Google must change search business practices after FTC decision

Google must change search business practices after FTC decision

Summary: The FTC has issued a number of decisions in its complex investigation of Google, ranging from changes to search business practices to licensing Motorola-owned patents.

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The Federal Trade Commission handed down a full bag of decisions in its antitrust investigation of Google during a press conference on Thursday.

Essentially, Google is going to have to make a number of changes to its business practices -- especially regarding search.

For starters, in a 4-1 vote, the FTC ordered Google to stop using patents purchased by Motorola to exclude competitors. These patents cover "standardized technologies" across smartphones, laptops, tablets, and gaming consoles.

During the presentation from FTC headquarters in Washington D.C., FTC Chairman Jon Leibowitz described these patents as "the cornerstone of interoperability" that enable mobile phones to talk to each other.

Leibowitz said that Google's settlement with the FTC requires the company to offer a license based on fair, reasonable, and non-discriminatory (FRAND) terms to any company that wants to use these technologies.

The FTC's stance on this is that, "if left unchecked," these patents could give way to higher prices "as companies may pay higher royalties for the use of Google’s patents because of the threat of an injunction, and then pass those higher prices on to consumers."

The worst-case scenario, according to the FTC, would be for the technology industry to abandon standards, limiting innovation and investment altogether.

But again, the bigger changes focus on search. The FTC has ordered that Google stop "scraping" the content of its rivals for specialized search results. Businesses should now be able to opt out of Google products such as Shopping and Local without being penalized in how their companies pop up in search results.

Therefore, Leibowitz continued, this will create "organic search," which he asserted will make search engines more "vibrant" and "competitive."

Additionally, the FTC has stipulated that "Google has agreed to remove restrictions on the use of its online search advertising platform, AdWords, that may make it more difficult for advertisers to coordinate online advertising campaigns across multiple platforms."

Google's senior vice president and chief legal officer, David Drummond, published Google's response in a blog post on Thursday, explaining that businesses "will now be able to mix and copy ad campaign data within third-party services that use our AdWords API."

Drummond added:

In addition, we’ve agreed with the FTC (PDF) that we will seek to resolve standard-essential patent disputes through a neutral third party before seeking injunctions. This agreement establishes clear rules of the road for standards essential patents going forward.

Leibowitz asserted that these decisions follow "an exhaustive investigation into Google's business practices." Arguing that many competitors -- including those locked in legal battles with Google around the world -- likely wanted the FTC to go further, Leibowitz said it is "time to move on here" and that the investigation is officially closed.

He added that Google has agreed to comply to all of these changes to its business practices, and that the FTC will "vigorously monitor" the corporation to make sure these adjustments are made.

Drummond outlined the changes in a commitment letter, also published online on Thursday. Here's an overview of some of what we can expect:

  • Google will make a web-based notice form for website owners to opt-out of Google's Covered Webpages (i.e. Shopping, Local, Flights, etc.) within 90 days.
  • Google will remove AdWords API Terms and Conditions concerning input and copying restrictions for all AdWords API licenses within the United States within 60 days.
  • Google will file an update with the FTC's Compliance Division within 60 days.

Trying to put a positive spin on the rulings, Leibowitz said that Google can go back to focusing on innovation and new products -- but that it must do so fairly.

To recall, the government agency designed to protect consumers has been investigating the Internet giant over charges of "alleged anticompetitive conduct."

This is essentially in reference to the core of Google's business -- search -- which is deeply integrated throughout the Mountain View, Calif.-based corporation's vast portfolio of products.

Up until now, it has been said that both the FTC and the European Commission have been delaying any formal decision in their respective Google/antitrust investigations.

Back in October, it was reported that the FTC was close, but it was basically the same story through November into December. Bloomberg also reported in November that the FTC was pressing Google with an "ultimatum" that consisted of the following two options: settle with the agency now or wait for the inevitable lawsuit.

So Thursday's abrupt announcement that there would be an announcement at all today might have come as a bit of a surprise to followers of the case.

Topics: Google, Government, Government US, Legal

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76 comments
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  • get the government off Google's back!

    the big Government is stiffling the innovation google gives to the world.
    Google should have fought these ridiculous charges and shame the moronic government and lame competition in the court.
    LlNUX Geek
    • LOL - well I guess when you bash MS

      and their "practices" you now lump Google in the same group. God that must sting - A LOT.
      ScanBack
    • What innovations?

      Google business is built on stolen stuff, from software, patents, search content and youtube media.

      Hopefully DOJ and European regulators will hand over the punishment google deserves.
      Owlll1net
      • Microsoft always innovates, right?

        Not!!

        Just a little about Microsofts acquisitions...

        Microsoft has subsequently acquired 146 companies, purchased stakes in 61 companies, and made 25 divestments. Of the companies that Microsoft has acquired, 107 were based in the United States. Microsoft has not released financial details for most of these mergers and acquisitions.

        Since Microsoft's first acquisition in 1987, it has purchased an average of six companies a year. The company purchased more than ten companies a year between 2005 and 2008, and it acquired 18 firms in 2006, the most in a single year, including Onfolio, Lionhead Studios, Massive Incorporated, ProClarity, Winternals Software, and Colloquis. Microsoft has made five acquisitions worth over one billion dollars: Skype (2011), aQuantive (2007), Fast Search & Transfer (2008), Navision (2002), and Visio Corporation (2000).
        Arm A. Geddon
        • That's nice...

          But instead of telling us this stuff, where actually did you get this information about the financial details for most of these mergers and acquisitions. Ever try their web site?
          Gisabun
        • I don't see an issue with purchasing companies.

          flash news for you: even FTC don't think either, otherwise Apple, IBM, Google, Oracle, HP etc. wouldn't be able to either.
          Ram U
      • Rachael is Wrong & has Misinterpreted What Both Google & FTC is saying!

        You only need to read Google's Statement to understand this. If you read what FTC is actually saying, this is all positive for both Google and it's future. Their Patents are still good and though they are voluntarily choosing to use out of court Settlement Options to get their money from infringers of their Standards Based Patents, the long range outcome is the same. Eventually they will all have to pay them (including Apple and Microsoft). Because being a standard means it's already a proven patent if accepted into the Standards Governing Body.

        This then essentially only takes away the possibility of using injunctions to force payment in America only. But like in any business, if you owe money for using patents, eventually you are going to be made to pay. Otherwise like the Worst Case Scenario..... NO COMPANY LIKE MOTOROLA, SAMSUNG, NOKIA or even losers like Apple and Microsoft are going to be willing to invest in Standards Essential Patent Development, if they will never receive a return on their investment and STANDARDS WILL DIE!

        So you can count Apple and Microsoft's over paying for Nortel Standards Patents as way overpriced purchases too. When they too can never be used to get an injunction in America ever either! ....and that's the part Google is loving right now!!! lol.... ahahaha...

        On the other elements of this "Voluntary Agreement" between Google and FTC, Google is NOT really losing on either. Rachael and probably most of the inept and ignorant writers on the Web will probably all continue to blow chunks on this, forever feeding us all..... a lot of MIS-INFORMATION instead of the STRAIGHT TRUTH!!! READ GOOGLE's STATEMENT:
        http://googleblog.blogspot.com/2013/01/the-federal-trade-commission-closes-its.html

        It's plain as day that Google isn't even getting a reprimand or any "Order of Change" in their business practice. They are VOLUNTARILY making CHANGES that in the end will help them to be more competitive and give US CONSUMERS GREATER BENEFITS from All Search Providers!

        Opening Statement:
        "The U.S. Federal Trade Commission today announced it has closed its investigation into Google after an exhaustive 19-month review that covered millions of pages of documents and involved many hours of testimony. The conclusion is clear: Google’s services are good for users and good for competition."

        Sounds like Google is HAPPY about ending this investigation w/o nary a slap on their pinky fingers or Billions in Pocket Change (no fines ever)! lol.....

        "We’ve always accepted that with success comes regulatory scrutiny. But we’re pleased that the FTC and the other authorities that have looked at Google's business practices—including the U.S. Department of Justice (in its ITA Software review), the U.S. courts (in the SearchKing and Kinderstart cases), and the Brazilian courts (in a case last year)—have concluded that we should be free to combine direct answers with web results. So we head into 2013 excited about our ability to innovate for the benefit of users everywhere."

        The Winners are We Consumers..... and Google in the long run itself in the FUTURE!!!! :D
        KronJohn
      • Did Google steal your house

        If not you are simply crazy and get some help.
        Van Der
      • No value

        Post is just noise.
        radleym
    • LoL.

      are you sure? :D
      Ram U
    • Errr.....

      Let me guess? Anti-Microsoft, Pro Google? If the same thing happened to Microsoft, you'd be jumping for joy saying "They deserve it. time that FTC knocked them down."
      "stiffling the innovation"??? More like giving their own subsidiaries [and those who pay] preferred search access. Lately i do a search on something with Google's search, I may have to got to a couple of pages to get a proper answer.
      If Google doesn't fight, they know they are guilty!
      Gisabun
      • Results Vary

        a while back, MS had a bing challenge where you'd do a search and it's show results for Bing and Google. For programming related questions, I generally preferred Google. For other queries, it Bing was slightly better (though it was close to a draw).

        The only time I go in several pages on Google is if I'm not sure what exactly I'm searching for or if I'm doing a lot of research and intend to read many pages. For the most part i found the same was true with Bing. Even on programming searches, I generally got the answer on the first page. Google tended to have the pages I prefer higher. No doubt that's because programmers favor certain sites.

        That said, anyone that thinks Google (and Apple for that matter) aren't well on their way to being MS circa 1993-2000 is nuts. MS in the 90's was evil. Today, not so much.
        notsofast
  • Got off easy

    Google probably had tons of embarrassing web searches for the FTC staff and blackmailed them into submission. Google IS Evil. Google IS Skynet.
    Dr Phil of Crap
    • :)

      well Google are looking to introduce their driverless taxis in the United States. so robots next !!
      RedCup
  • Only the beginning

    The feds won't quit till they have nationalized all businesses!
    Ricardus
    • All encompassing evil

      When children won't play nice in the sandbox, Mother must step in.
      c4791p@...
    • They're nationalizing Google?

      Are you sure you're not on some drugs?
      Michael Alan Goff
    • I thought LinuxGeek's comment was hilarious

      but you beat him. This is the dumbest thing I read. FTC is not recommending US to take over Google, neither they did with Microsoft, IBM, AT&T etc. What Google got is the least fine over what Microsoft, IBM, AT&T, Standard Oil etc went through.
      Ram U
  • Google exposed

    As being no different nor more special than any other mega corporation. For a long time Google clung to the image of being the "Good Guys".

    I fervently hope Apple takes note here. It would be refreshing if they reformed on their own.
    MajorlyCool
    • Patents drove the Motorola aquisition

      Google has been targeted by Apple when they routinely pursue lawsuits that seek to enforce patents which limit the success of Android. That is just business. Google wanted to give themselves leverage to ward off such patent suits that would seek to prevent the use of Android, so they were forced to spend millions of dollars to purchase a company with substantial patent holdings that would be essential to the industry which it was trying to compete, enter Motorola. That too is just business.

      It is unfair that the FTC would now limit Google from using the patents acquired in the Motorola acquisition to their full effect. They are patents that were granted by the proper authority and they should have the right to use the patents to the full extent provided by law. If other companies choose to use patents to provide exclusivity or monopoly for themselves, then Google should be able to use the same practice for their defense and to their benefit.

      I would rather see the FTC work to change the patent laws to allow fair competition for all companies, not just target one company in ways that prevents them from using their assets within the framework of the existing laws.
      james.graham@...