News

Google Settles with FTC on Patents and Search

• By Kurt Mackie
• 01/07/2013

The U.S. Federal Trade Commission (FTC) announced two settlements that it made last week with Google after a year-and-a-half review.

The settlements concern the company's alleged abuses with regard to standard essential patents and search advertising. Under the settlement's terms, Google will not seek injunctions against parties willing to license intellectual property deemed to be necessary for technology used in a standard, otherwise known as the "standard essential patents" concept. Google agreed not to do that in both U.S. federal courts and at FTC courts. One of Google's targets in that respect has been Microsoft, but typically the litigation has taken place in German courts. For instance, Google had sought 2.25 percent of Microsoft's Xbox sales to license Wi-Fi wireless standards technology that Google had acquired with its purchase of Motorola Mobility Inc.

Google also agreed to remove some contractual restrictions for advertisers using its AdWords online search advertising platform. Those restrictions allegedly made it more difficult for advertisers to leverage Google's APIs for use on other online advertising platforms, such as Microsoft's.

Another part of the settlement concerned alleged abuses associated with search results and so-called "vertical" search services. According to the settlement, Web site operators now can block their content from being used in Google's vertical search services, which is already in effect, according to a Google blog post. The FTC had investigated claims that Google was pulling star ratings and user reviews from competing vertical search Web sites for use in Google Shopping and Google Local, which are Google's own vertical search services.

Many of these search advertising complaints were lodged by a coalition of Web services companies at the Fairsearch.org Web site. Those companies include Microsoft, Nokia, Oracle, Expedia, Kayak, Tripadvisor and more.

The FTC also closed its investigation of claims that Google engaged in "search bias." According to the complaints, Google had allegedly modified its search algorithms to favor its own search properties. The FTC particularly looked at Google's "Universal Search" capability as having this bias, but it dropped the inquiry because Google's actions were not deemed to be anticompetitive.

"Undoubtedly, Google took aggressive actions to gain advantage over rival search providers," said Beth Wilkinson, outside counsel to the FTC, in a released statement. "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."

Google clarified in a letter to FTC Chairman Jon Leibowitz that its AdWords API commitments extend for five years. Only "covered" Web pages in the U.S. market are affected, including Google Advisor, G+ Local, Flights, Hotels and Shopping. The agreement not to display the vertical search results of other sites pertains to Google's automatic Web crawlers but not to displays based on Google's independent research.

The FTC's settlement apparently disappointed Microsoft, with Vice President and Deputy General Counsel Dave Heiner calling it "weak" and "unusual." Heiner claimed in a blog post that the FTC didn't follow its own practice of seeking industry feedback, although the FTC's proposed agreement is available for public comment through Feb. 4, 2013. After that time, the FTC "will decide whether to make the proposed consent order final," according to the FTC's announcement.

Heiner also claimed that Google turned down the terms on "fair, reasonable and nondiscriminatory" intellectual property licensing that Apple and Microsoft had accepted at the urging of the U.S. Department of Justice. He accused Google of restricting Microsoft's YouTube App for Windows Phone such that it lacks access to the sort of metadata provided to Android phones. While the European Commission is investigating this particular matter, the FTC has dropped the subject, according to Heiner.

Google is expected to present its proposal before the European Commission this month in a separate antitrust inquiry, according to a Fairsearch.org post. The group described Google's search result displays as "anticompetitive."

A sympathetic New York Times article suggested that the FTC had simply overlooked where Google had engaged in harm. Citing interviews, the Times article suggested that Google actually harmed its paying customers, namely its advertisers, in weighting search results more toward Google properties.

This particular anticompetitive concern hasn't gone away at the European Commission. The idea that Google might weight search results in its own favor is one of the EC's top concerns, according to Joaquín Almunia, vice president of the European Commission for competition policy. However, in a May statement, Almunia indicated that if Google cooperates with an "outline of remedies," the Commission likely would not draw up a Statement of Objections against the company.