In 2013, the Federal Trade Commission (FTC) ended its investigation into Google, but new documents reveal that FTC staffers believed the company engaged in behavior that hurt consumers and advertisers.

The outcome of the investigation saw Google make some changes and the agency's commissioners decided not to sue the world's largest search engine in what likely would have been the largest antitrust since the United States government sued Microsoft in the late 1990s.

At the time, Google not surprisingly hailed the FTC's decision as evidence that the company had never been a negative force for consumers or its advertiser customers. But last week, documents from the FTC's investigation were inadvertently released as part of a Freedom of Information Act request and they paint a different picture of Google.

The documents reveal that FTC staffers responsible for the investigation concluded Google's "conduct has resulted—and will result—in real harm to consumers and to innovation in the online search and advertising markets." Among the findings detailed in the documents:

  • Evidence suggested that Google favored its own vertical properties over those of competitors.
  • Google scraped content from third parties and threatened to remove those parties from search results if they didn't let it use that content.
  • The search giant used various tactics to deter advertisers and partners from running ads or working with other search engines.

As part of its settlement with the FTC, Google agreed to make changes related to some but not all of these issues and according to a statement, Google is adamant that it was vindicated by the FTC's decision not to pursue legal action. In that statement, Google General Counsel Kent Walker added, "Speculation about potential consumer harm turned out to be entirely wrong. Since the investigation closed two years ago, the ways people access information online have only increased, giving consumers more choice than ever before."

But the FTC documents have received attention because the agency's findings seemed to provide ample cause for a different outcome. "This document appears to show that the FTC had direct evidence from Google of intentional search bias," Luther Lowe, the vice president of public policy for Yelp, told the Wall Street Journal. Yelp was one of the companies that complained to the FTC about Google's behavior.

As the Wall Street Journal points out, "It is unusual for the commissioners to not take staff recommendations. But in this case, they were wrestling with competing recommendations, including a separate report from the agency’s economic bureau that didn’t favor legal action."

The FTC's decision two years ago could prove even more impactful as Google continues its push into vertical markets like auto insurance. But Google has arguably become more vulnerable in the past two years as well. The company still has a dominant share of the search market, but that has slipped recently. Many believe that Facebook, which has seen its ad business soar, is becoming a real threat to Google's ad dominance. And upstart social platforms like Snapchat, while not direct Google competitors, serve as a reminder that Google has failed to develop a competitive social platform of its own.

None of this means that the FTC's past findings don't open old wounds or raise legitimate concerns, but it's also clear that in today's booming digital economy, no tech company, however powerful, can use its power to stifle innovation for too long, and those that try in the long run will probably only make themselves less competitive.

Patricio Robles

Published 23 March, 2015 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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