Google Settles FTC Antitrust Inquiry

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Google has settled with the Federal Trade Commission to resolve the agency's 19-month antitrust investigation into the company's advertising business practices and its use of industry-standard patents against competitors.

The settlement requires Google to meet prior commitments to license key patents under fair, non-discriminatory terms. Following its acquisition of Motorola, Google sought or threatened injunctions against competitors' products through the International Trade Commission, despite prior promises from Motorola to license relevant patents.

FTC chairman Jon Leibowitz said his agency's enforcement action makes clear that companies must live up to their patent licensing commitments and will relieve companies of the burden of hoarding patents for defensive purposes, thereby freeing up capital for innovation.

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In addition, Google has made a public commitment to change its business practices for five years in two significant ways: It will allow websites to prevent Google from scraping content and displaying that content on Google's own Web properties, a practice that brought complaints from the likes of Yelp.com. And it will drop its API restrictions that prevented advertisers from writing code that automated the export of ad-campaign data for use in third-party ad-campaign management systems.

The FTC commissioners voted unanimously to close the agency's investigation of Google's search business practices, thereby allowing algorithmic changes that affect competitors' visibility in Google search. "Although some evidence suggested that Google was trying to eliminate competition, Google's primary reason for changing the look and feel of its search results to highlight its own products was to improve the user experience," Leibowitz said.

Asked at a FTC press conference to provide examples of that evidence, Leibowitz demurred, referring the reporter to the commissioners' published statements. As an example of the competitive impact of Google's alleged "search bias," the commissioners' joint statement noted that Google demoted almost all comparison-shopping websites from its first search results page.

"These changes resulted in significant traffic loss to the demoted comparison shopping properties, arguably weakening those websites as rivals to Google's own shopping vertical," the FTC statement said. "On the other hand, these changes to Google's search algorithm could reasonably be viewed as improving the overall quality of Google's search results because the first search page now presented the user with a greater diversity of websites."

Google's escape without the imposition of significant restrictions represents a major win for the company and a defeat for Microsoft and allied online businesses, which have been urging regulators to block Google acquisitions and to curb alleged anti-competitive practices since 2007.

FairSearch.org, a group supported by Oracle, Microsoft, Nokia and several travel websites, warned that what it perceives as a regulatory wrist-slap will encourage further bad behavior. "The FTC's inaction on the core question of search bias will only embolden Google to act more aggressively to misuse its monopoly power to harm other innovators," the group said in an emailed statement.

Google's chief legal officer David Drummond said in a blog post that Google has always welcomed regulatory scrutiny and expressed satisfaction with the FTC's decision to validate Google's approach to "Universal Search" -- by which "organic" Web search results are intermixed with search results from other indexes at Google's discretion -- as a fair business practice.

Google has yet to resolve a European Commission inquiry begun in late 2010, though E.U. antitrust chief Joaquin Almunia has said he expects a settlement proposal from Google this month. The Competition Commission of India is also examining Google's business practices for potential antitrust violations.