The FTC recently dropped its two-year antitrust investigation of Google after the company voluntarily committed to license certain patents to mobile rivals, and upon request, stop “scraping,” which is the practice of including snippets of information from other websites in its search results. Google has already started to cut back on its use of “scraping” after Yelp’s complaint, which had helped ignite the FTC’s investigation. Google also promised to allow its advertisers easier movement of advertising campaigns to rival platforms.
Google was investigated on allegations that it was abusing its dominance in internet search through methods such as tying, exclusive dealings, deceptive practices, monopoly pricing, and privacy abuse. These accusations, if proven, violate section 1 and 2 of the Sherman Act and section 5 of the FTC Act. Most of these allegations stemmed from the adoption in 2007 of Google’s Universal Searching (which presents listings from news, video, images, local, and books at the top of the search results) and the merger with Motorola.
In order to conclude that Google violated the Sherman Act and FTC Act, it must be proven that Google’s tactics unreasonably restrain competition, either by harming consumers or excluding competition. Google argued that its search engine helps consumers by making search more convenient. Instead of receiving many hits from a search, it will bring up a related article, book, and so forth that shift the search results in a helpful way for consumers. Google also argued that the process would not harm competition because if consumers were looking for a particular company, they could easily find it; the only difference is that the result is further down the list. The FTC ultimately agreed. Regulators also found no evidence that Google unfairly favored its own services in search results.
To settle these allegations that have stemmed from both the transition to Universal Search and the merger with Motorola, Google has voluntarily committed to license certain patents, which would address the concerns with potential violations of Section 1 of the Sherman Act. The company also agreed to stop scraping from other sites and allow easier access to other advertisements, which address potential violations of Section 2 of the Sherman act and Section 5 of the FTC Act.
Unresolved Concerns
Despite the settlement, there are still concerns that the FTC has overlooked major problems. Critics have pointed out that the FTC has failed to address the fact that 78 percent of revenue (and what is estimated to be 85 percent globally) in search advertising is controlled by Google. Critics argue that this qualifies as a monopoly that reduces competition.
Another concern is how the FTC has defined consumers. The FTC found that Google was not in fact harming consumers, but helping them. Some argue that the FTC viewed consumers incorrectly. Although there are no details defining how the FTC measured consumer harm, it is suspected that the FTC defined consumers as those who use Google to search for information rather than the companies who pay for advertisements. Critics argue that had the FTC viewed consumers as the companies who purchase the advertisements, there would have been a different result because it is not, in fact, helpful for businesses that pay for advertisements and get pushed down on the list to accommodate Google’s new practice.
Google and the EU
Although Google’s promise to change its practice has abated the FTC, a spokesman for the European Commission, Michael Jennings, stated, “We have taken note of the FTC decision, but we don’t see that it has any direct implications for our investigation, for our discussions with Google, which are ongoing.” In July, Google sent the European Commission an informal settlement proposal, which they have been reviewing. The EU’s antitrust chief recently gave Google a month to come up with a detailed proposal that would resolve the two-year investigation’s complaints. If Google fails to resolve the complaints and is found guilty, it will be fined ten percent of its revenue, which could amount to $4 billion.