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AP Photo/Jose Luis Magana
             AP Photo/Jose Luis Magana   

FTC gives Google a free pass

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Zack Christenson
Research Fellow, American Consumer Institute
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      Zack Christenson

      Zack Christenson is a research fellow for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research institute.

The Federal Trade Commission dropped their investigation of Google over its business practices on Thursday.

The FTC had been looking into whether Google had engaged in anticompetitive practices with the way it serves its search results and if it gives preference to its own products over that of its competitors. Saying that Google did show preference to its own products when serving search results, the agency said that it was done mostly legitimately.

The FTC took a promise from Google to correct the more egregious examples of search favoritism, in lieu of imposing any penalties on the company. The commission also found that Google has used its patents on cellphone technology improperly, and ordered Google to make it available to rival companies.

Google has a long history of being accused of these anti-competitive search practices. It’s long pushed it’s own Google Products items ahead of competitors, for instance. There have also been complaints from companies such as Searchking, Foundem and Nextag, saying that their positions in search results have been downgraded drastically. The American Consumer Institute conducted a study to test whether Google “self-deals” their own products over those of their competitors, Yahoo and Bing. It ran 50 words through each search engine, testing to see if Google would rank their results higher than their competitors.  The results were very interesting:

Comparing the first search result for each of the fifty key words, the results show that Yahoo tends to favor its own websites (6 times) to roughly the same degree as Bing favors Yahoo’s websites (5 times), and Bing tends to favor its own websites (0 times) to roughly the same degree as Yahoo favors Bing’s websites (1 time). Similarly, Yahoo finds Google as the first search result in 11 of the 50 key words, while Bing finds Google 13 times. This suggests that there is no obvious favoritism between Bing and Yahoo with respect to any of the three search engine providers. However, Google searches find Bing and Yahoo less often, while finding its own websites at more than twice the rate, suggesting that Google may be favoring its own websites over its competitors.

Many consumer and industry groups, as well as Internet startups, had urged the FTC to investigate Google’s practices, saying its adversely hurt their business. Businesses such as Yelp and FairSearch.Org, a collection of tech industry companies, have made various claims of large drops in traffic due to tweaks in Google’s search algorithms.  After Thursday’s announcement, FairSearch.Org blasted the decision, calling it “disappointing and premature,” and adding:

“The FTC’s settlement is by no means the last word in this case, leaving the FTC without a major role in the final resolution to the investigations of Google’s anti-competitive practices by state attorneys general and the European Commission. 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 American Consumer Institute said that “letting Google off with a letter promising not to do it again is like believing Lindsay Lohan will stay out of trouble this time.”

Google claims that they have a right to engage in these practices, and that the competition is only a click away.  Google says if a user feels their not getting the best experience possible, there are other search engines, such as Bing or Ask. But much of Google’s actions smacks of hypocrisy when looked at within the entirety of its positions.  Google has been a vocal and ardent supporter of net neutrality, which would restrict ISP’s from imposing any regulations or restrictions on users – thus, according to the argument, providing a neutral platform.

With Google’s search obviously favoring its own results, it’s not giving equal, or neutral, results to its users. You can argue over whether this violates anti-trust laws, but it certainly violates the spirit of a net neutrality philosophy. The same can be said of Google’s dustup over its YouTube app and the Windows phone. According to Microsoft, Google is blocking full access to YouTube on the Windows 8 phone. When it comes to net neutrality, Google claims to be worried about the end user receiving a fair shake. When it comes to their own situation, they’d rather not be held to the same standard. Certainly a case of “it’s good for thee, but not for me.”

Now that the FTC has decided not to act, it will be interesting to see how Google will implement its voluntary changes to search. Google clearly hasn’t been held to the same standard as others that have been investigated over anti-trust allegations, including Microsoft. Microsoft was penalized over its Internet Explorer browser’s dominance, something that harmed almost no one, save for a few tech companies.

Google’s practices, whether legal or not, are surely harming thousands of small businesses that aren’t attracting the attention they once did, due to Google’s diversion of traffic to their own products. Many studies, including one done here at ACI, show that it’s caused great harm to innovation and stifled the marketplace.

Zack Christenson writes on digital tech issues for the American Consumer Institute.