Google antitrust settlement surprises everyone

The recent settlement by the Federal Trade Commission with Google leaves privacy advocates shocked and dismayed but smartphone manufacturers will be jubilant.

Following an investigation of Google’s business practices, the FTC’s settlement has been deemed feeble by most and even outrageous by some corporations, like Microsoft. Microsoft has contended that Google have been stifling the competition and feels that the company has been let off the hook. It is true that Google has been looking to lock consumers into its suite of services through Google+ and its acquisition of Motorola Mobility worried many smartphone developers that it would squeeze the competition. The merger saw Google acquire invaluable telecommunications patents so that it could have even more control over the development of smartphones and tablet devices, thereby relying less on third party manufacturers and become a more aggressive competitor to Apple.

Many have been highly critical of the FTC’s antitrust settlement with Google but there are some factors that observers need to be cognizant of. Google’s search engine was examined by regulators to find out if their search results were biased towards its own content and they did in fact find that this was the case. Google acknowledged these biases. Likewise, other search engines display biased search results because companies pay search engines to have their brands get preferential treatment in display results. There was a limit to what the FTC could actually do. The FTC was successful in forcing Google to modify its scraping techniques – a process by which they cull data from a variety of Internet sites, including competitor Web sites.

A second important factor is the concessions that Google offered as part of the settlement. Google agreed to drop two patent disputes with Microsoft over technology used in the Xbox. Many of Motorola’s patents were FRAND (fair, reasonable and non-discriminatory) patents meaning that they have mandatory licensing criteria associated with them. The FTC has secured promises from Google that it will provide greater access to competitors to the telecommunications technologies in a number of key patents. This should be viewed as a win for both the FTC and innovators, and ultimately consumers. We all know about the highly publicized legal battles being fought by Apple – particularly accusations of patent infringement by Samsung. These lawsuits have cost millions of dollars and have the potential to hinder innovation when innovators are reluctant to build upon and improve existing technologies for fear of litigation. The FTC has successfully averted ongoing patent infringement cases and the potential for future litigation. 

The antitrust settlement was critical for Google given its business model, which relies heavily on mining user data. Google’s problems in China are well-documented, with claims of the government hacking Gmail accounts and numerous other confrontations. The European Union’s new online privacy legislation, which overhauls EU Directive 95, poses a serious challenge to Google, Facebook and others with their data mining operations. Thus, maintaining the status quo in terms of privacy, in the United States, was critical for Google. Ultimately, Google is one of the great American success stories and an important player in our information economy. With more than 30,000 employees worldwide and revenue of approximately $10 billion every quarter, most people would want to see this company continue to flourish.

Numerous online privacy initiatives appear to be a litany of suggestions without action unfortunately. Sens. John Kerry (D-Mass.) and John McCain (R-Ariz.) introduced The Commercial Privacy Bill of Rights Act of 2011, which "establishes a framework to protect the personal information of all Americans both online and offline." It is unclear what has happened to this initiative. At the end of 2012, the FTC noted how smartphone applications could harvest personal data from our children and urged application developers to give parents greater control over data that is being collected. The Obama Administration has made it clear that it wants greater privacy protection when Administration officials outlined a proposed "Consumer Privacy Bill of Rights" last year.

Finally, many will wonder if the FTC has changed tack with the issue of online privacy. It has vehemently investigated Google, Facebook and others mining personal data, challenged deceptive practices and won some very large settlements. The FTC accused Google of deceptive practices in its rollout of Google Buzz. It has demonstrated strong biases with its search engine by putting its own interests over the fair and balanced results hoped for by consumers. Google was also fined $22.5 million by the FTC for misrepresenting privacy assurances to Apple’s Safari users.

Have we finally seen a more conciliatory FTC and an end to these high-profile investigations of Google?

Hayes is a professor at Pace University’s Seidenberg School of Computer Science and Information Systems in New York. As the Computer Information Systems Program Chair at Pace, Hayes has cultivated partnerships with the New York Police Department, United Nations, and many other respected agencies. Hayes also manages the computer forensics laboratory at Pace, conducting research with computer science and information systems students.

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