The FTC's Google ruling: a qualified free pass

The only binding action that resulted from the broad and lengthy probe was a consent order barring Google from abusing the "standard essential" mobile-phone patents it acquired from Motorola. That order was consistent with the commission's recent declaration that the holders of such patents shouldn't seek injunctions against would-be licensees when they can't agree to terms.

Notably, the commission took no action on allegations that Google manipulated its search results to favor its own services. Google acknowledges that its search algorithm isn't exactly an honest broker, but it says other search sites play favorites in their results too. And if consumers don't like that the results they get from a Google search, they can use a different site.

That's certainly true, although it may hard for consumers to recognize when a search doesn't deliver a result it should have. At any rate, Beth Wilkinson, outside counsel to the FTC on the Google case, said, "[R]regarding the specific allegations that the company biased its search results to hurt competition, the evidence collected to date did not justify legal action by the Commission." She added, "Undoubtedly, Google took aggressive actions to gain advantage over rival search providers. However, the FTC’s mission is to protect competition, and not individual competitors. The evidence did not demonstrate that Google’s actions in this area stifled competition in violation of U.S. law.”

That statement about the FTC's mission echoes what advocates of a restrained approach to antitrust have been arguing. There's a fine line, granted, between harm to a competitor and harm to the consumers who've been uniquely served by that competitor. But there's a line nonetheless.

A number of those competitors -- such as Yelp, Expedia and Nextag -- had hoped that the commission would bring an antitrust case against Google based on the commission's authority to combat "unfair methods of competition." They argue that Google abuses its dominant position in search to steer traffic to Google services that compete with their sites.

By law, the commission can bring an unfair methods of competition case only when it can prove that consumers have been harmed or are likely to be harmed, and that this harm isn't outweighed by other benefits to consumers or to competition. Google contends that it helps consumers not just by helping them find a site that can provide the information they're looking for, but by actually providing that information in the search results.

That's reminscent of Microsoft's contention, in the face of a Justice Department antitrust lawsuit, that it was helping consumers by integrating a Web browser and a media player deeply into its operating system, relieving them of the need to launch separate programs. That wasn't a winning argument, but Microsoft's share of the market for operating systems back then was significantly larger than Google's share of the search market.

But I digress. The commission evidently didn't believe it could win an unfair competition claim. Rather than bring one anyway or just close the case, however, it persuaded Google to agree voluntarily to do two things: remove contract provisions that stopped advertisers from coordinating pitches on Google's AdWords platform with those on other sites, and let sites withhold their content from Google services without dropping out of Google's search results.

The latter addresses complaints from the likes of Yelp and TripAdvisor that Google was feeding crucial bits of content, such as reviews, from their sites into Google services. It seems obvious that a company shouldn't be able to appropriate a competitor's work. But it's not obvious that such behavior violates the statutes that the FTC enforces. In other words, it may be unfair, but it may not meet the definition of an "unfair method of competition."

Berin Szoka, president of the TechFreedom policy shop, said the two voluntary agreements stem from the "strong concerns" held by the commission's three Democrats. "Whether or not these [agreements] are good for consumers, 'strong concerns' alone cannot justify strong-arming any company into changing their business practices or product design," Szoka said in a statement. "If these changes were required to address antitrust violations, the FTC could have, and should have, brought, and settled, a complaint in a truly enforceable consent decree. Since the FTC concedes it could establish no violation of law, it is inappropriate for the agency to impose such conditions—and unclear that they can actually enforce them."

The commission is hardly the first agency to extend its regulatory muscle into the gray areas of the law. And considering the complaints from advertisers and competitors, it's hard to get too worked up about the voluntary agreements. Nevertheless, Szoka has a point. Antitrust enforcement is vital to commerce and consumer protection, but it needs to be based on the law, not individual commissioners' thoughts about what is and isn't fair.

Oh and by the way, Google continues to be scrutinized by the European Commission, whose top antitrust regulator has already said he believes Google abuses its leadership in the search market. So while the company may have steered its way safely past the FTC, there may be trouble ahead on the other side of the Atlantic.

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