Google Faces Renewed EU Scrutiny in Wake of FTC Leak

Posted on March 26, 2015 by Paul Thurrott in Cloud Computing with 0 Comments

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European lawmakers who previous scuttled an EU settlement with Google are now taking an even more hardline stance against the search giant in the wake of leaked documents showing that the company should have faced antitrust charges in the United States. Meanwhile, the FTC and Google are both scrambling to undo the damage caused by these leaked revelations.

“This new evidence is crucial and could not come at better time,” Ramon Tremosa i Balcells said in a statement. The Spanish lawmaker had previously signed a European Parliament resolution calling on the breakup of Google for its antitrust violations. One of several EU investigations of Google is examining almost exactly the same behavioral issues that the FTC failed to prosecute.

The damaging FTC leak showed that federal regulators in the United States had a strong antitrust case against Google but declined to press charges, mysteriously agreeing instead to ineffectual and voluntary business behavioral changes.

A very similar EU investigation into Google’s search business uncovered the same anti-competitive and anti-consumer business practices as did the FTC. And the European Commission, then run by JoaquĆ­n Almunia, also originally attempted to push through a weak settlement that would have caused just minor changes in Google’s behavior.

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Outraged by this passiveness, EU lawmakers demanded that Almunia and the EC do more to protect consumers in Europe. And in his waning days as Competition Commissioner, Mr. Almunia was forced to continue the case rather than settled. So the Google investigation is now being run by his successor, Margrethe Vestager, who has pledged to be less of a pushover. That said, the EU’s case can and should only focus on Google’s abuses in the EU.

“As Commissioner Vestager has said a number of times, to take the Google investigation forward and get it right, she is taking the necessary time to update information in the files and form her own view, before deciding on next steps,” EC spokesperson Ricardo Cardoso said this week when asked about the FTC leak and how it might impact the EU case against Google. “It is very important that the application of competition law in individual cases remains independent from politics and that antitrust procedures are not put into question. It is the Commission’s obligation to respect the rights of all the parties involved and to remain neutral and fair. These are crucial values for competition law enforcement.”

Meanwhile, both the FTC and Google are trying to undo the PR damage caused by the leak revelations, which noted, among other things, that Google had indeed violated US antitrust laws. But despite the overwhelming recommendations of the staffers who actually investigated Google, the FTC commissioners overruled them and decided not to sue.

This is, of course, not the story that the FTC or Google is trying to communicate.

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“Contrary to recent press reports, the commission’s decision on the search allegations was in accord with the recommendations of the FTC’s Bureau of Competition, Bureau of Economics, and Office of General Counsel,” an FTC statement notes. “The agency said that it regretted the release of the documents, which were confidential and should not have been included in a response to a Freedom of Information Act request. We are taking additional steps to ensure that such a disclosure does not occur in the future.”

For its part, Google of course highlights the fact that the FTC investigated its business practices and then declined to charge it with antitrust violations. (Which of course ignores that this is indeed the problem.) Besides, where’s the consumer harm?

“Speculation about potential consumer harm turned out to be entirely wrong,” Google general counsel Kent Walker said. “Since the [FTC] investigation closed two years ago, the ways people access information online have only increased, giving consumers more choice than ever before.”

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