Google seemed to be heading to a relatively painless antitrust decision from the U.S. Federal Trade Commission in recent months, one that wouldn’t have hit the search giant’s search engine practices with a big stick.
But that’s been changing lately as critics have been letting the FTC know that a more serious approach should be considered, especially in light of harsher consequences and actions being taken by the European Union in connection with antitrust complaints there against Google.
Such criticisms are the thrust of the FTC’s about-face in how it was approaching Google, according to a Dec. 20 story from Politico.
“European regulators appear headed toward a dramatically different conclusion to their antitrust probe of Google than their American counterparts—a binding agreement that could cost the search company dearly if violated,” according to Politico. “That’s one of several reasons why the expected Federal Trade Commission settlement that sources said was a done deal unraveled Tuesday.”
Neither agency “was ever expected to formally label Google a monopoly or a violator of antitrust laws, but all signs pointed to the FTC concluding its case with voluntary concessions while the EU would extract a binding agreement that could significantly alter how the search engine operates there,” the story reported.
Rumors have been circulating for months that the FTC would announce a decision in the case by the end of this year, but that was scuttled Dec. 19 when unnamed sources revealed that a decision in the matter won’t come until sometime in 2013.
Several IT analysts who spoke with eWEEK said they aren’t surprised that the FTC might be taking a harsher approach in its reviews of Google and its behavior in the world of search.
“The FTC would look foolish giving Google a tickle if the EU puts real meat on the bone,” Steve Duplessie, founder of Enterprise Strategy Group, wrote in an email response. “The problem is that like all ‘new’ effective monopolies—which, let’s face it—we all strive to become, are difficult to regulate due to their very nature. These issues never existed before. It’s logical that any company successful at changing the game the way that Google has will continue to push and push until it is stopped. “
On the other hand, wrote Duplessie, “I have no issue with Google in this regard—it’s in the DNA of all successful businesses that operate above board, albeit often at the fringes.”
In the United States, companies like Google have an easier time pushing their own agendas, he said, because “our very system is built to support the business versus the people. It’s only when the business crosses a line so egregiously, and many times not even after that (again, look at the banking fiasco—nothing of substance has changed at all from a regulatory perspective) that our regulators ever really act in the best interest of the people versus the business.”
Google’s Antitrust Dance with the FTC: Analysts Weigh In
It’s a different approach in Europe, he said. “Because of that, the EU is in a better position to legislate and regulate for the people ahead of the interests of the company in question. And, it appears that in the case of Google, it intends on doing so.”
With that in mind, the FTC might be waiting to see what the EU does in its case against Google so it can follow the lead of the EU, wrote Duplessie. “If and when the EU levies real, serious rules of engagement for Google—which it must follow or the penalties will be massively detrimental to its business operations (unlike the slap on the wrist they would most likely receive in the U.S.)—they become the standard bearer for as the protector of the peoples interest. If the FTC were to come up with some [lesser] finding that has zero teeth, they would look completely foolish.”
Dan Maycock, an analyst with Slalom Consulting, said it’s ironic that Microsoft is one of the companies seeking harsher actions against Google by the FTC, especially since Microsoft was in a similar antitrust bind over its inclusion of its Internet Explorer browser as the default browser in its earlier Windows operating systems.
“Things are very cyclical,” said Maycock. “Microsoft is coming at Google here because they are trailing” in the search marketplace. “They know this story all too well.”
Yes, the FTC has been too lenient in its approach toward Google so far, he said. “I would say this is as big a deal as what Microsoft went through” in its antitrust dealings with the FTC. “I’m not sure why the FTC was backing off on this when they’ve been really good at telling dominant players to make room for others.”
One possible reason, said Maycock, is that “search is ultimately not as cut and dry as a browser being built into an operating system,” which was the key issue on the Microsoft antitrust case. “If I was sitting in the FTC’s seat, I would say it’s absolutely the same thing. They need to do what needs to be done to make it fair.”
Charles King, principal analyst with Pund-IT, said the delay in announcing a decision in the case has roots in politics.
“If the rumors about the EU being more severe in their treatment of Google are true, then it’s entirely plausible to me that the FTC would say, ‘Let’s sit on our heels to see how things play out before making our own decision,’” said King. “The sense that I have is that it would not surprise me to see a more balanced approach here, that the FTC’s ruling would not be radically out of balance with what’s happening in Europe.”
Google’s Antitrust Dance with the FTC: Analysts Weigh In
More likely, however, is that the FTC is putting the issue into the background right now because of other bigger issues in the forefront in Washington today, such as the looming fiscal cliff, the upcoming Presidential Inauguration and the slow recovery of the global economy, said King.
“I think someone at the FTC is saying, ‘We don’t need to come out with a controversial ruling now before the holidays,” he said. “Personally, I think that’s probably the more likely scenario no matter what the rumors are otherwise. Doing so doesn’t really hurt anybody. They’ve got much larger issues on their plate.”
One of the biggest criticisms from critics of a gentle FTC approach against Google arose in November, when word got out that the settlement talks between Google and the FTC might not include a key part of the U.S. government’s concerns about Google’s business practices. What was missing was language addressing one of the most serious charges against Google—that it intentionally manipulates search results to harm competitors.
Instead, the talks were focusing on less controversial issues, such as how the company uses patents and how it displays comments collected from other Internet services.
Google was first notified by the FTC of a “formal review” of its business practices in June 2011 after similar reviews began in Europe. At that time, the European Commission launched an investigation into the company’s search practices after vertical search engines such as Foundem, eJustice.fr and Microsoft’s Ciao complained the company favored its own Web services in search results on Google.com over theirs. They argued that this put them at a significant competitive disadvantage in the market.
The initial FTC review in 2011 began after the agency heard complaints from Microsoft, Expedia, TripAdvisor, Yelp and other Websites that Google promotes its own Web services above those of competitors.
Google denied all such allegations at that time, noting that its search algorithms analyze Website quality and popularity based on links for placement as part of its PageRank system.
In July, Google reached a record $22.5 million settlement with the FTC to resolve charges that Google bypassed Apple Safari browser privacy settings that blocked cookies for their users. The settlement was criticized by the Competitive Enterprise Institute, an industry group, as “a dangerously overbroad precedent that will chill Internet innovation and hurt online startups,” the Institute said in a statement at that time.