You can watch the press conference here (unfortunately the FTC’s crappy technology only allows you to embed their entire page, not just the video player).

FTC Commissioner Jon Liebowitz

Outgoing FTC Commissioner Jon Liebowitz hands Google a softball deal as he exits

Jon Leibowitz, Chairman of the FTC, will be holding a press conference at 1pm ET announcing the settlement with Google for ” for alleged anticompetitive conduct.”

According to the FTC calendar, the commission has not met publicly to discuss the issue of Google.  And under the Sunshine Act Meeting Notice, any time more than 2 commissioners meet to discuss an issue, they must publish a notice of the meeting.

From the publicly available information, it looks like outgoing commission Chair Jon Liebowitz has been scurrying around meeting with only one commissioner at a time in order to skirt the intent of the Sunshine Act Meeting notice.

It’s pretty gobsmacking that the FTC is going to decide their biggest antitrust case of the decade without having a meeting of all the commissioners to discuss the evidence, give their positions, hear analysis and allow the entire FTC to understand how the decision was reached.

Leibowitz appears to be “racing to a settlement,” according to Politico, in order to hand Google a softball deal with no enforceable consent decree before he retires.  The settlement apparently allows Google to skate most of the serious charges simply by agreeing not to scrape certain sites for content any more, and allowing advertisers to export data to other platforms, per Bloomberg.

In contrast, the European Union is continuing its much broader investigation of Google, which has called into question the legality of its entire business model.  They expect Google to deliver enforceable, binding commitments in the next 2 to 3 weeks.

It also appears that Liebowitz has not consulted with either State AGs who have been investigating Google for antitrust activities, or with the other businesses who have complained that Google’s anti competitive activities have hurt them.

Bottom line:  European consumers have a much more vigilant watchdog guarding their interests.  Why Liebowitz rushed this decision before seeing what Google offers to the EU in a few days is anybody’s guess. But as he exits the FTC, he’ll be carrying his ass — because Eric Schmidt just handed it to him.

1:09:  Webstream goes down.

1:10: Liebowitz: Today’s decision protects consumers & businesses, following an exhaustive investigation.  Commission received over 9 million pages of documents.

Two issues:

  • 1st:  Google’s misuse of patent protection.
  • 2nd: Google unfairly biases its own search results.  We closed this action because we could not find any evidence that they did so.

Patent: 4-1 vote.

Years ago, Motorola agreed to license its essential patents.  Based on this, many companies invested millions.  Then Motorola changed the rules of the game, sought injunctions and exclusion orders on devices using its essential patents.  When Google bought Motorola they continued this practice.

Agreement requires Google to abandon its claims on standard essential patents and allow reasonable licenses.

Section 5 authority: when Congress created it, restricted remedies the commission could seek.  FTC can impose fines but can’t put people in jail.

Google has agreed to stop misappropriating or “scraping” its rivals for use in its own search results.  Google has made “legal and binding” commitments to address the commission’s concerns.

Commission investigated Google’s practice of scraping competitors’ contents, like those on Yelp, and use it in ways that let consumers believe they were its own.  When Yelp complained, Google threatened to remove Yelp’s restaurant reviews completely from its search results.

Going forward, Google will allow companies to opt out of being included in its verticals without being punished in its general search.

Investigation looked into Google’s practice multi-homing, which prevented small businesses from using tools to manage advertising on both Google and other advertising platforms including Bing.

Today, the commission has voted unanimously voted to close the investigation into search bias.

Although some evidence pointed to Google demoting their competitors’ websites, the changes Google made to their algorithm was to improve Google search results for consumers.  Since many of Google’s competitors did the same thing, and tried to game Google’s results, they concluded that it was to the consumer’s benefit.

Google is unquestionably one of the world’s great companies.  With today’s decision by the FTC, it can continue to focus on its business and its products.

Many believe that  we should have done more, particularly Google’s competitors.  Google thinks we should have done less.  [So voila!  must be great - jh]

Today’s decision is good for consumers and good for business.

1:25: Opens up the floor for questions, and web stream goes down again.

1:27:  Stream back up.

1:28:  Liebowitz:  I have no reason to think Google will not honor their commitment, I think that they will [how about the fact that they violated the Google Buzz consent decree with no penalty? - jh]

1:29:  Q: Politico  – If you didn’t look into their algorithm, and a company thinks they were demoted, what do they do?

Leibowitz: there are monitoring commitments.

Q:  FTC will be monitoring Google’s algorithm?

Leibowitz:  There are monitoring commitments within the agreement.  The decision was 5-0.

Q:  I still don’t hear how the FTC is monitoring them if it’s a voluntary agreement.

Leibowitz:  We closed search bias.  But if competitors think they’re being scraped, or have opted out and thinks they’re being demoted, we’ll know.

Q:  LA times — What are the penalties?

Leibowitz:  If you violate an order, it’s $16,000 per violation, and that can multiply very very quickly.  And in a privacy case, we have sanctioned them.  But with companies like Google, they want to honor their commitments.  And there’s also the possibility of further enforcement actions.

Bloomberg: Why wasn’t there a public comment period?

Leibowitz:  There will be a 30-60 day comment period for patent.  For scraping, because there wasn’t a complaint, there’s no basis for a traditional order.  There may be some folks who are complainants to the FTC who have other points they want to make, they all understand that the API restrictions have been dropped.

WaPo:  Most complaints from groups have to do with search bias.  By unanimously closing this case, I’m quite sure Google will be emboldened.  You said you did find some evidence of search manipulation, but that they didn’t warrant taking action.  Is there a danger that a company can feel they’re off the hook?

Leibowitz:  I’m sure anyone who is the Chairman of an agency would like to bring a “big case.”  But that’s not our job.  We found unanimously that they had not acted monopolistically and had not violated the FTC Act.  If they cross the line we can always open a case again.

FTC Watch:  Having had a unanimous verdict here, are you saying the Justice Department should not pursue a case?

Leibowitz:  I don’t believe that will be a concern.

Q:  You seem to think the FTC is a better place to handle these things because of Section 5 authority.  Is that your contention here?

Leibowitz:  No I think the Justice Department is terrific and we work closely with them.

Q:  You said you found evidence of search manipulation.  Can you go into detail?

Leibowitz:  Read the statement.  As for the evidence, that’s confidential.

AP:  How was the investigation affected by rapid changes in search engine companies?  Google said it changed its search algorthms 500 times last year.

Leibowitz:  We understand it’s a fast changing industry and we want to be careful about when we apply sanctions.

FTC: We had our chief technology officer Ed Felton taking a look at it.

KCBS:  You said you receivied a number of complaints. How many?

Leibowitz:  No, it’s confidential, unless it’s in one of the commissioners’ statements.

Sun Sentinel:  Did the FTC investigate Google’s applications last year for more than 100 new domain extensions?  Other companies like Microsoft and Yahoo did not apply for these generic terms.

Leibowitz:  We have been very concerned about dramatic expansion of ICAN, which can cause consumer confusion and illegal activity.  Without knowing more I can’t speak as to Google.  There have been hundreds of companies who have done it, and we’re looking at it but not with respect to Google.

Politico:  Has Google said they’re going to withdraw its cases at the ITC to drop products?

Leibowitz:  Yes, I believe they’ll be posting their commitment to us and also posting a blog post written by David Drummond, which I believe is up now.

Q: You say have no reason to believe Google will violate its commitments, but recently you had to fine Google for violating privacy agreements.  Isn’t that a good reason not to trust them?

Leibowitz:  I want to believe the best about companies, and that they want to honor their commitments.  But if we have to look into it again we will.

Q:  There has been concern that you wanted to wrap this up before you left the FTC.  Is that true?

Leibowitz:  I love this job, I love my colleagues, the staff did a remarkable job, the commissioners were detailed in their reviewing of the documents and we had multiple commission meetings [huh? - jh] and I’m delighted that we concluded this case in the way required by law.

END OF PRESS CONFERENCE