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Friday, January 4, 2013

Daily Report: Google Pushed Hard Behind the Scenes to Convince Regulators

For 19 months, Google pressed its case with antitrust regulators investigating the company. Working relentlessly behind the scenes, executives made frequent flights to Washington, laying out their legal arguments and shrewdly applying lessons learned from Microsoft's bruising antitrust battle in the 1990s, report Claire Cain Miller and Nick Wingfield of The New York Times.

That is why one of the biggest antitrust investigations of an American company in years ended with a slap on the wrist Thursday, when the Federal Trade Commission closed its investigation of Google's search practices without bringing a complaint. Google voluntarily made two minor concessions.

Edward Wyatt of The New York Times reported that by allowing Google to continue to present search results that highlight its own services, the F.T.C. decision could enable Google to further strengthen its already dominant position on the Internet. It also enables Google to avoid a costly and lengthy legal war of attrition like the antitrust battle that Microsoft waged in the 1990s.

“The way they managed to escape it is through a barrage of not only political officials but also academics aligned against doing very much in this particular case,” said Herbert Hovenkamp, a professor of antitrust law at the University of Iowa who has worked as a paid adviser to Google in the past. “The first sign of a bad antitrust case is lack of consumer harm, and there just was not any consumer harm emerging in this very long investigation.”

Elsewhere on the Web, FOSS Patents, which has in the past been paid by Goog le, focused on the part of the F.T.C.'s ruling regarding Google's standard essential patents. “In terms of impact on other cases, the order is a consent decree: Google accepted it as part of a broader settlement,” wrote Florian Mueller. “Over the last couple of years I've been watching a certain pattern of companies making licensing offers on outrageous, totally unacceptable terms, knowing that no one in his right mind would accept them, only to then seek injunctive relief against an allegedly-unwilling licensee,” he writes.”The FTC undoubtedly wanted to put an end to these games.”

Politico reported that “instead of ignoring Washington - as rival Microsoft did before its costly monopolization trial in the 1990s - Google spent about $25 million in lobbying, made an effort to cozy up to the Obama administration and hired influential Republicans and former regulators. The company even consulted with the late Robert Bork and the Heritage Foundation and met with senators like John Kerry to make its case. In other words, these traditional outsiders worked the system from the inside.”

GigOm said, “The biggest loser is Microsoft, which funded a long-running cloak-and-dagger lobbying campaign to convince the public and government that its arch-enemy had to be regulated. Sites like Yelp, Kayak and Expedia also lose in the sense that Google can now push them down its search listing with impunity (though there is no sign for now that Google is actually doing this).”

The Washington Post said that the F.T.C. was not persuaded by the evidence at hand. “‘The American antitr ust laws protect competition, not competitors,' said Chairman Jon Leibowitz. Establishing whether consumers have suffered - or are likely to suffer in the future - has long been the quicksand in the middle of U.S. antitrust cases. Wait too long to rein in monopolists, and the damage might be irrevocable. Move too fast, and the evidence of consumer harm might lack the clarity necessary to survive a court challenge.”

The Wall Street Journal focused on a stinging dissent from J. Thomas Rosch of the F.T.C.: “He didn't advocate suing Google, but said that in principle the FTC should require legally binding consent decrees if problems are found. ‘After promising an elephant more than a year ago, the Commission instead has brought forth a couple of mice,' Mr. Rosch said.”