Google’s ‘monopolistic behaviors’ and the FTC

The Wall Street Journal’s report this week that in 2012, Federal Trade Commission staffers had found evidence that Google had engaged in “monopolistic behavior” and advised that the agency sue, was more than a trip down antitrust memory lane.

The details in the report revived questions about the search engine’s credibility then and its motivations today as it moves into new areas. It also raises concerns over the ability of the FTC to protect consumers.

The FTC’s decision in 2013 not to sue the company ended a chapter for Google and some of its competitors such as Yelp, TripAdvisor, Microsoft and Amazon. The company still faces an extensive, ongoing European antitrust probe.

Google beat the antitrust rap, as Politico reported then, by engaging in Washington, including spending about $25 million on lobbying. However, Todd Zywicki writing in the Washington Post reminds that Jon Leibowitz, the then-chair of the FTC, denied in 2013 that lobbying had any influence, and points to the fact that the decision not to sue was unanimous among all five commissioners, which suggests “no political pressure from the White House.”

This week, the Journal reopened the issue with articles on the FTC’s competition bureau report, which the Journal mistakenly received through a public records request. In it, FTC staff did not recommend suing over the company’s search practices but over three related areas of its business.

Google’s Kent Walker said in a statement:

Speculation about potential consumer and competitor harm turned out to be entirely wrong. Since the investigation closed two years ago, the ways people access information online have increased dramatically, giving consumers more choice than ever before.

And our competitors are thriving. For example, Yelp calls itself the ‘de facto local search engine’ and has seen revenue growth of over 350% in the last 4 years. TripAdvisor claims to be the web’s ‘largest travel brand’ and has nearly doubled its revenues in the last 4 years.

Much of the FTC report struck Danny Sullivan, in Marketing Land, as standard search engine practice. But he zeroed in on the finding that the company “adopted a strategy of demoting, or refusing to display, links to certain vertical websites in highly commercial categories.”

Sullivan subsequently reported that Google told him that it had experimented with its shopping algorithm in 2007 out of concern over the quality of some aggregation and shopping comparison sites.

Again, I was reminded of the tricky aspect of investigating Google — behavior that may look monopolistic could also be explained as being done to improve consumers’ experience, a sentiment echoed in the FTC staff report. Per the Journal:

The “evidence paints a complex portrait of a company working toward an overall goal of maintaining its market share by providing the best user experience, while simultaneously engaging in tactics that resulted in harm to many vertical competitors, and likely helped to entrench Google’s monopoly power over search and search advertising,” the staff said.

 

Above: The Google logo. 

 

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  • greg

    If this story was about Microsoft the writers tone would be negative and focused on the findings. But it is about Google, a home town company with many thousands of local employees, so the story ignores the findings and seeks to mitigate them by muddy the waters.
    google out spent almost every single company in the USA to block these investigations. and Google was the 2nd largest contributor to Obamas campaign. (I am not neg Obama just this weak sauce story)
    outside of the valley and outside of its monetary influence, governments and members of the public are not nearly as happy and up beat as the mercury news. …

  • Douglas Hull

    Wouldn’t be nice if the FTC paid as close attention to the monopolistic practices of Comcast? and opened up cable territories to real competition?

 
 
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