A Crackdown on Google’s Strong Arm Tactics

In a landmark decision, the Federal Trade Commission (FTC) on Thursday ended a 19 month probe into Google’s search and patent –licensing norms. However, the regulators did not take any considerable action against Google’s practices that favours its own products over competitors. Google had been pressurised by the FTC to agree to some legally binding changes over its search advertising platform, but in the end the accord leaves the Internet giant without any substantial threat. Google agreed to resolve disputes with competitors over patents it inherited from its $12.5 billion Motorola purchase —( “interoperability standards” ) of patents .The commission concluded Google was using strong-arm tactics on competitors financially to obstruct innovation in the smart phone and tablet domain. Under federal patent law, patents deemed essential, like the ones Google purchased, must be licensed on “fair and reasonable terms.”

The FTC strongly condemned the Motorola Mobility (MMI) (a subsidiary of Google) which used essential patents to try to block competition and extract huge payments. Google, on the other hand claimed that t its search results were protected by the First Amendment, a claim the FTC did not publicly address on Thursday. Google’s competitors including Microsoft has alleged that Google promoted its own services, including videos, shopping and maps, over equally or better-qualified rivals, and pushed down results from competing “vertical search” companies.

Microsoft’s deputy general counsel Dave Heiner is quite unhappy over Google’s persistent hesitation to build a dedicate YouTube application for Microsoft’s Windows Phone mobile platform something which it has done for Apple’s iPhone after Apple displaced YouTube as its default video player.

“Google continues to block Microsoft from offering its customers proper access to YouTube. This is an important issue because consumers value YouTube access on their phone — YouTube apps on the Android and Apple platforms were two of the most downloaded mobile apps in 2012,” Heiner said.

Here’s what’s going to change for the Internet search giant:

Google has to license standards-essential patents. When Google bought Motorola, it got access to a lot of patents that are needed for basic wireless devices. It used these patents to attack its rivals and seek injunctions. As a part of this settlement it will drop the attacks and license the patents.

Google will stop scraping the search results of specialized sites like Yelp (A site which offers recommendations for restaurants). Google used to provide business reviews from Yelp and then put its own specialized search results. When Yelp Objected to this, Google warned that it would remove yelp from its listing. As a part of this FTC agreement, if a company complained, then Google can not threaten to block it from general search.

Google has to make it easier to use Google’s ad products in conjunction with rivals’ ad products. There were restrictions from Google’s AdWords that made it difficult to simultaneously manage ad campaigns. This will change.

The FTC says this is an enforceable pact, though how it’s going to enforce the agreement is unclear. During the press conference announcing the settlement, reporters asked FTC Chairman Jon Leibowitz how he would enforce the agreement and he didn’t really have an answer.

This is what he had to say:

The changes Google has agreed to make will ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy. This was an incredibly thorough and careful investigation by the Commission, and the outcome is a strong and enforceable set of agreements.”

News from The Guardian

Contributed by Kartik Raju

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