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Google escapes FTC legal action but accepts a rap on the knuckles

Following a nineteen month investigation into alleged restrictive practices by search giant Google, the Federal Trade Commission (FTC) has decided not to take legal action. Search rivals are less than happy with the outcome. Google, on the other hand, is understandably breathing a sigh of relief. The search engine didn’t escape entirely unscathed however; it has ‘volunteered’ to accept several concessions to avoid any further threat of legal action by the Commission. Over on this side of the pond Google still faces the threat of further legal action because of the ongoing investigation into anti-competitive practices by the EU’s Competition Commission.

The FTC found that Google had not biased its search results to favour its products, in spite of protestations by its competitors. However Google has accepted that from now on it should give advertisers access to more information about their campaigns, and it has also agreed not to use other providers’ material such as product reviews in its own search results. The search giant was also forced to accept a further concession about how it uses the patents it bought when it acquired Motorola Mobility last year for $12.5billion (£7.9billion).

Google has now agreed to charge “fair and reasonable” rates to companies that need to use its standard essential patents. By that it is referring to the essential patents that are critical to industry standards, for example the type of technology that allows tablets and smartphones to connect to the internet via Wi-Fi. It has also agreed not to take out injunctions which force licensees to remove their products from sale if there are disagreements about how much a reasonable rate should be.

Search rivals have expressed disappointment with the FTC’s decision as they had been hoping for much tougher sanctions to be applied against Google after such an exhaustive investigation. Fairsearch, an organisation representing several of Google’s critics like Microsoft, issued a statement claiming:

“The FTC’s decision to close its investigation with only voluntary commitments from Google is disappointing and premature, coming just weeks before the company is expected to make a formal and detailed proposal to resolve the four abuses of dominance identified by the European Commission, first among them biased display of its own properties in search results.”

The FTC had been asked to investigate whether Google had been favouring its own products in search results. The FTC chairman, Jon Leibowitz, however, told a press conference that the commission had found no evidence of that:

“Some may believe the commission should have done more, but for our part we do follow the facts where they lead,” he stated.

“We do it with appropriate rigour. This brings to an end the investigation. It is good for consumers, it is good for competition and it is the right thing to do.”

Google is also promising that it will stop copying content from other websites to use in its summaries, even though the company had insisted the practice was legal under the fair-use provisions of US copyright law. However, perhaps the most important change will see the search giant allow advertisers to copy ad campaign data to other search engines, like Microsoft’s Bing.

Google’s response to the settlement is hardly surprising. Google’s chief legal officer, David Drummond, stated in a company blog post:

“The US 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. The conclusion is clear: Google’s services are good for users and good for competition.”

However, Google may yet have the smile wiped from its corporate face should the EU’s Competition Commission decide that its practices are anti-competitive. In December, 2012, the Commission gave the search giant a month to address four key areas:

  • the manner in which Google displays “its own vertical search services differently” from other, competing products
  • how Google “copies content” from other websites – such as restaurant reviews – to include within its own services
  • the “exclusivity” Google has to sell advertising around search terms people use
  • restrictions on advertisers from moving their online ad campaigns to rival search engines

If Google does not address these critical concerns and is subsequently found guilty of breaching European anti-trust laws, it could potentially face a fine of up to$4 billion. Google has until the end of the month to respond to the Commission’s concerns.

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