The Obama-era Federal Trade Commission reportedly misread evidence when investigating Google a decade ago, making incorrect assumptions about the future of the internet that allowed the search giant to dominate its rivals.
The trade commission spent 19 months between 2011 and 2013 investigating allegations that Google broke antitrust laws by unfairly advantaging its own products over those of competitors in online search results.
In the end, the agency voted not to take action against Google, arguing that the company’s search algorithm helped users and didn’t unjustly hurt rivals. But new internal FTC documents obtained by Politico show that the agency downplayed the importance of online search on cellular phones and underestimated Google’s market share in online advertisements.
The agency’s five commissioners did not take the advice of staff at the trade commission, who suggested they vote in favor of suing Google for creating exclusive deals with Apple and many major telecom companies that ensured that the search engine would be pre-installed on cellphones before customers bought them.
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The trade commission documents show that a senior Google executive told FTC investigators that the company was paying “humongous” amounts to get the exclusive contracts. Furthermore, he boasted in internal emails that the deals allowed Google to “own the U.S. market.”
Those contracts are now, eight years later, at the center of an antitrust lawsuit filed against Google last year by the Justice Department and state attorneys general.
When it comes to judging whether corporations are violating antitrust law, high pricing isn’t a problem for Google since it charges nothing for its search engine. Instead, the critical question is if the company’s preferential treatment of its own products gives it a powerful advantage over competitors.
Other tech giants such as Facebook and Amazon had complained at the time that Google’s dominance in the online search market could harm their businesses because of the company’s search bias. Amazon, for example, was so fearful of Google’s anticompetitive behavior that it took a hit to its revenue in order to strike contracts with Microsoft’s Bing and Yahoo’s search engine in the hopes of trying to keep them alive and competing.
In fact, Google changed its search algorithm in 2007 in order to ensure its own products and services were advantaged at the top of search results over those of its rivals, downgrading products from rivals such as Yelp and Amazon. These actions received so much blowback from users that Google was eventually forced to reverse them.
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Now, many of the FTC officials who were part of the trade commission’s 2011 Google investigation are still involved in the antitrust fight, but some of them now work for the opposite side, Google.
