Google Said To End FTC Probe With Letter Promising Change

Google Inc. (GOOG) is poised to offer voluntary concessions that will end a 20-month U.S. antitrust probe of its business practices without any enforcement action being taken, two people familiar with the matter said.

Google, which has been under investigation by the Federal Trade Commission, is preparing a letter promising not to copy content from rival websites without permission and to allow advertisers to compare data from ad campaigns with their performance on other Internet search engines, one of the people said yesterday. That will bring the antitrust investigation to a close without a lawsuit or settlement, said the people, who asked not to be identified because the matter isn’t public.

An end to the probe without enforcement action would be a blow to competitors including Microsoft Corp. (MSFT), Yelp Inc., and Expedia Inc. An alliance of such e-commerce and Web-search companies have pressed the agency to act, claiming Google’s dominance of Internet search combined with favoring its own services in answers to queries violates antitrust laws.

Adam Kovacevich, a Google spokesman, declined to comment on whether Google is preparing to announce concessions in the case or whether the FTC is preparing to close the matter without taking action. Cecelia Prewett, a spokeswoman for the FTC, also declined to comment.

‘Work Cooperatively’

“We continue to work cooperatively with the Federal Trade Commission and are happy to answer any questions they may have,” Kovacevich said in an e-mail.

Google has been engaged in settlement talks with the FTC for about two weeks. The Mountain View, California-based company has resisted the FTC’s efforts to reach a formal settlement agreement over allegations that it skews search results to favor its services, saying such an agreement may hurt its business prospects, said the people.

“Enforcement authorities should not allow Google to retain an unfair advantage in the market gained through years of anti- competitive behavior,” said Fairsearch.org, the alliance that includes Microsoft, said in an e-mailed statement yesterday. “If the FTC fails to take meaningful action after a nearly two- year investigation, Google will only be emboldened to act in ways that are more harmful to consumers and innovators.”

Fairsearch.org claims that Google puts its own restaurant reviews, maps and shopping services at the top of the results page and that the first three answers to a query garner 88 percent of users’ clicks.

Favored Services

“At a minimum, if the government is going to concede that the practice isn’t unlawful, it should make it clear that Google is favoring its own services,” said Gary Reback, an antitrust lawyer in Menlo Park, California, who represents companies that have complained about Google’s practices.

Google’s position, made publicly by Executive Chairman Eric Schmidt during a Senate Judiciary antitrust hearing in September 2011, is that its rankings help consumers who seek the best direct answer to a query rather than links to other information sources.

“Our challenge is to return the most relevant answers first,” Schmidt said at the hearing. “This means that not every website can come on top.”

Reback criticized the FTC’s investigation, saying that many of his clients, which include NexTag Inc. and other shopping- comparison websites, received no follow-up questions, including about the anticompetitive effects of Google’s practices.

Under Pressure

The agency has been under pressure to extract concessions from Google after winning a battle with the Justice Department’s antitrust division over which regulator would probe the world’s most popular search engine.

Google also is in discussions with European Union officials to resolve their antitrust concerns. Those include Google ranking its services higher than rivals’ offerings in search results, copying competitors’ Web content, and making agreements with websites and developers that stifle competition in the advertising industry.

The attorneys general of some states, including Texas, California, New York and Ohio, have also been investigating Google’s practices in Internet search.

In another investigation of Google, the FTC will probably announce a consent decree that would limit the company’s ability to seek injunctions against competitors’ products that rely on so-called standard essential patents, said the people. The decree would stop short of a complete ban on Google seeking injunctions against use of its patents where the company has agreed to license the technology on “fair and reasonable terms,” the people said.

Bloomberg