FTC drops probe of Google search

Even the U.S. government can’t rein in Google Inc.’s dominance of online search.

Federal regulators ended a 19-month antitrust investigation into the Mountain View, Calif., search engine giant without imposing any major sanctions.

The probe focused on complaints that Google skews its search results to favor its own products and services, which unfairly hurt competitors.

It was a bitter decision for Microsoft Inc. and a cadre of other small and large rivals that feel Google remains unchecked in its dominance of the Internet search business. Critics say the settlement will only embolden the company, which handles two-thirds of all U.S. Web searches and more than 80% in much of Europe.

“The Federal Trade Commission had an opportunity in this case to make sure there would be plenty of room for the emergence of the next Google … and instead it has decided to let the incumbent run wild,” said Siva Vaidhyanathan, professor of media studies and law at the University of Virginia and author of “The Googlization of Everything — and Why We Should Worry.”

The commission did find that Google sometimes favors its own products and services in search results. But commissioners said there was no proof the company violated U.S. antitrust laws or harmed consumers.

As part of a settlement, Google agreed to relatively minor changes to its search practices.

The company agreed to stop including snippets of content from other websites in its search results and make it easier for advertisers to manage their marketing campaigns on competing websites.

Google also agreed to a separate, formal consent order to license hundreds of patents it acquired when it bought Motorola Mobility to mobile device rivals, to settle allegations that it was stifling competition.

“Anyone who is in the business of being the chairman of an antitrust enforcement agency would like to bring a big case … but more important than that is to faithfully execute the law,” FTC Chairman Jon Leibowitz said at a news conference in Washington, D.C.

The settlement was widely viewed as an exoneration for Google, which had insisted it has done nothing wrong and simply gives consumers the most relevant information available. It also allowed Google to dodge a protracted legal fight, such as the one that Microsoft endured in the late 1990s and early 2000s that is blamed for distracting its management just as Internet search was taking off.

Over the last 14 years, Google has become one of the world’s biggest global brands. It has created more wealth faster than any company in history.

And it has become a hugely influential gateway to the Web, guiding people to the answers they seek on the Internet and determining what articles they read, storefronts they shop and websites they visit.

That has made Google rich. It has a 75% share of revenues in the $17.6-billion U.S. search advertising market, according to research firm EMarketer. And it has a 41% share of the overall $37.3-billion U.S. digital advertising market.

Its unparalleled dominance of search advertising and growing dominance in smartphones and online video has also made enemies. One of its sharpest critics is Microsoft, which runs the search engine Bing.

Smaller competitors that rely on Google to drive traffic to their websites also said Google stacks the deck in its own favor, adjusting search results to showcase its own services such as shopping and travel. Allegations that Google has abused its market dominance has led to antitrust investigations by some U.S. state attorneys general.

But antitrust experts say the FTC faced an insurmountable challenge in proving anticompetitive behavior.

“You don’t get to first base in an antitrust case unless you can show consumers were harmed,” said David Balto, a former policy director of the FTC’s bureau of competition who also has done some paid work for Google.

He expects that European regulators will also agree to a formal settlement with Google over antitrust issues. European competition commissioner Joaquim Almunia said in December he hoped to reach a settlement with Google this month.

European antitrust officials, who have broader authority, are likely to wring some concessions from Google but the changes are likely to be mostly minor such as labeling results from its online services more clearly. Analysts expect that the investigation might serve as a warning for Google.

Bert Foer, president of the American Antitrust Institute, a watchdog group that supports strong enforcement, predicted Google would be more careful about how it conducts business to avoid getting in additional antitrust scrapes, the way Microsoft did, but probably will still face complaints.

“Google’s a company that doesn’t seem to like to be at odds with government, not like Microsoft, which used to fight tooth and nail,” he said. “Google negotiates, they’ve learned a lot about public relations from the Microsoft case years ago and their public image is important to them. I think they’ll be careful. But I think they’ll continue to get in trouble. When you’re that big … there’s going to be complaints.”

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Guynn reported from San Francisco and Puzzanghera from Washington.