Google braces for antitrust suit following Obama reelection

President Obama's reelection means that Google is unlikely to receive a reprieve from a looming antitrust lawsuit.


The Federal Trade Commission is nearing the end of a yearlong investigation into Google's business practices. 

People familiar with the case say the commission staffers have concluded there is reason to believe Google is violating antitrust laws and have recommended that the commission take action.

The commissioners are currently reviewing that recommendation.

If Mitt Romney had won the election, he would have appointed a new FTC chairman and Republicans would have controlled three of the five commission seats.

It is possible that a GOP-led FTC would have still gone after Google, but a Romney victory was probably Google's last best chance at escaping the investigation unscathed.

Observers say they believe that a majority of the commissioners are leaning towards taking action against Google. But no formal decision had been made, and it is unclear what kinds of penalties Google would face.

FTC Chairman Jon Leibowitz has repeatedly said he plans to close the case by the end of the year, and a decision could come in a matter of weeks.

The FTC is concerned that Google is manipulating its search results to ensure that its own services, such as YouTube, Google Maps and Google Shopping, appear above those of its rivals.

Google's competitors argue that the company shouldn't be allowed to use its dominant search engine — which has about a 67 percentmarket of the market — to stifle competition.

Competitors including Microsoft, Kayak, Expedia and Oracle formed an organization called FairSearch to lobby Congress and the FTC to crack down on Google.

Google says there is nothing unfair about its search rankings. Even if the results did boost Google products, the company says, it wouldn’t be illegal.

The FTC is also currently conducting a separate investigation into whether Google is illegally blocking its competitors' access to basic industry technologies. Google is required to license so-called "standard-essential" patents on a fair and reasonable basis. 

Commission staff are concerned that Google is violating antitrust law by trying to block companies like Apple and Microsoft from using its standard-essential patents, which cover technologies used for Wi-Fi, video streaming and other services.

The FTC's patent investigation is nearing its conclusion, and the FTC could file complaints in both cases simultaneously or within weeks of each other.

Addressing the concerns over the company's use of its patents would be relatively simple — Google would likely just have to license the patents to other companies at lower costs.

But addressing the complaints about its search results is a much more difficult task. 

Google's search algorithm is extremely sophisticated and is constantly evolving. Google says it made a total of 520 changes to the algorithm last year alone.

Asking a federal agency to oversee such a complex business secret would be a daunting and perilous challenge. The technology sector has been one of the few bright spots in the economy and regulators would be reluctant to interfere in ways that could stifle the industry's growth.

"I do think over-regulation of the Internet and restriction of what people can do is a big risk for us," Google CEO Larry Page said at a company conference in Arizona last month.

Google has reportedly told European regulators, who are also investigating the issue, that it is willing to label its own services in search results. 

But that concession would not appease Google's competitors, who are urging regulators to order the company to treat its own services the same way it treats competitors.