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FTC "Brought Forth a Couple of Mice" in Slapping Google on the Wrist

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As predicted, the Federal Trade Commission has punted any serious action against Google's monopoly dominance of search advertising and related sectors.  Worse, it turns out the investigation was so narrow and ultimately so perfunctory that it's hard to understand what took 19 months to get such a meager result.

Conservative FTC Commissioner J. Thomas Rosch mocked his liberal colleagues, saying in a statement that "after promising an elephant more than a year ago, the Commission instead has brought forth a couple of mice."

The FTC did not even get a consent decree to enforce its main complaints against Google, just voluntary commitments by Google, an almost unprecedented approach to enforcement that Commissioner Rosch noted is "an unjustified and dangerous weakening of the Commission's law enforcement authority" and sets a terrible precedent for future FTC actions.

So what did the FTC kind of do to restrain Google?

  • Google has to allow competitors to use Motorola patents considered important for interoperability of wireless phones and devices.
  • Google promised to stop "scraping" (grabbing snippets of reviews or information) from rival sites, notably something the company had already promised publicly to stop
  • Google promised to allow its advertisers to more easily move data about advertising campaigns to rival ad platforms like Microsoft (multi-homing in industry parlance)
That's it.

All claims of search bias by Google were dismissed by the Commission and they didn't apparently investigate any of the other wide-ranging complaints about Google monopolistic activity across its various products.

Allowing multi-homing is a substantive change in Google behavior and of some importance as I argued here, but also ultimately not enough to change the power dynamics in the search advertising sector.

The real problem is that that the Commission apparently ignored so many other bigger antitrust issues in their investigation:

  • At the most basic level, the FTC did not address the core problem that Google dominates not just two-thirds of all search queries but garners 78 percent of all revenue in the search advertising sector (and 85 percent globally), a monopoly concentration that leaves little room for competition in the whole sector.
  • The FTC did not address how Google is using those super-profits ($12 billion per year on $50 billion annual revenue) to saturate other product areas with its own offerings, from specialized search verticals to the Android operating system to its YouTube video services.
  • Most of all, the FTC did not say one word about Google's increasingly dominant control of user data, which it adds to with each new product line launched as it tracks user behavior through its web services, apps, cookies and other online tools.
  • Nowhere does the FTC discuss allegations that Google used its control of the Android operating system to strongarm manufacturers into using its geolocation services to better track the location of users, despite that issue being a focus of a private antitrust lawsuit.

The FTC in its statements just provide no real analysis that Google's power in the marketplace, its value to advertisers, comes from its systematic undermining of user privacy and by having so much more data than any rival.  It's a bit like doing an antitrust analysis of Standard Oil back in the day and ignoring whether its control of oil supplies might be giving it an advantage in the marketplace.

And nowhere does the FTC even acknowledge that Google's business model of de facto selling user privacy to its advertisers might be a source of consumer harm, a point I detailed in my Cost of Lost Privacy posts.

For critics of Google, today's FTC decision is not bad news because we disagree with the results, but bad news because it reflects an enforcement agency failing to even ask the right questions.

Luckily, the Federal Trade Commission is not the only game in town.  The European Commission is likely to come out with its own findings in coming weeks or months and in the U.S., states attorneys generals across the country have been pursuing their own antitrust investigations into Google.

Just as the FTC punted on investigating Microsoft back in the 1990s, leaving it to the states and ultimately the U.S. Department of Justice to launch a real investigation of Microsoft's antitrust abuses, we will hopefully see a repeat of that history with hopefully the right questions being asked at the next step of what it likely to be a long road to reining in the Google monopoly.