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No sanctions
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Washington, Jan. 4: The Federal Trade Commission yesterday handed Google a major victory by declaring, after an investigation of nearly two years, that the company had not violated anti-trust or anticompetition statutes in the way it arranges its Web search results.
By allowing Google to continue to present search results that highlight its own services, the FTC decision could enable Google to further strengthen its already dominant position on the Internet.
It also enables Google to avoid a costly and lengthy legal war of attrition like the anti-trust battle that Microsoft waged in the 1990s. That fight took an enormous toll on Microsoft and opened the door for competitors like Google to become the technology sector’s new leaders. Now, a weakened Microsoft was among those most vocal in complaining that Google was unfairly abusing a monopolistic position to thwart its rivals.
Google, which attracts 70 per cent of all search queries in the US, has used its search business, which generates billions of dollars in profit annually from advertising, to expand into businesses that include maps, restaurant reviews and travel bookings.
Competitors worry that the FTC’s decision will allow Google to continue to make inroads at their expense.
The decision sets up a potential conflict with European officials, who are working with Google to resolve similar concerns about the way the company operates its search engine in Europe, where it is even more dominant than in the US.
Web search has become vital to the success of many businesses. Being ranked higher in search results can mean a great deal more traffic and revenue; being ranked lower can hurt both. Google has long claimed that it uses a neutral algorithm for search queries, something that competitors disputed.
But Jon Leibowitz, chairman of the FTC, said that “While not everything Google did was beneficial, on balance we did not believe that the evidence supported an FTC challenge to this aspect of Google’s business under American law.”
The five-member commission voted unanimously to close its investigation without bringing charges, although some staff members argued vigorously that Google should face sanctions for using online search results to draw consumer traffic to its own services. The FTC said it had found that Google’s practices improved its search results for the benefit of users and that “any negative impact on actual or perceived competitors was incidental to that purpose”.
Google did agree to make some minor changes to its search practices related to search advertising. The FTC said those commitments were enforceable if the company violated them, but the agreement avoided a formal consent decree or litigation, weapons that the FTC had available.
One FTC commissioner, J. Thomas Rosch, said in a partial dissent that the commission would not be able to hold Google to its promises in any meaningful way, as it might do through a contempt proceeding or a fine.
Competitors said the war was not over. Fairsearch.org, a group of Google rivals including Microsoft, said yesterday’s action left the FTC “without a major role in the final resolution to the investigations of Google’s anti-competitive practices by state attorneys general and the European Commission. The FTC’s inaction on the core question of search bias will only embolden Google to act more aggressively to misuse its monopoly power to harm other innovators”.
In a less-watched part of the investigation, which will have a less direct impact on consumers, the commission found that Google had misused its broad patents on cellphone technology, and it ordered Google to make that technology available to rivals. That order may benefit phone manufacturers that use either Google’s Android operating system or competing systems. Some FTC officials said that in the long run, the sanctions could be a bigger victory for consumers.
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