The US Federal Trade Commission has concluded its far-reaching investigation into Google with a two-pronged order. Going forward, Google's Motorola subsidiary must license its standard-essential patents on a fair and reasonable basis, while Google has also agreed to stop certain practices that unfairly burden its rivals.
The FTC, however, did not find that Google unfairly manipulated its search results to highlight its own products and demote competing firms.
On the patent issue, Google has agreed to a consent order that prohibits it from seeking injunctions on products from companies that are willing to sign licensing deals. Specifically, the FTC was concerned about gadgets that utilise standard-essential patents owned by Motorola, or patents that are key to the operation of today's technology, like those related to wireless connectivity. Rather than asking the court to pull offending products off store shelves, Google/Motorola must license their technology on a fair, reasonable, and non-discriminatory (FRAND) basis.
This issue has made headlines with Motorola recently in its fight against Microsoft. Redmond claims that the licensing fees requested by Motorola are much too high, while Motorola claims that Microsoft is being unreasonable. Just last month, a Seattle court denied Motorola's request for an injunction against Microsoft products that the Google-owned company claim infringed on its patents.
A Microsoft spokeswoman today declined to comment on the deal.
When asked if the order concludes the cases Motorola has before the International Trade Commission, which handles injunctions, FTC Chairman Jon Leibowitz said today that Google/Motorola will "certainly" drop the cases it has before the ITC.
Google inherited the Motorola patent problem after it acquired the firm back in August 2011 for approximately $12.5 billion (£7.7 billion). That deal, ironically, was completed largely so that Google could bulk up its patent portfolio.
The companies also have cases before various US district courts and overseas. The European Commission is looking into the issue separately; after talking with European Commissioner Joaquin Almunia, Leibowitz said the EU is "making progress in their investigation."
FTC to Google: Stop the Scraping
The inquiry dates back to June 2011, when Google revealed that the FTC had started a "review of our business." Google didn't provide details on the focus of the probe at the time, but most people believed the bulk of the investigation would centre on Google's search practices.
In September 2011, Google executive chairman Eric Schmidt appeared on Capitol Hill to defend his company's business practices and answer questions about whether Google prioritises its own products in search results over the results of smaller, similar businesses, like Yelp.
In its order today, the FTC found that Google's practice of highlighting its own products or switching up how it displays search results are not a cause for concern.
"Although there was some evidence that Google was trying to eliminate competition" across its search products, Google's primary reason for changing up its search products and the look and feel of its services "was to improve the user experience," Leibowitz said.
"Changes to algorithms that had the effect of demoting websites had some plausible connection to improving Google search results, especially when competitors tried to game Google's algorithm," he continued.
"On balance, we don't believe the evidence required an FTC challenge," Leibowitz concluded.
The FTC did, however, take issue with Google's practice of "scraping" content from rivals like Yelp and passing it off as its own. Yelp CEO Jeremy Stoppelman complained about this practice at the same Capitol Hill hearing back in 2011, and said that Google penalised companies that complained by removing them from Google search completely.
Going forward, sites like Yelp can opt out of having their content scraped without fear of being pulled from Google search results.
"Websites can already opt out of Google Search, and they can now remove content (for example reviews) from specialized search results pages, such as local, travel and shopping," Google said.
In a statement, Yelp said that the FTC requirements "validate a number of the concerns we have raised about Google's dominance in the search market and its anti-competitive behavior. The closure of the Commission's investigation into search bias by Google without action, however, represents a missed opportunity to protect innovation in the Internet economy, and the consumers and businesses that rely upon it. We look for the regulatory bodies continuing their investigation to have greater success."
Meanwhile, Google has agreed to remove restrictions that made it difficult for AdWords customers to coordinate online advertising campaigns across multiple platforms.
"Advertisers can already export their ad campaigns from Google AdWords. They will now be able to mix and copy ad campaign data within third-party services that use our AdWords API," according to Google.
In a blog post discussing the FTC's decision, Google said the takeaway is that "Google's services are good for users and good for competition."
"As we made clear when the FTC started its investigation, we've always been open to improvements that would create a better experience," wrote David Drummond, Google's chief legal officer.
The company penned a letter to the FTC in which it agreed to the commission's demands.
"We've always accepted that with success comes regulatory scrutiny. But we're pleased that the FTC and the other authorities that have looked at Google's business practices ... have concluded that we should be free to combine direct answers with Web results," Drummond wrote. "So we head into 2013 excited about our ability to innovate for the benefit of users everywhere."
Leibowitz acknowledged that there will likely be some who think the FTC should have done more; there will be a 30-day comment period on the patent issue. But the chairman said the FTC conducted an "exhaustive" review of Google, and believes "companies like Google ... want to honor their commitments."
When asked about a recent $22.5 million (£13.8 million) fine levelled against Google for failure to comply with an earlier FTC order, Leibowitz said he has faith that Google doesn't want to "go through that again."
"I want to believe the best about people," he continued. But should Google violate the arrangement, the FTC will step in because Google has made "legally enforceable" commitments, he said.
Image Credit: Flickr (kalexanderson)