FTC: Google Search Ranking Does Not Violate Law

Settlement includes voluntary changes; Commission mandates Motorola patents must be made available to competitors on reasonable terms

By John Eggerton -- Broadcasting & Cable, 1/3/2013 12:40:37 PM

The Federal Trade Commission Thursday closed its almost two-year-long investigation of Google's search and advertising businesses with a settlement, rather than prosecution, based on Google's promises to change some of its business practices to resolve allegations of anticompetitive conduct.

The FTC concluded that Google's search rankings, on balance, were to improve consumer experience rather than bias them anti-competitively in favor of Google content and closed the investigation saying Google's conduct did not violate American law that the FTC applies -- the vote was 5-0. Google volunteered to make some changes to that experience, however, including not scrapping competitor's data or disfavoring clients who advertise on other platforms. For example, websites can opt out of specialized search without being demoted in organic searches.

Those Google promises are legally enforceable and binding commitments, FTC chairman Jon Leibowitz said. He said the search investigation was closed because the evidence of the FTC's extensive investigation did not support the claim that prominent display of its own content in searches was undertaken without legitimate justification. 

In a separate settlement order (in a 4-1 vote), the FTC also required Google to make the standard essential patents (SEP) it bought from Motorola available on fair terms to competitors, including trying to resolve disputes "through a neutral third party before seeking injunctions."

Leibowitz said he did not think Google was getting off the hook with the finding its search was not actionably anticompetitive. He said antitrust regulators always want to bring the "big case," but said that Google had not violated the law and so suggested this was not going to be that big case. He did say there was some evidence of search manipulation, but suggested that weighed against the totality of search did not tip the scales.

"The U.S. Federal Trade Commission today announced it has closed its investigation into Google after an exhaustive 19-month review that covered millions of pages of documents and involved many hours of testimony," Google senior VP and chief legal officer David Drummond blogged of the decision. "The conclusion is clear: Google's services are good for users and good for competition."

Drummond also outlined Googles two commitments: "Websites can already opt out of Google Search, and they can now remove content (reviews, for example) from specialized search results pages, such as local, travel and shopping; 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."

Some company critics had pointed to Google's control over where companies and ads rank in searches as comparable to the ISP control of Internet on- and off-ramps that the government regulated against in the FCC network neutrality rules. For its part, Google has said it is simply doing what is best for the consumer and providing the most relevant responses as rapidly as possible.

In a Senate Commerce Committee hearing in September 2011, the Judiciary Committee's Antitrust Subcommittee Chairman Herb Kohl (D-Wis.) teed up the key question -- whether Google was biasing its search results or simply presenting them in the best way to get consumers from its site to their Web destination, and whether there was an inherent conflict now that Google had gone on a buying binge and morphed from a search company to an Internet conglomerate.

In follow-up written answers to the Hill following that hearing, Google executive chairman Eric Schmidt had asserted that Google was not dominant in search, arguing that its competitors are not just general search engines -- Bing, Yahoo -- but specialized search engines, social networks and mobile apps. He also backed off his characterization of Google at the hearing as "in the area" of legal definitions of monopoly. "Google has none of the characteristics that I associate with market power," he wrote. But, as he did at the hearing, he again suggested in the letter that that was an issue for a court to decide.

The FTC concluded that a court prosecution was not appropriate given its conclusion that Google search ranking on balance was to improve customer experience, not bias search in violation of the law.

That decision did not sit well with Google critics looking for stronger action out of the government.

"The FTC's reported closing of its Google search bias investigation, with no real enforceable settlement mechanism, and a special new self-enforcement antitrust precedent apparently only available to Google, raises serious questions about the integrity of the FTC's law enforcement process and whether the FTC accords Google with special treatment not available to other companies," blogged arguably Google's strongest critic, Scott Cleland, president of Precursor LLC, on reports the investigation had wrapped.

The FTC had been under pressure from Congress to look into Google's online advertising tracking and privacy policies.

Google last year agreed to pay an FTC-record $22.5 million to settle charges it violated an earlier FTC settlement when it misrepresented that it was not placing tracking cookies or serving up targeted ads to Apple Safari browser users..

In October, 2011, Google settled with the FTC over charges it had "used deceptive tactics and violated its privacy promises when it launched its social network, Google Buzz." In that settlement, Google promised not to misrepresent "the extent to which consumers can exercise control over the collection of their information."

Leibowitz said he doesn't think Google will want to go through that again and that the FTC is in a "trust but verify" mode.