Google’s haughty tactics with US regulators have returned to pursue them. Critics said the tech giant paved the way for a dramatic showdown with the Justice Department nearly a decade ago.
The DOJ sued Google last week, accusing them of using it anti-competitive tactics to maintain the dominance of the search engine over competitors. The focus of the lawsuit – massive cash payments to smartphone makers like Apple and Samsung to make the Google search engine the default option on their devices – is new.
Still, according to industry sources, the Silicon Valley giant has made itself vulnerable to a fight against the heavyweight DOJ by refusing to collaborate with smaller regulators in the past.
In 2012, a democratically-led Federal Trade Commission offered the search engine giant a plea for alleged anti-competitive practices that would likely have protected it from its current legal battle with the DOJ, sources the Post said.
The FTC’s offer, which has not yet been reported on, came in the form of a declaration of consent, in which Google did not admit guilt if it agreed to curb some of its controversial search practices.
This included scraping content from third-party websites like Yelp by Google for use on its own platforms without being linked to those websites, as well as restrictions that the FTC said were put in place by Google to prevent advertisers from doing business with competing websites.
The offer – led by then FTC chairman Jon Leibowitz, a Democrat – was firmly denied.
“Google struggled against everything,” a source with knowledge of the events told The Post. “They said,” We don’t think you have the votes to sue. “
Indeed, Leibowitz did not have the support he needed to sue. He only had support from Democratic Commissioner Julie Brill, but not from Edith Ramirez, also a Democrat, or the two republican commissioners of the FTC: Maureen Ohlhausen and Thomas Rosch.
In 2013, after a two-year investigation, the FTC announced that Google had approved changes to its scraping and ad sales guidelines through a non-binding “letter of commitment” giving the FTC the authority to ensure compliance.
According to sources, if Google had approved Leibowitz’s original offer, it would have been under the jurisdiction of the FTC between seven and ten years – a period during which Donald Trump’s DOJ was not allowed to step on his turf.
“You would have been wise to sign a consent decree with the FTC,” a source who was aware of the 2012 discussions told The Post.
“I think it’s a great story about the path not taken,” added William Kovacic, a professor at George Washington University, an FTC commissioner from 2006-2011, who confirmed the plea deal offered became after he left the agency.
“If the FTC had come home with a real order, it could have been considered a much more legitimate law enforcement measure. The whole story of the government’s ineffectiveness in dealing with big tech would have been different, ”added Kovacic, pointing to loud calls from DC to contain Silicon Valley.
“It is entirely possible that Google was encouraged,” said Kovacic of the FTC’s refusal to file a lawsuit.
Google, which refused to comment on the story, has vehemently denied that its practices are anti-competitive, and in a blog post last week declared the DOJ’s lawsuit “deeply flawed”. The Alphabet-owned company controls 90 percent of all online searches in the United States, generating $ 160 billion in annual advertising revenue. They say it got there because it’s the best search engine out there.
The DOJ claims it was wrongly helped by persuading phone manufacturers to make it the default engine, thereby blocking sales channels. It does this through the Android operating system, which powers nine out of ten phones, according to the DOJ. It also pays off for Apple to make it the default search engine on the iPhone. That translates into payments to Apple of up to $ 11 billion a year, or around a third of Alphabet’s annual profit, according to government figures.
If Google gets tangled up and lost with the DOJ, it could be forced to sever its relationship with Apple – a scenario so dire for Google that it is being referred to as “code red” within the company, prosecutors said. While Android phones are more widely used, almost half of Google search traffic came from Apple devices in the past year, the DOJ’s complaint said.
Google, which competes against Microsoft’s Bing and DuckDuckGo, is expected to argue that efforts to slow its growth would only harm consumers. “People use Google because they choose, not because they’re forced to, or because they can’t find an alternative,” the company’s senior vice president of global affairs said in a blog post last week. “This lawsuit would do nothing to help consumers.”
And while the company has effectively used that argument to fend off regulators in the US and Europe for years, Seth Bloom, a longtime general counsel of the US Senate Antitrust Subcommittee, says the DOJ could still win if it can show that Google’s measures “are to prevent other search engines from flourishing. “
“I think Google’s monopoly on search is undisputed,” he said.
Nicolas Vega contributed to this story.