Google Critics Dismiss FTC Settlement; Silicon Valley Lawmakers Praise Agency Prudence

Silicon Valley Democratic Reps. Anna Eshoo and Zoe Lofgren applauded the FTC’s settlement with Google. The agreement “strikes an appropriate balance that protects consumers and preserves innovation,” said Eshoo, ranking member of the Communications Subcommittee, in a statement late Thursday. Eshoo commended the FTC on its consent order requiring Google to license its standard-essential patents, which “ensures that competitors will have access to the patents essential to powering these key technologies,” and its decision to close the investigation over claims of Google’s “search bias.” Lofgren said the consent order on patents “will help ensure consumers continue to benefit from new and innovative products and services that connect them to the Internet,” and she applauded the agency for protecting consumers “without impermissibly expanding the jurisdictional reach of the FTC.” In November, the two lawmakers urged the FTC to tread carefully in its investigation of the search giant.

The agreement is “weak and -- frankly -- unusual,” said Microsoft Deputy General Counsel Dave Heiner in a company blog post (http://xrl.us/bn9eia). Because the agency did not seek input from leading industry members, the agreement does not do enough to rectify Google’s practices, Heiner said. Microsoft “would have explained that Google’s promise on ad campaign portability falls short of the mark in various ways,” including the fact that Google has only agreed to lift data portability restrictions on U.S.-based advertisers, Heiner said. The agency’s consent order requiring Google to license its standard-essential patents (SEPs) on terms that are fair, reasonable and nondiscriminatory (FRAND) “runs for 13 pages, most of which spell out exceptions -- the various circumstances when Google can sue for an injunction on its” SEPs he continued. Heiner compared the consent order to a two-sentence commitment Microsoft made to the Justice Department last year: “Microsoft will always adhere to the promises it has made to standards organizations to make its standard essential patents available on fair, reasonable and nondiscriminatory terms. This means that Microsoft will not seek an injunction or exclusion order against any firm on the basis of those essential patents."

Google has “declared victory” and will be emboldened by the settlement, Heiner said, pointing to a Google blog post (http://xrl.us/bn9egk) in which Chief Legal Officer David Drummond said the decision proves that “Google’s services are good for users and good for competition.” Despite Leibowitz’s confidence in Google’s willingness to abide by the agreement, Heiner said there is no reason “to believe that Google recognizes its responsibilities as an industry leader.” Heiner is optimistic “that other antitrust agencies, within the United States and overseas, are still examining Google’s conduct,” including the European Union. “We remain hopeful that these agencies will stick to their established procedures, ensure transparency, and obtain the additional relief needed to address the serious competition law concerns that remain,” he said.

"The FTC rolled over for Google,” said John Simpson, director of Consumer Watchdog’s Privacy Project, in a statement. Though the agency’s consent order requiring Google to license its FRAND-encumbered SEPs “will help ensure competition in the manufacture of smartphones and tablets ... that was never the heart of the issue,” he said. “Google clearly skews search results to favor its own products and services while portraying the results as unbiased,” which “undermines competition and hurts consumers,” he said. Without a consent order requiring Google to alter its practices of “scraping” or penalizing competing websites and lift its restrictions on ad campaign portability, the FTC has no reason to believe the company will abide by its voluntary agreements, he continued. “Why would the FTC take Google at its word?” he asked.

By closing the investigation without bringing search bias-related claims, the FTC “affirms that every company is free to compete by serving its users, no matter how high its market share or how much its rivals suffer as a result,” said Ryan Radia, director of technology studies at the Competitive Enterprise Institute, in a statement. The decision “reflects the vigorous state of competition on the Internet -- and the utter failure of Google’s critics to put forward a serious antitrust case against the company,” he said, encouraging Google and its competitors to “refocus on what they do best: building innovative products that create wealth and make our lives better.” Tom Lenard, president of the Technology Policy Institute, said the FTC “demonstrated its professionalism by concluding that the evidence did not support bringing an antitrust case and that no additional remedy was likely to benefit consumers.”