Both Eric Goldman and James Grimmelmann have the details on the FTC’s rather extraordinary capitulation today. It is a big win for Google. Still, a few questions remain. I have the following:
1) Commissioner Rosch included this intriguing footnote in his concurrence/dissent:
I . . . have concerns that insofar as Google has monopoly or near-monopoly power in the search advertising market and this power is due in whole or in part to its power over searches generally, nothing in this “settlement” prevents Google from telling “half-truths”–for example, that its gathering of information about the characteristics of a consumer is done solely for the consumer’s benefit, instead of also to maintain a monopoly or near-monopoly position. . . .That is a genuine cause for “strong concern.”
Did Google ever say that it was gathering data purely for consumers’ benefit? That would seem to be an odd representation for a for-profit company to make.
2) The FTC’s letter closing the investigation has given us precious little illumination here, and makes the entire affair seem like a waste of enforcement resources (or a fiasco to be expected from an agency utterly outmatched by the entities it is investigating). The Commission’s statement says “The totality of the evidence indicates that, in the main, Google adopted [changes] improve the quality of its search results, and that any negative impact on actual or potential competitors was incidental to that purpose.” But it has not released details about the nature of that evidence, the types of tests it used, or the standards employed in them. How are other tech companies to avoid such investigations in the future if they can’t get such information?
3) In its “commitment letter” to the FTC, Google states that it won’t demote sites in general purpose search results (on Google.com) if the sites opt out of having their content scraped onto Google Shopping, G+ Local, Flights, Hotels, and Advisor webpages. As the FTC Chairman put it,
Going forward, Google will allow websites the ability to opt out of appearing in its vertical properties like Google Local or Product Shopping, without being penalized or demoted in its general search results on Google.com.
What happens if a site produces evidence that it has been demoted after opt-out (during the 5-year period this commitment letter is good for)? Is there any FTC process that will be faster, more accurate, or more streamlined than, say, a good old-fashioned adjudication? If not, isn’t a commitment like this superfluous?
4) The New York Times reported in October that the FTC staff had prepared a secret 100-page memo advocating legal action against Google. Did the staff change its mind completely in less than 90 days? Or have they been overruled by political appointees? Peter Maass has noted, in the privacy context, that “The agency can take companies to court, but its overworked lawyers don’t really have the time to go the distance against the bottomless legal staffs in Silicon Valley.” Is the same now true for competition law as well?
To be sure, Google hired some of the best minds in the legal profession (and academy) to promote its position. That kind of advocacy often gets results. But until we have a better sense of the answers to the questions above, I’m afraid the bottom line is that a black box investigation exonerated a black box search engine–cold comfort for those who might worry about the power exercised by Google online.