Google must change search business practices after FTC decision

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.
Written by Rachel King, Contributor

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.

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