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FTC-Google Antitrust: The Obvious Case for Consumer Harm -- Part 10 Google Unaccountability Series

Despite reports questioning the evidence of consumer harm in the FTC antitrust investigation of Google, it's obviously there if the FTC chooses to charge Google under its Section 5 authority which prohibits "unfair or deceptive acts or practices." The legal threshold for proving consumer harm under Section 5 versus the Sherman Act is dramatically easier for the FTC prosecution to meet. Thus press reports about Google consumer harm are implicitly more about the furious debate over which law(s) to use than it is about the provability of consumer harm.

A main argument the FTC made to win the turf battle over which antitrust agency would lead the Google antitrust investigation, the DOJ or FTC, was that the FTC had Section 5 authority, in addition to the Sherman Act anti-monopolization authority that the DOJ and FTC both share. Unlike antitrust precedent from the Sherman Act, which guides that consumer harm should outweigh any offsetting innovation or consumer benefits, Congress in Section 5 declared deceiving consumers is illegal harm of consumers.

Thus the FTC must prove only that Google deceived consumers, because deception is prima facia evidence of consumer harm. Under Section 5 Google would have the unenviable legal and political task of trying to persuade a court or jury that deception is better for consumers than fair representation, or effectively that Google knows what's better for consumers than consumers know for themselves. Such a task is especially problematic for Google because it assiduously built its search brand and consumer reputation on Google search being "objective," (unbiased) and hence inherently trustworthy.

The Obvious Case of Google Consumer Harm

Simply, the FTC must prove Google deceived consumers.

First, Google's founders eerily laid out the exact motive and predicate for this case in a 1998 academic paper they wrote.

  • "…we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers. Since it is very difficult even for experts to evaluate search engines, search engine bias is particularly insidious." … "For example, a search engine could add a small factor to search results from "friendly" companies, and subtract a factor from results from competitors. This type of bias is very difficult to detect but could still have a significant effect on the market. Furthermore, advertising income often provides an incentive to provide poor quality search results." "… we believe the issue of advertising causes enough mixed incentives that it is crucial to have a competitive search engine that is transparent and in the academic realm."

Second, Google has long represented to the public on its website that its search results are objective (unbiased) and that being unbiased is critical to maintaining user trust.

  • "We never manipulate rankings to put our partners higher in our search results and no one can buy better Pagerank. Our users trust our objectivity and no short term gain could ever justify breaching that trust."

Third, a bi-partisan letter to the FTC from the Senate Antitrust Subcommittee and also the Subcommittee's hearing record of witnesses under oath, provide a wealth of public evidence for the FTC's case even before the FTC issued CIDs (subpoenas) to collect additional evidence. The Senate hearing collected broad evidence of Google having hard-coded preferences of Google content and recorded Google Chairman Eric Schmidt categorically denying Google biases or preferences its search results.

Fourth, former Google Executive Marissa Mayer publicly admitted Google manipulated its search results to preference Google Finance and Google Maps.

  • "When we rolled out Google Finance, we did put the Google link first. It seems only fair, right? We do all the work for the search page and all these other things, so we do put it first. That’s actually been a policy, then, because of Finance we implemented it in other places. So for Google Maps, again, it’s the first link."

Finally, if, as one expects, the FTC conducted a legitimate and serious investigation, and did not short its evidence collection to meet any artificially-imposed investigation deadlines, the FTC should have been able to confirm and expand upon the findings of the Senate Antitrust Subcommittee's investigation which found: "Rather than act as an honest broker of unbiased search results, Google's search results appear to favor the company's own web products and services."

In sum, there is an obvious FTC-Google antitrust case of consumer harm outlined above, if the FTC avails itself of its unique Section 5 authority (that prohibits "unfair or deceptive acts or practices" as illegal consumer harm), the extra authority that the FTC argued would make the FTC better able to prosecute Google than the DOJ.

If the FTC somehow determines that it is unable to institutionally fulfill its law enforcement responsibilities in this Google investigation satisfactorily, the FTC then should refer the case to the DOJ, just like the FTC did twenty years ago in referring the Microsoft antitrust antitrust case to the DOJ when the FTC was institutionally unable to satisfactorily fulfill its law enforcement responsibilities in that case.

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Google Unaccountability Series:

Part 1: "Why Google Thinks It Is Above the Law"

Part 2: "Top Ten Untrue Google Stories"

Part 3: "Google's Growing Record of Obstruction of Justice"

Part 4: "Why FTC's $22.5m Privacy Fine is Faux Accountability"

Part 5: "Google's Culture of Unaccountability: In Their Own Words"

Part 6: "Google Mocks the FTC's Ineffectual Privacy & Antitrust Enforcement"

Part 7: "An FTC Googleopoly Get Out of Jail Free Card?"

Part 8: "Top Lessons to Learn for Google Antitrust Enforcers"

Part 9: "Google Mocks EU and FTC in Courting Yahoo Again"

 

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