FTC To Recommend Antitrust Case Against Google

NeutronCowboy writes with news that a majority of top staff members from the U.S. Federal Trade Commission have become convinced that Google "illegally used its dominance of the search market to hurt its rivals." The FTC is now drafting a memo that recommends the U.S. government begin an antitrust case against Google. "The agency’s central focus is whether Google manipulates search results to favor its own products, and makes it harder for competitors and their products to appear prominently on a results page. ... The memo is still being edited and changes could be made, but these are mostly fine-tuning and will not alter the broad conclusions reached after an inquiry that began more than a year ago, said these people, who spoke on the condition that they not be identified. ... The FTC staff memo does not mean that the government will sue Google for antitrust violations. Next, the vote of three of the five FTC commissioners would be required. And each step is a further prod for Google to make concessions to reach a settlement before going to court. Last month, Jon Leibowitz, chairman of the FTC, said a final decision on whether to sue Google would be made before the end of this year.

Comments

What?

[Anonymous Coward]

If you were in the business of advertising...

Wouldnt it be 100% your control AND your business to do exactly this? determine which ads to put where and why to get the best result?

Google is being investigated for doing their job... lol

Really?

[dreamchaser]

Nobody forces anyone to use Google to search. They don't sell search. I fail to see a case, but IANAL.

Re:Really?

[squiggleslash]

OK, but at least in theory the site that attracts the most visitors (that you want to advertise on) is also the one that's the easiest to compete with.

Search itself isn't hard. That is to say someone with a VPS can probably build and run an Altavista clone and make a profit from ads if they want to. Not enough to give up the day job, but enough to cover the running costs.

Good search of course is harder, but Google's search has gone through phases where it's very good, followed by very awful, followed by OK, followed by (... etc, you get the idea), enough times.

Why does Google have a "monopoly" on search, and does it have a monopoly on search? The nearest I can think of, to be honest, is that they own the word "Google". People go to Google because it's good enough and they know it's good enough, and don't know enough about Bing or Yahoo search to feel that'd be less of a waste of their time. So Google has immense market share, but it's hard to believe it has market power - if it was signficantly worse than its rivals, people would get frustrated and switch, they would lose their trust in "Google" pretty quickly and have no reason to stay.

And I know that because I've done the same thing. I've switched from Google when it's been awful - when it's gone over the top in ignoring words in my search criteria and bringing up useless results, or when clicking in the wrong place causes my browser to hang for five seconds because Google's JS has decided to load an entirely unnecessary preview of a search result's color scheme (WTF? I'm glad they fixed that.) I've generally switched back because its competitors are for the most part lousy clones of Google that aren't better.

This is not like Windows, where people went to Windows because Microsoft was able to control the DOS market from 1981 onwards, and used its power as the controller of the "standard platform" to make it expensive for OEMs to bundle competitor's products. (This is not to say early Windows wasn't an improvement on, say, GEM, but the reason why we have Windows on home computers in 2012 is not because Windows 1.x or 2.x was a more sophisticated, powerful, system in 1987 than GEM or DesqView.)

Disclaimer: I don't actually have a disclaimer. Last month I sold my sole share in GOOG because my new kid means I need the cash right now. ;-) Boy did I pick the right time, I can't imagine this announcement is going to help the stock price...

Re:Really?

[swillden]

This is exactly what is being claimed Google is doing: leveraging their dominant position in the search market to gain unfair advantages in other, unrelated markets. If they really are doing this, it certainly is worthy of investigation.

What will be really interesting is if, as I strongly suspect, Google does not give its own products any extra "boost" in search results, or even in ads -- but Google's products come out on top because they're what Google's algorithms predict is of most interest to the searchers.

What then? Is that unfair dealing? Should Google be obligated to artificially lower the visibility of its own products in search?

In case it isn't clear to some how algorithms could be deciding the placement of Google's products in ads, keep in mind that all Google ad-views are a result of a real-time auction in which tens of thousands of candidate ads "compete" for the spot. Google's algorithms select the winning ad based on a combination of factors including the ad's observed effectiveness and the price the advertiser bids. So, if the Google Chrome team, for example, decides to run ads on Google and submits their ads along with a bid, and the normal algorithms are then applied to decide when to show that ad... is there any way that Google can be accused of anti-competitive use of its search dominance?

I mean, Google effectively even has to pay for the advertising space given to its own products on its site. There may or may not be any transfer of money between divisions, but if Google's algorithms decide that the Chrome team's bid beats out some other advertiser's bid for a given ad spot, Google is foregoing the revenue from that other advertiser, so there is a real financial cost to the decision to display the Chrome ad. Actually, that would be true even if Google were artificially boosting the placement of its own products, rather than just using high bids (though given the ability to use the bid as a handle to tweak visibility, I can't think why anyone would feel the need to introduce a different boosting parameter into the algorithm).

Where it gets a little fuzzier is when we look at Google's decision to build specialized search engines like Maps and Shopping, which have their own specialized search competitors, and then to give the results of those engines prominent placement in the general web search page. Is that leveraging Google's general-search dominance to gain share in other markets? Or is it a logical extension to general search, to provide more useful results to general query? I think the latter, but others might disagree.

(Disclaimer: I work for Google, but I don't have anything to do with ads, or search, and don't know anything about how Google decides to handle ads for its own products.)

so is everyone else

[Anonymous Coward]

I wouldn't go to the same extremes you do in describing google. I do agree that google's business model is built on exploiting consumer's habit for profit, but the issue with the FTC, is that the other creepy uncles of the world are demanding their chance to go through your things. Getting the FTC involved will only make things worse.

Re:"Lobby" more, like Apple

[GPierce]

That used to be true. Today I get the government someone else pays for.