FTC report concludes Google caused 'significant harm' to rivals: WSJ

An FTC probe into potential abuses of power led key agency members to push for the government to sue Google, according to the WSJ.

Mike Blake/Reuters/File
A Google logo is seen at a Best Buy electronics store in this file photo illustration taken in Encinitas, California, on April 11, 2013.

The Federal Trade Commission (FTC) launched a probe into allegations that Google abused its monopoly power. The 2012 FTC report concluded that Google was skewing search results in its favor and led to key members of the commission wanting to bring antitrust charges against the company, but the FTC decided not to take action.

Now, three years later, details of the report have come to light, sparking debate about the company again.

According to the Wall Street Journal, the 160-page FTC report concluded Google was causing “significant harm” to rivals, and stated that the company’s "conduct has resulted – and will result – in real harm to consumers and to innovation in the online search and advertising markets."

Even though key members of the government agency pushed for a lawsuit, there were conflicting opinions from the agency’s economic bureau. The FTC’s commissioners unanimously voted in 2013 to end the investigation. It helped that Google voluntarily adjusted some if its practices in response to the probe.

“After an exhaustive 19-month review, covering nine million pages of documents and many hours of testimony, the FTC staff and all five FTC Commissioners agreed that there was no need to take action on how we rank and display search results,” Google general counsel Kent Walker said in a statement on Thursday to WSJ.

The report was not meant to be public, according to the WSJ, but was “inadvertently disclosed in an open-records request.

The FTC report highlighted four main accusations against Google: it created a search bias in its own favor; it “scraped,” or copied, content from other sites to improve its own results; it restricted advertisers’ ability to sell consumer data to rival search engines; and it created “exclusive deals” by adding contract restrictions that kept websites published in its own results from working with competitors such as Microsoft’s search engine Bing (though one FTC commissioner cited lack of evidence in this accusation).

Google revised its advertising data policy to give more control to advertisers over the information the companies collect – one of the major reasons the investigation was halted.

While Google refuses to admit to any wrongdoing, the FTC report outlines how the company was prioritizing search results for its own sites above others.

Google’s search engine ostensibly follows a ranking system – based on number of clicks a website receives or if it is highly cited – but the company found that other services were overshadowing its own.  Afraid of losing revenue, Google created a specialized algorithm to “automatically boost” its own sites above others, according to the report. It used this unique measurement, instead of the “click-through rates” it used for rivals, because its own services would rank too low, said former Google executive Marissa Mayer in the report. Ms. Mayer was Google’s vice president of search and user experience at the time of the investigation and is now chief executive officer of Yahoo. She could not be reached for additional comment by WSJ.

The report says this practice twisted online markets, such as shopping, travel, and local business, in Google's own favor, directly affecting rivals such as Yahoo and TripAdvisor. The FTC also claims that Google did not include the best flight deals or results in its search page for consumers, leaving fewer options to choose from.

The FTC report additionally notes that Google scraped, or copied, information from rivals such as Amazon. To solve its apparent product popularity problem, Google took Amazon’s ranking system on merchandise and how well items sold and leveraged the information for its own product services.

Some are speculating that the report will spark more complaints from rivals such as Yelp, but the new revelations will likely hurt Google most in European courts, where regulators are currently pursuing their own probe into Google.

The WSJ article sparked considerable debate, both against and in support of Google. “If you don't like Google's search results feel free to go write your own algorithms ... and offer the service at no cost to the 1.1 billion users in 123 different languages,” wrote a WSJ commenter who went by the name Allen Lewis. While some are wary of the company’s reach, others champion the service and say that (as Google puts it) other options are “just a click away.”

That said, an examination by Harvard Business Review into how a start-up search engine might succeed against Google concluded that such a business plan is seemingly futile. Because the success of a search engine depends on how much an algorithm learns, “even those with better algorithms” have no way to compete. This is also the reason why even well established rivals such as Bing cannot compete, according to HBR.

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