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4/27/2012
02:22 PM
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FTC Hires Attorney, Eyes Google Search: What's Next?

Despite Google's mantra, "competition is only a click away", FTC hires lawyer to head antitrust investigation of Google's search advertising business. This pressures Google to make concessions.

Oracle v. Google: Tour The Evidence
Oracle v. Google: Tour The Evidence
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For the past three years, Google has been laying the groundwork to defend itself against potential antitrust complaints from regulators in the U.S. and in Europe. But its ward against harm--repeating the phrase "competition is only a click away"--appears to have failed to keep regulators at bay.

On Thursday, Federal Trade Commission chairman Jon Leibowitz said the FTC had hired experienced litigator Beth Wilkinson to head its antitrust investigation into Google's search advertising business. According to the San Jose Mercury News, Leibowitz stressed that the agency has not decided whether to file a formal antitrust complaint against Google.

For Google, the announcement by the FTC says that troops have gathered at its border. It's a sign that something needs to be done to defuse tensions lest hostilities erupt.

Google declined to comment.

Wilkinson's hiring comes as the European Commission, which has been conducting its own investigation of Google's search advertising business, is soon expected to decide whether it will file a formal complaint against the company. Three states--California, New York, and Texas--also are conducting their own inquiries. Google also faces antitrust inquiries in Argentina and South Korea, the company said in a recent financial filing.

[ Read Google Battles Charges Of Search Bias. ]

A similar situation occurred in 2008 and it didn't go well for Google: Four years ago, Google and Yahoo planned an advertising partnership. In September of that year, the Department of Justice hired antitrust litigator Sandy Litvack. This was seen as a sign that the DoJ intended to block the deal. To avoid a fight with the Justice Department, Google ultimately gave up on the idea of partnering with Yahoo.

DoJ intervention has prompted Google to make some other changes. It helped derail the Google Books settlement; it ended the unlawful no-poaching agreement that Google, Apple, and others California tech companies had made; it placed conditions on Google's ITA acquisition; and it forced Google to pay $500 million for accepting ads from illegal online pharmacies.

The FTC has been less effective, barking at Google more than it has bitten the company. The FTC in 2010 concluded its Street View investigation without meaningful penalties. The FTC's Google Buzz privacy inquiry resulted in Google agreeing to 20 years of privacy audits, but fell short of any real punitive action. And the agency has approved several large Google acquisitions, specifically DoubleClick and AdMob.

Given the preference in Washington for self-regulation--a preference that predates the Obama administration--Google's foes should not be surprised by the FTC's light touch. But the hiring of Wilkinson perhaps signals a shift in the winds.

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