Why The FTC Wanted To Sue Google For Anticompetitiveness

Giuseppe Macri Tech Editor
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A confidential report by the Federal Trade Commission investigating Google in 2012 recommended suing the company for multiple anticompetitive practices before the investigation was closed by commissioners in 2013.

The report obtained by The Wall Street Journal and written by key staff at the FTC said Google “conduct has resulted — and will result — in real harm to consumers and to innovation,” and that those actions had already resulted in “significant harm” to its competitors.

According to the 160-page report, Google took content from websites including Yelp, TripAdvisor and Amazon to bolster its own search results. When companies complained to Google, the search giant threatened to remove them from its search results — essentially blackmailing companies to obtain their cooperation.

“It is clear that Google’s threat was intended to produce, and did produce, the desired effect, which was to coerce Yelp and TripAdvisor into backing down,” the report said.

Google also prevented companies that syndicated its search results from collaborating with other search engines, and refused to let companies advertising through Google — the largest source of online advertising on the web — from using the data they got from Google ads with other advertising services.

The report states that Google “adopted a strategy of demoting, or refusing to display, links to certain vertical websites in highly commercial categories.”

After forcing Google to make changes to its policies, then-FTC chairman Jon Leibowitz said the changes offered “more relief for American consumers faster than any other option,” and the agency’s five commissioners voted unanimously to settle the investigation with Google in 2013.

“Speculation about potential consumer and competitor harm turned out to be entirely wrong,” Google said in a statement, adding that “after an exhaustive 19-month review, covering 9 million pages of documents and many hours of testimony, the FTC staff and all five commissioner agreed that there was no need to take action on how we rank and display search results.”

“This shows the FTC had direct evidence of intentional search bias by Google,” Luther Lowe, Yelp’s vice president for public policy, said in a New York Times report Thursday. “With the FTC agreeing to a weak settlement against the recommendation of professional staff, this anti-consumer behavior has been effectively greenlighted in the United States.”

The FTC’s economics bureau reportedly recommended not suing the company.

“It’s really remarkable the staff recommended issuing a complaint, and the commission not only disagreed but allowed Google to issue a letter saying ‘we won’t do it again,’ rather than enter into a consent decree,” Matthew J. Reilly, a former 13-year veteran at the FTC’s bureau of competition, said in the Times report.

Reilly added it was rare for all five commissioners to vote against a recommendation by the bureau.

The report comes amid a four-year investigation into Google by European regulators for antitrust violations.

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