Though it was surely not its intention, the Federal Trade Commission’s conclusion last week of its investigation of Google invites the question: What useful function does the FTC serve?
Not content, after two years of investigation on the taxpayers’ dime, to largely look past the mountain of evidence of marketplace harm caused by Google’s search and advertising practices, the Commission compounded that error by declining to issue a formal consent order, leaving it in the hands of Google itself, without the prospect of penalty, to change some of its business practices.
As even Commissioner J. Thomas Rosch said in his statement of concurrence and dissent, the FTC’s “settlement” with Google “creates very bad precedent and may lead to the impression that well-heeled firms such as Google will receive special treatment at the Commission.”
In elaboration of his dissent from the settlement procedure, Comm. Rosch added this:
Instead of following standard Commission procedure and entering into a binding consent agreement to resolve the majority’s concerns, Google has instead made non-binding commitments with respect to its search practices….
Our settlement with Google is not in the form of a binding consent order and, as a result, the Commission cannot enforce it by initiating contempt proceedings. The inability to enforce Google’s commitments through contempt proceedings is particularly problematic given that the Commission has charged Google with violating a prior consent agreement.
What Comm. Rosch delicately calls “special treatment,” the more cynical of us would recognize as political influence peddling, a practice that Google has become quite adept at employing. First it bankrolled the codification, at the Federal Communications Commission, of “net neutrality” regulations, thereby providing a solution to a nonexistent problem; then it led the successful opposition to the PIPA and SOPA copyright bills, the better to protect its investment in YouTube; now it has neutered the FTC, with the consequence being that it can continue to game its search results in ways that favor companies it controls.
So how has Google managed such political feats? Well, would you believe that money has played a role? In the FTC investigation alone Google reportedly spent some $25 million lobbying the matter. To give an idea of the magnitude of this kind of spending, it equals 10 percent of the FTC’s total annual budget of $250 million.
But in addition to its FTC-specific lobbying, it’s well known that Google has cast its lot, through munificent campaign contributions and public policy support, with the current administration. Though it failed to come to pass, there was undoubtedly substance to the rumor that Google’s Eric Schmidt was being considered for a cabinet post in the Obama Administration.
Even so, there is evidence that the FTC commissioners know what they have done. Their concluding statement about Google’s search practices, for instance, displays an almost comical defensiveness as they contend that, even if Google’s search practices favor its own companies, that is arguably okay:
In sum, we find that the evidence presented at this time does not support the allegation that Google’s display of its own vertical content at or near the top of its search results page was a product design change undertaken without a legitimate business justification. Rather, we conclude that Google’s display of its own content could plausibly (emphases added) be viewed as an improvement in the overall quality of Google’s search product…. Although at points in time various vertical websites have experienced demotions, we find that this was a consequence of algorithm changes that also could plausibly be viewed as an improvement in the overall quality of Google’s search results….
Although our careful review of the evidence in this matter supports our decision to close this investigation, we will remain vigilant and continue to monitor Google for conduct that may harm competition and consumers.
Such limp-wristed rhetoric aside, there is a chance that Google will be brought to heel, just not by American authorities. As it happens, the European Commission has also been investigating Google’s misdeeds, and the odds are good that, lacking the kind of political clout in Europe that it has in the USA, the company may actually receive from the Europeans something more than just a slap on the wrist. On Dec. 18 the Commission gave the company 30 days to provide it with proposals to settle its complaints, something that could cost Google billions if it fails to do so.
Whatever the Europeans do, however, there remains the FTC’s foozled play, well put in a Bloomberg News editorial:
The FTC missed an opportunity to explore publicly one of the paramount issues of our day: Is Google abusing its role as gatekeeper to the digital economy? Lawmakers, economists, other regulators, and consumers should all be in on this important debate over whether Google is leveraging its overwhelming dominance of search into unassailable market power in other areas.
The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.