Google settles FTC antitrust with patent and advert limits

Jan 3, 2013
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Google has settled with the FTC, avoiding antitrust penalties by agreeing to license standard-essential patents to rivals without threat of injunctions, and to remove restrictions on online advertising, though the concessions aren't enough to placate activists. As part of the agreement, Google will be forced to license the standard-essential Motorola Mobility patents on FRAND (fair, reasonable, and non-discriminatory) terms to any rival that requests them, after fears that the search giant might use its acquired IP to bludgeon competitors with extortionate licensing fees else run the risk of expensive and limiting injunction proceedings.

"The Commission’s complaint alleges that Google reneged on its FRAND commitments and pursued – or threatened to pursue – injunctions against companies that need to use MMI’s standard-essential patents in their devices and were willing to license them on FRAND terms" the FTC said today, with Google basically losing the sting from its 24,000 patent/patent application grab of Motorola Mobility. The FTC's fear was that Google's increasing control over what are deemed essential elements of technology might curtail product evolution.

"Google has agreed to a Consent Order that prohibits it from seeking injunctions against a willing licensee, either in federal court or at the ITC, to block the use of any standard-essential patents that the company has previously committed to license on FRAND terms" FTC

As for advertising, Google has agreed to two key concessions in order to dismiss concerns that it was using its search heft to undercut other services. Google will now give its advertising customers greater access to the APIs that deliver feedback on ad campaign results.

Meanwhile, sites will be able to "opt out" of inclusion in Google services like Places, after companies like Yelp complained that Google was scraping their data and leaving web users no reason to visit their sites specifically. "Some FTC Commissioners were concerned that this conduct might chill firms’ incentives to innovate on the Internet" the commission said today.

"Google also has promised to provide all websites the option to keep their content out of Google’s vertical search offerings, while still having them appear in Google’s general, or “organic,” web search results" FTC

However, allegations that Google was prioritizing its own results above those of rivals, and manipulating search results to benefit itself, were dismissed. Rivals had argued that "Universal Search" was in effect making a virtual-walled garden where Google's own services were promoted, but the FTC said that it believed the changes were more in keeping with Google refining its own products.

"According to the Commission statement, however, the FTC concluded that the introduction of Universal Search, as well as additional changes made to Google’s search algorithms – even those that may have had the effect of harming individual competitors – could be plausibly justified as innovations that improved Google’s product and the experience of its users. It therefore has chosen to close the investigation" FTC

Chatter of a voluntary agreement by Google broke late last year, with the company tipped to be more willing to make a "gentleman's agreement" if it could avoid legislation and potential fines. "The changes Google has agreed to make will ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy," FTC Chairman Jon Leibowitz said today. "This was an incredibly thorough and careful investigation by the Commission, and the outcome is a strong and enforceable set of agreements."

"We’ve always accepted that with success comes regulatory scrutiny" Google said of the agreement. "But we’re pleased that the FTC and the other authorities that have looked at Google's business practices ... have concluded that we should be free to combine direct answers with web results. So we head into 2013 excited about our ability to innovate for the benefit of users everywhere."

Unsurprisingly, though, activists aren't quite so happy with the outcome. Fairsearch, the organization set up by Microsoft, Nokia, Yelp, and others to highlight the alleged Google antitrust behaviors, is yet to comment, but the  American Consumer Institute Center for Citizen Research has already compared the search company to Lindsey Lohan:

"As Google’s dominance grows, consumers have become extremely concerned about the search giant’s control of the marketplace, entrance into new markets, and a seeming indifference to the protection of privacy and the law in general. Letting Google off with a letter promising not to do it again is like believing Lindsey Lohan will stay out of trouble this time. The FTC had a long list of grievances against Google to choose from when deciding if they unfairly used their dominance to crush their competitors yet they failed to use their authority for the betterment of the marketplace and to the advantage of consumers by declining to take action against the dominant company" American Consumer Institute Center


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