FTC Pressures Google to Resolve Antitrust Investigation

The US Federal Trade Commission reportedly waited to make public its intent to sue Google for antitrust violation until after the November 6 US presidential election. The heat is on, now that the US elections have concluded: the FTC wants Google to resolve the antitrust investigation for its search properties, or face a lawsuit. But it would take the votes of five commissioners for the FTC to take action.

The main accusations against Google are that the search engine favors its own services against competitors, ranking them higher in the SERPs. In a concrete example, Yelp CEO Jeremy Stoppelman wrote in a statement:

“Google is no longer in the business of sending people to the best sources of information on the web. It now hopes to be a destination site itself for one vertical market after another, including news, shopping, travel, and now, local business reviews. It would be one thing if these efforts were conducted on a level playing field, but the reality is they are not. The experience in my industry is telling: Google forces review websites to provide their content for free to benefit Google’s own competing product – not consumers. Google then gives its own product preferential treatment in Google search results.”

And Stoppelman is justified to worry. With Frommers, Zagat, and ITA software, Google has the potential to deliver a travel service to consumers, not just search results – and it is already moving in this direction. And what comes in Google search results in travel becomes even more powerful with Google Local, where all the new content will land, to create a “complete” experience, allegedly better for users.

“Google favors its own Google Local product in web search results, too. Rather than favoring
them algorithmically, however, Google simply favors them as a matter of design,” explained Stoppelman in a statement to a Senate judiciary subcommittee in September 2011.

And favoring Google products against competitors is not all. According to a report by Bloomberg, Google is also under scrutiny for:

…signing exclusive agreements to provide search services to online publishers and for making it difficult for advertisers to compare data about campaigns running on rival sites by Yahoo! Inc. (YHOO) and Microsoft Corp. (MSFT)’s Bing…

For ordinary consumers, it’s challenging to understand the gravity of these accusations, and the potential impact if the FTC finds Google guilty. What search engine users see in Google is a free tool, delivering relevant answers to search queries. They don’t care about algorithms, or politics behind the SERPs. They look for a restaurant in San Francisco, and they don’t mind that the results are powered with Google’s own ZAGAT. They don’t even ask why, or what’s in for Google. In fact, very few people know that Zagat belongs to Google.

All first results for “restaurants in Los Angeles” on Google.com feature Google’s own product, ZAGAT. In fact, ZAGAT is annoyingly prominent on the first page in SERPs for many other restaurant-related terms.

But the fact that all first results for this particular query, and for hundreds of other similar, are powered by ZAGAT, does prove that Google favors its own products in search, and shows why Yelp and others are concerned.

Not yet determined, if the FTC decides to proceed, it can file a complaint in its own administrative court or with the federal courts.