FTC: Google Search Ranking Does Not Violate Law

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 inSeptember 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.

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

Googlelast 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

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.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.