Document Shows FTC Staff Wanted to Sue Google on Antitrust Issues

An internal FTC report showing staff wanted to sue Google for anti-competitive practices was accidentally released to the Wall Street Journal.

Documents obtained by the Wall Street Journal under an open records request show that in 2012 several officials at the U.S. Federal Trade Commission wanted to sue Google Inc. for abusing its monopoly position in ways that hurt consumers and its competition.

But Google managed to avoid a federal antitrust lawsuit when the FTC’s Commissioners in January 2013 unanimously decided to drop a 19-month investigation of the company after Google voluntarily agreed to change some of its business practices.

According to the Journal, the 160-page document it obtained from the FTC reveals deep concern over Google’s business practices at several levels among members of the Commission’s Bureau of Competition.

The document was apparently supposed to remain private, but was accidentally released in response to a Freedom of Information Act request from the Journal, the paper said.

It shows that officials at the commission felt that Google’s practices at the time of the investigation had the potential to cause “real harm to consumers and to innovation in the online search and advertising markets.”

In an emailed statement, Google general counsel Kent Walker downplayed the concerns highlighted by the FTC in the report obtained by the Journal.

"After an exhaustive 19-month review, covering nine million pages of documents and many hours of testimony, the FTC staff and all five FTC Commissioners agreed that there was no need to take action on how we rank and display search results,” Walker said.

The speculation about potential harm being done to consumers and rivals has turned out to be completely wrong, Walker asserted in the statement. “Since the investigation closed two years ago, the ways people access information online have increased dramatically, giving consumers more choice than ever before,” he said.

Competitors such as Yelp and TripAdvisor that were referenced in the FTC report are thriving, he maintained. “For example, Yelp calls itself the ‘de facto local search engine’ and has seen revenue growth of over 350% in the last 4 years.” TripAdvisor meanwhile has nearly doubled its revenues in the last 4 years and calls itself the world’s largest travel brand, he said.

The FTC document shows that staff at the agency’s bureau of competition wanted the commission to file an antitrust lawsuit against Google over three separate issues, the Journal said.

One of them pertained to Google allegedly taking content from rival websites like Yelp, TripAdvisor and to improve its own websites, the Journal said quoting from the report. When competitors asked Google to stop taking their content, the search engine giant apparently threatened to remove the companies from its search rankings.

The second issue that FTC staff wanted to sue Google over was the company’s policy of restricting websites that publish its search results from also working with rivals like Bing and Yahoo. The third area where staff felt Google broke antitrust law was its restrictions on the ability of advertisers to use data gathered from Google’s ad campaigns in advertising run on other ad platforms, the Journal said.

FTC staff stopped short of recommending that Google be sued for practices involving its core search engine business. But they did find enough in the company’s actions to say that it caused “significant harm” to rivals.

FTC staff investigated several complaints by rivals about the company’s abuse of its position in the search engine market to promote its own interests while downplaying rival properties.

They concluded that the company did indeed adopt a strategy of demoting or refusing to display links to rival websites in highly commercial categories. Even so, they did not feel the abuses roses to a level where it warranted an antitrust lawsuit.

Google’s voluntary settlement with the FTC addressed some of these concerns, while leaving others unaddressed.

The contents of the FTC file appear to substantiate many of the concerns raised by rivals and regulatory bodies in Europe and elsewhere about the company’s practices.

Concerns over Google’s enormous influence and growing Internet presence have prompted calls for a breakup of the company in the EU. Critics want the company’s search business to be split up from the rest of its businesses in order to create what they claim would be a more level playing field for rivals.

Jaikumar Vijayan

Jaikumar Vijayan

Vijayan is an award-winning independent journalist and tech content creation specialist covering data security and privacy, business intelligence, big data and data analytics.