Leaked US antitrust report on Google adds weight to rivals' complaints

Google inflated rankings for its own services and scraped other companies' content, the report says

Google executive chairman Eric Schmidt, pictured during a 2011 U.S. Senate hearing.

Google executive chairman Eric Schmidt, pictured during a 2011 U.S. Senate hearing.

A leaked report by staff at the U.S. Federal Trade Commission paints an ugly picture of Google as a bullying monopolist and adds credence to complaints from rivals who have long criticized its business practices.

The report, which was mistakenly provided to the Wall Street Journal as part of a public records request, reveals that FTC staff concluded in 2012 that Google's business tactics had caused "real harm to consumers and to innovation," and the staff recommended a lawsuit against the company.

The FTC's commissioners ultimately decided not to take action and closed their investigation of Google. But the conduct described in the 160-page critique paints a damaging picture of the company and seems to vindicate rivals such as Yelp that have complained about its tactics.

The findings reveal, in staggering detail, the lengths to which Google went to maintain its dominance in search and bolster its lucrative advertising business.

Google typically ranks sites based on metrics like the number of links that point to a site and how often users click on those links. But at times the company boosted links to its own properties even when rival services might have better served its users, according to the report.

If a comparison shopping site from a competitor should have ranked highest, for instance, Google Shopping was sometimes placed above it. And when Yelp was deemed a more relevant result, Google Local would appear on top, the FTC staff wrote.

Google also copied, or "scraped," content from rivals such as TripAdvisor and Amazon.com, and threatened to remove those sites from its search listing if they objected, the Journal reported. In one instance, Google used Amazon's sales rankings to determine how it ranked products for its own listings, it said.

In so doing, Google sent a message that it would "use its monopoly power over search to extract the fruits of its rivals' innovations," the FTC staff wrote.

The evidence paints "a complex portrait of a company working toward an overall goal of maintaining its market share by providing the best user experience, while simultaneously engaging in tactics that resulted in harm to many vertical competitors, and likely helped to entrench Google's monopoly power over search and search advertising," the FTC staff wrote.

In a statement Thursday attributed to Kent Walker, Google's general counsel, Google said its competitors are thriving and that consumers have "more choice than ever before."

"After an exhaustive 19-month review, covering nine million pages of documents and many hours of testimony, the FTC staff and all five FTC Commissioners agreed that there was no need to take action on how we rank and display search results," Walker said. "Speculation about potential consumer and competitor harm turned out to be entirely wrong."

Yelp refers to itself today as the 'de facto local search engine,' he noted, and has grown dramatically in the last four years.

Still, the staff report paints a damaging picture of a company that once pledged to "do no evil."

According to the staff report, Google responded to the FTC's concerns by giving rivals the choice to opt out of having their content used in its listings, but to remain in its core search engine.

In advertising, they concluded, Google violated antitrust law by restricting advertisers from running campaigns on rival search engines like Bing or Yahoo. Specifically, it blocked advertisers from using data gathered from Google ad campaigns to run campaigns on other sites. The commission did not secure commitments from Google to change its policies here, the Journal reported. One FTC commissioner cited a lack of evidence.

For its investigation, the FTC collected 9 million pages of documents from Google and other parties, and took sworn testimony from Google executives.

The FTC staff conceded there would be "many risks" in bringing a lawsuit against Google, the Journal reported, including the "substantial innovation" that Google would be able to demonstrate had taken place, and the intense competition it faces from Microsoft and others.

The Journal said it had viewed parts of the report after the FTC inadvertently disclosed it as part of a Freedom of Information Act request. The FTC declined to release the remainder of the report and asked the Journal to return the document, but the Journal did not.

The agency closed its investigation of Google in 2013, after the company agreed to make changes to some of its practices. Findings by the FTC staff helped to inform the FTC commissioners' final decision.

Meanwhile, Google has continued to expand its own services. Just this week it announced more comprehensive listings for hotel searches, and earlier this month it launched a new service to shop for car insurance in California, with other states on the way.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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Tags internetbusiness issuesGoogleadvertisingsearch enginesInternet-based applications and services

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Zach Miners

IDG News Service
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