Google Confirms FTC Investigation; Will States Launch Inquiries, Too?
Google confirmed Friday that the Federal Trade Commission has launched an investigation into the company, and began what might be called a PR campaign to defend its practices.
In a blog post, Google said the FTC had “begun a review of our business”. Google did not say what specific types of documents the FTC was asking for.
Attorneys general in California, New York, and Ohio have also mounte their own investigations, the Financial Times reported.
On Thursday, The Wall Street Journal reported that the FTC was interested in exploring the relationship between Google’s search results and its own sites, possibly whether Google unfairly retained users onto its own sites, rather than directing them elsewhere within the Web, to rival sites.
“At Google, we’ve always focused on putting the user first,” Amit Singhal, a Google fellow, wrote in the post. “We aim to provide relevant answers as quickly as possible—and our product innovation and engineering talent have delivered results that users seem to like, in a world where the competition is only one click away. Still, we recognize that our success has led to greater scrutiny.”
Google said that it received the FTC’s request on Thursday, when a Google spokeswoman had denied comment.
Singhal’s also post tried to lay out what Google does for the customer: “do what’s best for the user,” “provide the most relevant answers as quickly as possible,” “label advertisements clearly,” “be transparent,” and achieve “loyalty, not lock-in”.
“These are the principles that guide us, and we know they’ll stand up to scrutiny,” Singhal said. “We’re committed to giving you choices, ensuring that businesses can grow and create jobs, and, ultimately, fostering an Internet that benefits us all.”
Google controls a dominant position in the search market, and its collection of Web sites often makes it the top destination for Web surfers. This month, Google sites raked in more than a billion unique visitors in the month of May, the first time an Internet company has reached that milestone, according to comScore data. Microsoft finished second.
Antitrust law focuses on not whether a company has achieved a monopoly, but whether it abuses that monopoly to create monopolies in other markets. Defining what or what is not a market can be the linchpin of the investigation. The FTC’s investigation, if it occurs, would be the first step in a process that could end with a formal lawsuit.
Some have called the investigation Web 2.0’s version of the historic battles between Microsoft and the Department of Justice. The DOJ’s oversight of Microsoft ended in May.
To date, much of the investigation into Google’s search practices has been centered in Europe, where the EU opened an investigation into Google’s search practices last November. Three companies – Foundem, a French legal search engine called ejustice.fr, and Ciao! from Bing, levied complaints against Google. EJustice’s parent, 1PlusV, added its own complaint in February. Google executives had dismissed the complaints as ones driven by Microsoft, a competitor.
FairSearch, an organization that includes Foundem, Microsoft, TripAdvisor, Travelocity, Hotwire, Expedia, and others, said in a statement Thursday that they were “encouraged” by the news.
“Google engages in anti-competitive behavior across many vertical categories of search that harms consumers by restricting the ability of other companies to compete to put the best products and services in front of Internet users, who should be allowed to pick winners and losers online, not Google,” FairSearch wrote. “The result of Google’s anti-competitive practices is to curb innovation and investment in new technologies by other companies.”
Google: a GPS for the Internet?
Finally, Singhal pointed users to a “competition site,” which appeared, on first glance, to avoid talking about competition and instead focus on Google’s contributions to the search market and to the Internet culture at large.
Only one section of that site (“Supporting a Competitive Web”) addresses competition directly. There, Google compares itself to a “GPS” for the Web.
“Google serves more like a GPS on the Internet highway—not an on-ramp. It helps people get around, but it’s not necessary. If someone knows where he wants to go, he can navigate to those destinations directly, whether it’s Craigslist, the New York Times websites, or icanhascheezburger.com.”
The post is accompanied by a photo illustration showing Google as an in-dash entertainment/navigation system, with a Yahoo printed map to the “Best of the Internet” close by. Bing is represented by a GPS device as well, but mounted to the windshield.
Reaction The Competitive Enterprise Institute, a free market think tank, criticized the deal. “Few modern markets are as vibrant and innovative as Internet search. Google and its rivals are engaged in fierce competition that has benefited consumers tremendously,” Ryan Radia, CEI Associate Director of Technology Studies, said in a statement. “Yet this FTC appears hell-bent on beating up on big, successful businesses, including Intel, Apple, and now Google. This investigation may be welcome news to Google’s rivals, but it’s bad news for consumers.” Editor’s Note: This story was updated at 4:28 PM with additional comments.
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