Is The FTC Moving Closer to an Antitrust Lawsuit Against Google?

Oct 24, 2012

By Kerrie Spencer, staff writer – October 24, 2012

Google invariably faces threats of lawsuits from many sources, merely as a result of their market position and reach. The latest rumors about lawsuits and Google include rampant speculation regarding whether or not the Federal Trade Commission (FTC) will sue Google in the coming months. The motivation for leaking information about the potential lawsuit is unknown. Also unknown is how much credence should be put into those rumors — fact-based water-cooler conversation, or just a way to gauge public reaction? It is hard to guess, but this latest rumor is starting to gather steam, according to people familiar with the FTC.

The buzz is that the FTC is contemplating suing Google for abusing its well-known dominance of Internet searches, in violation of antitrust laws. (1)(2)(3)(4)(5) Sources claim that a memo has been circulating FTC headquarters and that commissioners with the power to decide whether to sue the Internet giant are actively trying to work out how to proceed. There is reportedly more than one lawsuit being discussed; there may be two, the second one relating to Google misusing patent protections to block competitors’ smart phones from arriving in the marketplace. If this is the case, that could be called “dirty pool.” (1)

How did it come to pass that the FTC is considering suing Google? Findings were recently released from a 19-month-long investigation into Google’s business practices, specifically looking at if they unfairly hamper their competition. The results of the report have apparently motivated Google executives — and Google’s competition — to meet with the FTC, in hopes of changing the outcome of a vote by the FTC on whether to go ahead with either lawsuit.

Google really does not want to face a lawsuit of this nature. In fact, no business would want to face an anti-trust lawsuit that may prove they have been engaging in illegal practices to ensure their competition is unfairly disadvantaged. Will Google pull out all the stops to battle these issues in court? The company will have to decide what to do, should the FTC file suit, depending on the advantages of settling out of court and the perceived strength of the FTC’s case.

The possible patent lawsuit is of concern largely because the FTC is probing to see if Google unfairly ranks search results to favor their own businesses. A positive finding may mean major trouble for the California-based giant. (1)(3) The patent issue is not the only one that the FTC is investigating. They also want to find out whether or not Google increases ad rates for rivals, making it tough for advertisers to compare data relating to ad campaigns run on other sites.

The list of things the FTC is investigating includes even more items that paint a disturbing picture, if true, of Google’s business practices. For instance, the FTC is scrutinizing whether Google uses its control of the Android mobile O/S to dissuade smart phone and device makers from using their competitors’ applications. While many consumers may think “anything goes” when it comes to business competition, others may vote with their wallets by buying non-Android smart phones and using anything other than Google for their searches.

It took 19 months to look at how a company the size of Google operates, and by all indications, the FTC is not thrilled with what it found. Many industry observers think the suit(s) should move forward, though some industry experts are concerned that suing Google may trigger a never-ending quagmire. (4) Representative Jared Polis (D-Colo.), recently made comments indicating that a suit against Google would likely prompt Congress to limit FTC authority, a concern he has shared in writing with FTC Chairman Jon Leibowitz. Polis feels strongly about the case, saying that the “application of anti-trust against Google would be a woefully misguided step that would threaten the very integrity of our anti-trust system, and could ultimately lead to Congressional action resulting in a reduction in the ability of the FTC to enforce critical anti-trust protections in industries where markets are being distorted by monopolies or oligopolies.” (4)

Representative Polis’s quote sounds a bit like a thinly veiled threat against the FTC, telling them not to sue Google or else they might find their hands slapped and their authority to enforce anti-trust issues reduced. Politics and the technology industry make strange bedfellows.

And so the waiting begins. Will the FTC ultimately sue Google? If so, will Congress then move to reduce the FTC’s power to enforce anti-trust protections? Does the FTC have a strong enough case to prevail? Regardless of how a case may progress, it will have an effect on consumers. Many computer users are wired into or powered by Google. If they lose in court, people may find they are forced to change their day-to-day online experience.