23 Comments

Summary:

Google says it has received a letter from the FTC about an investigation, but maintains in a blog post that it’s just trying to serve users the best way it knows how. Will this Little Orphan Annie act fly with the feds? Unlikely.

518196807_1821b28c6b_z

Google said Friday it has received a formal letter from the Federal Trade Commission notifying the company that an investigation of its business practices is under way, confirming rumors of an impending investigation that surfaced on Thursday in the Wall Street Journal. In a blog post responding to the FTC’s letter, a Google executive maintained the search giant simply does its best to provide the best results for users, and that it doesn’t know what the FTC is after. But will this kind of gee-whiz, Little Orphan Annie act fly with the feds? Unlikely.

The blog post, by Google Fellow Amit Singhal — the head of Google’s core ranking team — seems designed to play up the innocence of the company as much as possible. It even has an almost aggressively inoffensive headline: “Supporting choice, ensuring economic opportunity.” It sounds like it was automatically generated using a selection of favorable keywords designed to promote positive feelings about Google’s mission (which for all we know it might have been). There’s more along those lines here.

As almost everyone knows by now, a big part of Google’s mission is “Don’t be evil,” and the blog post sticks tightly to this theme. Singhal argues that Google is focused on “putting the user first,” and it simply wants to provide relevant answers as quickly as possible, in a world where “the competition is only one click away” — a phrase that seems designed to respond to any potential questions about market dominance or monopoly, which are likely to be the core of any federal antitrust case.

It’s still unclear exactly what the FTC’s concerns are, but we’re clear about where we stand. Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow. No matter what you’re looking for — buying a movie ticket, finding the best burger nearby, or watching a royal wedding — we want to get you the information you want as quickly as possible.

In the post, Singhal reiterates several times that “using Google is a choice,” and says the company tries hard to be as competitive as possible by doing a number of things (the obvious implication being that some competitors don’t), including:

  • Provide the most relevant answers as quickly as possible. Singhal says Google is “always trying to figure out new ways to answer even more complicated questions” and advertisements “offer useful information, too.”
  • Label advertisements clearly. Google “always distinguishes advertisements from our organic search results,” the blog post says, and will “continue to be transparent about what is an ad and what isn’t.”
  • Be transparent. Singhal says Google shares “more information about how our rankings work than any other search engine.”
  • Loyalty, not lock-in. The Google post says the company believes “you control your data, so we have a team of engineers whose only goal is to help you take your information with you.” (This one is probably aimed at Facebook and its refusal to let you download your contact info.)

Despite all the warm feelings Google is trying to encourage, however, the reality is that by opening a formal investigation, the FTC is effectively saying that Google is being evil, even if only a little bit. And there’s one big issue Singhal doesn’t mention in his description of what Google does, which could become a crucial point in the federal government’s investigation, if it becomes an actual antitrust case: namely, that Google directs users to its own properties at the expense of competitors.

This kind of behavior may be implied when Singhal mentions that advertisements “are always labelled clearly,” since the links to the company’s own services (when you search for maps, for example, and get a link to Google Maps) are highlighted in yellow at the top of the page. But regardless, the company pointing people toward its own offerings — maps, image-hosting, and so on — has been a key part of many of the legal attacks and antitrust claims aimed at Google.

There may continue to be plenty of debate about whether “search neutrality” should even exist as a concept in the same way “net neutrality” does, but Google’s ability to effectively subsidize its own offerings at the expense of others is likely to be a central question for the FTC as it looks at the substance of competitors’ complaints. To pretend it’s not an issue probably isn’t the best strategy. And while the angel-with-a-halo act might be a great public relations move, it’s probably not going to win over anyone in Washington.

Post and thumbnail photos courtesy of Flickr users Alexander Boden and Mark Strozier

  1. So nobody is locked into using Google. There are no contracts that you are stuck with, there are no fees. The use of it is not tied to any specific hardware, as you can access it from any browser you choose. There are multiple competitors, and using a different one is as easy as typing their letters into the browser. If you’re an advertiser, there are lots of places for you to place your ads (Bing, Facebook, twitter,to name a few) . Google doesn’t even set the price for ads themselves, they let advertisers bid how much they think it’s worth. Big companies do not get to block little companies from placing ads. If any company wants to compete in the search business, there is nothing Google can do to stop or even slow them down, other than offering a superior product. Google doesn’t consume finite resources that are not available to everybody, they have to pay for the bandwidth they need to connect their servers to the internet, and for providing the billions of pages of information to visitors to their websites, just like everybody else.

    Then there’s the wireless phone carriers. ATT wants to buy T-Mobile to create the largest wireless carrier in the nation, in an industry where two companies will have over 80% of the market. They will eliminate their lowest cost competitor (T-Mobile), one that offers far more flexible service plans. While ATT may not prevent you from supplying your own equipment, they will effectively charge you for it anyway, as subsidies for mobile phones and devices are included in their monthly fees. Not just anyone can compete with ATT; you must acquire a license to use a limited amount of wireless spectrum, and after the proposed acquisition, ATT will have license to so much of the spectrum that it is not possible for new companies to enter the market to compete with them.

    If you are a customer of ATT and want to switch to one of their few competitors, you will have to pay a fee to leave. If you choose to stay with them, you will pay the highest rates in the nation, and will have restrictions on how often (i.e., bandwidth caps) you can use your service. If you want to supply equipment to ATT, you will often have to agree to not sell the same device to their competitors – they insist on exclusive marketing deals, and often insist that device manufacturers place artificial limits on how the devices can be used.

    Now tell me which company should be investigated for anti-trust abuse.

    Share
    1. Amen. Great comments.

      Share
    2. Those are some great points, Ken. Thanks for the comment.

      Share
  2. Most people pay nothing to Google and can switch to another equivalent service with near-zero switching cost. What form of monopoly is this? How about we force Starbucks to sell Egg McMuffins next to their own muffins? This makes about the same amount of sense.

    Share
    1. I agree with this. McDonalds is not acting in an anti competitive nature when it sells ice creams (hamburgers being the main business) in the store it has built, no one would force them to sell competitors food and if we don’t agree / don’t like them we can always go to another fast food joint.

      Share
  3. C’mon Ingram — use your head and stop hating on Google.

    The mere act of opening an investigation DOES NOT mean Google is “evil”, any more than handing down an indictment proves one is guilty of a crime. All an investigation is, is just that: an INVESTIGATION! Competitors cry foul, and the FTC investigates. A mere accusation doesn’t mean Google is guilty of anything.

    That will be determined AFTER the investigation, get it?

    Share
  4. why is google obligated to play up other services at the expense of their own?

    Is search a public good to be regulated by the gov’t?

    Who forces us to go to http://www.google.com?

    why should google link to bing’s mapping service?

    surely facebook’s next on the FTC’s antitrust list?

    then apple?

    i don’t understand tech bloggers like Ingram’s outrage towards google. (and like the previous commenter,) no outrage at a duopoly of wireless carriers. OMG! It’s EVIL that google makes me move my eyes a few pixels further down the screen to find other options! they aren’t blatantly deleting web pages.

    Share
    1. Just for the record, I am not outraged about Google, nor do I think it meets the standard definition of monopoly. Thanks for the comment though.

      Share
  5. Very nice pushback in the comments here, I congratulate the writers.

    Share
  6. I know. It bull shit. Such good company gives money away for wind and solar energy 500million this year. It bullshit plus it hurting economy they have no case and some the people in the congress have Microsoft lobiest. Its wrong there is Bing and yahoo so many search engines yet somehow its a monopoly Microsoft had monopoly not Google it a click away. Google docs free they do so much good p, read article that it olictal grand standing. Also what about face book dominance or apple they just attack Google cause they don’t do lobbies and dirty shit. They give there mo ey to a,ternative energy and giving android and chrome os for free. If I could protest government I would. Leave Google alone, plus they are killing stock and keeping them from doing there business. Plus when government got hacked Google was there to help nsa. Where is aple Facebook Microsoft fucking everyone that Where. G-d for bid there is company to help the consumer. Dush bags in DC not getting there kick backs aren’t happy. This is Microsoft lobby doing this. They will kill economy with out google. No Google no android chrome voice free internet tin kansas. seriouksy I wish I could start a cause to help, I wish something I could do. What about iTunes doinating music world there is no alternative to iPod. Very upsetting how this shit government anti trust happy to destroy innovation in america. Besides Google and apple there are no good American invators. Jobbs will die then apple wont innovate and Google will be all that’s left if they r around. These people should be shot. They provide a good free service what’s the problem.

    Share
  7. Transparent in how it’s rankings work? I just threw up a little in my mouth.

    Share
  8. 90% of all computers on the planet ship with IE and Bing set as default. Tell me how Google.com is not a choice?

    Share
  9. Google is making *exactly* the same mistake as Microsoft: it still thinks of itself as an upstart, when they are actually the incumbent dominant force in the market. The whole point of anti-trust laws is that as a near-monopoly you cannot act the same as just another player because the intentions may not be evil, the impact is completely different.

    Google can not afford to be this naive, because unlike Microsoft they have considerably more social and economic power, and governments around the world are becoming acutely aware of that. If they don’t face reality, they are heading straight for the faith MS barely escaped: the ultimate penalty of being forced to split into separate entities.

    Share
  10. Many commenters forget that intention in the area of antitrust laws is in the eyes of the beholders. The laws forbids monopolies except in the case of natural or innocent monopolies. “Innocent or natural” are the key words. Actions by a company with no dominant market share may be innocent but the same actions by a company with dominant market share may not be. Microsoft’s bundling of IE in its OS was considered not innocent and anti-competitive, while the government did not care when Apple bundles Safari into its OS. Same action, different results.

    Words to remember by: when a company gets a lion share of a significant market, it will get investigated. This is true for the AT&T, IBM, Microsoft, Standard Oil, and the lesser known Brown Shoe company. The government interest is to foster competition; the moral leaning or intention of the company targeted has very little to do with it. Any practice that is deemed to deter competition will be scrutinized and may be judged as not “innocent”.

    Share

Comments have been disabled for this post