what it termed “inaccuracies” in the WSJ’s story. The blog then goes on to note that the FTC, several state Attorneys General, and courts in both Germany and Brazil had determined that Google’s conduct was lawful. The blog then concludes with a GIF saying “Aha!”

Given the EU’s new charges against Google, it appears that the company’s antitrust problems may be beginning anew, and that the WSJ is very interested in making sure they stick this time. It remains to be seen what will come of the WSJ’s other allegations concerning the White House and the FTC’s decision not to file its own charges against Google.

Google Public Policy