FTC ramps up its probe of Google

SAN FRANCISCO — Escalating an antitrust investigation of Google Inc.'ssearch business, the Federal Trade Commission has hired an outside lawyer to lead the probe and perhaps take the case to court.

The FTC said Beth Wilkinson, a former Justice Department prosecutor who played a key role in the conviction of Oklahoma City bomber Timothy McVeigh, will take over the Google investigation.

The hiring, which ramps up the investigation into allegations that Google unfairly ranks search results to favor its own businesses and increase advertising rates for competitors, came as Google fired back at the Federal Communications Commission in a separate battle involving its Street View service.

The Internet search giant said it did not obstruct the FCC’s investigation into its mapping service and placed the blame for the delay in completing the probe on the regulators.

“Google has cooperated fully with investigations around the globe regarding this matter, acting in good faith at all times,” the Mountain View, Calif., company said in its letter. “While Google disagrees with the premise of the notice and many of its factual recitals, Google has determined to pay the forfeiture proposed in the notice in order to put this investigation behind it.”

Google filed the response after the FCC accused it of deliberately impeding and delaying the probe into incidents in 2010 when Google collected and stored data from unprotected wireless networks while cruising the streets to take photos for its mapping service. Google said its interception of emails, passwords and other private information was inadvertent.

The agency proposed slapping Google with a $25,000 fine for stonewalling investigators. Google said it would pay the fine but said it was not admitting any wrongdoing. It instead criticized the FCC for its handling of the probe.

“Over the course of the 17 months it took the FCC to officially conclude its investigation, the commission did not contact Google for weeks and months at a time,” Google said in its reply. In one instance, Google said, it did not hear anything from the agency for 83 days; in another, for 52 days. Google also said it voluntarily extended the probe by seven months after the FCC ran out of time based on its own rules.

“It is difficult to reconcile those lengthy delays with the FCC’s criticism of Google’s responses as ‘untimely,’” Google said.

In a statement, FCC spokeswoman Tammy Sun said: “The commission stands behind the work of the career staff who investigated Google’s secret collection of personal passwords, emails and other private data through its Street View project. Going forward, important concerns about the privacy of unencrypted Wi-Fi communications remain.”

As part of its Street View project, Google dispatched specially equipped cars to snap photos of homes and other buildings in an attempt to map the U.S. block by block. But from May 2007 to May 2010, it also collected sensitive information from unencrypted home wireless networks.

Google at first denied it was collecting the data, then said it had captured only fragments of people’s online communications. In October 2010, it admitted for the first time that it had collected and stored entire emails, text messages and passwords. It says that the data collection was inadvertent and that it stopped as soon as the company learned of it.

The FCC said in its report April 13 that it did not find evidence that Google broke eavesdropping laws in collecting Internet data from millions of unknowing U.S. households. The agency said its probe ran into two insurmountable hurdles: There is no precedent to apply the FCC law to unprotected Wi-Fi networks, and the agency did not uncover enough evidence that Google had violated federal rules.

The Federal Trade Commission also investigated Google but wrapped up that investigation in October 2010 after Google pledged to improve safeguards. Connecticut and other states launched their own inquiry in July 2010. That inquiry is still underway.

Privacy advocates dismissed the $25,000 penalty as negligible for a company that had nearly $38 billion in revenue last year and stands accused of snooping into private information.

The Electronic Privacy Information Center, a Washington group that filed the original complaint with the FCC over Google’s data-collection practices, sent a letter to U.S. Atty. Gen. Eric H. Holder Jr. calling the agency’s probe insufficient.

A person familiar with the investigation who was not authorized to discuss it publicly said the Department of Justice completed its investigation in May 2011. The FCC closed its probe this month.

“The DOJ had access to Google employees, reviewed the key documents and concluded that it would not pursue a case for violation of the Wiretap Act,” Google said in its letter to the FCC.

Google is still grappling with privacy flaps on other fronts. Last year, it agreed to 20 years of independent privacy audits to settle FTC claims that it had deceived users and violated its own privacy policies when it launched the Buzz social network.

Google still faces Street View investigations in Europe. Last year,France’sNational Commission on Data Processing and Liberties levied a $132,000 fine on Google for collecting personal information while gathering information for its Street View service.

Google has also come under scrutiny for how it uses the voluminous data it collects. The FTC is looking into whether the company deceived millions of consumers by bypassing their privacy settings on Apple’s Safari Web browser and putting tracking cookies on their computers and gadgets.

On Thursday, the FTC confirmed it had hired Wilkinson, the former general counsel of Fannie Mae, to run the agency’s antitrust investigation of Google. Wilkinson, 49, a partner with Paul, Weiss, Rifkind, Wharton & Garrison in Washington, has worked as a litigator for corporate clients including Pfizer Inc. and Philip Morris International Inc.

Google disclosed in June that the FTC had opened a broad antitrust investigation.

The FTC is focusing on whether Google unfairly ranks search results to favor its own businesses and increase advertising rates for competitors, people familiar with the probe told Bloomberg News.