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Google wins drawn out FTC probe, critics saying decision unfair

InternetPrivacy_Google_AP_1Google Inc has scored a major victory on Thursday following US government regulators’ ruling that ended an investigation into the company’s search practices deemed disadvantageous to rivals.

However, Google was forced to promise that it would discontinue  “scraping” reviews and other data from competitors in favor of its own products, as well as to let advertisers to gather data so they can assess for themselves how their advertising campaign works.

Google also promised to stop seeking sales bans when engaged in a lawsuit against other companies that infringe on standard essential patents to ensure interoperability, the FTC said last Thursday.

Competitors of Google and Microsoft Corp are hoping that the FTC would slap the giant Internet company with a broad antitrust case similar to the one that the Justice Department litigation did to Microsoft during the 90s.

Smaller companies like Nextag are complaining that Google is manipulating its search results to favor its own products, and to push down search results for its competitors, making them hard to find for customers.

Jon Leibowitz, the FTC Chairman, had anticipated negative feedback from competitors of Google during the press conference regarding the agency’s decision to end the investigation.

“Even though people would like us to bring a big search bias case, the facts aren’t there,” Leibowitz said.

“The changes Google have agreed to make ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy.”

The regulatory commission voted 4 to 1 in favor of settling patent investigation into the search company’s injunction requests, while a 5 to 0 vote ended the probe on the subject of search bias.

The news did little on the performance of Google shares. They close the trading day with an increase of 42 cents at $723.67 as investors had been anticipating that the FTC investigation will not cause any big damage.

“I never saw any real likelihood that the feds were going to insert themselves between one of the most popular brands in the world and the constituency that adores it,” Gartner Inc analyst Whit Andrews said.

User review site as well as networking hub Yelp claimed that Google scraped reviews, and expressed its disappointment with the conclusion of the FTC investigation.

Yelp spokesman Vince Sollitto said in an email to Reuters that the FTC’s decision to not do anything is a “missed opportunity” to ensure innovation continues in the Web. He also added that his company is still looking forward to a continued investigation by the FTC resulting to more success.

Microsoft did not immediately issue a comment on the FTC decision, though Dave Heiner, the company’s deputy general counsel, commented in a blog on Wednesday about “Google misconduct”, which blocked Google-owned YouTube  from running on Windows Phone.

Gary Reback, the counsel of the group that includes Nextag, commented that he believed the investigation did not go well for them as the commission failed to look into his clients claims that Google hurt their business. Reback, who works for the law firm Carr & Ferrell LLP and has gained renown for his litigation work against Microsoft in the 1990s, thinks that the investigation was “rubbish” despite the assurances of the FTC that it was done thoroughly and exhaustively.

I’ve never seen anything as shallow and incomplete as this was,” he said.

Software maker Microsoft had been the subject of litigation and antitrust probes since 1990 after the FTC started an investigation that lasted until 2011.

Leibowitz tried to justify the commission’s decision by mentioning that the agency had checked all the 9 million pages of documents and took sworn testimony from key Google executives. “This was an incredibly thorough and careful investigation by the commission, and the outcome is a strong and enforceable set of agreements,” Leibowitz said.

Google’s chief legal officer, David Drummond, said that the FTC announcement means that “Google’s services are good for users and good for competition.”

Thomas Rosch, set to retire from the commission this month, hinted that the decision did not do well.

“After promising an elephant more than a year ago, the commission instead has brought forth a couple of mice,” Rosch said.

The FTC broke tradition by not asking for a consent decree to end a probe. It let Google write a letter promising to enforce the changes the agreed during the probe instead.

The move drew some criticism that questions Google’s willingness to offer the pact.

Citing financial penalties, Leibowitz said: “I have no reason to think that Google won’t honor their commitment; I think they will.”

A few of the critics of Google had hinted in December that should the FTC probe prove to be weak, they would bring the issue to the Justice Department for resolution.

The European Union is also doing a similar probe of Google. An announcement on December 18 revealed that the search giant had a month to think about how to best resolve the investigation.

A certain group of state attorneys general in Texas are also looking into the company.

A mild slap on the wrist was handed to Google last August after the FTC ruled that Google bypassed the privacy settings of users running Safari browser for Apple Inc computers. The practice was deemed in violation of a 2011 consent decree made with the FTC following a failed rollout of the social network Buzz.

source: reuters

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