The government leaves Google alone—what it means for users - Ars Technica

The biggest tech news this week is: Google is safe.

Of course, from a business perspective, Google never looked endangered in the first place. The company has close to 70 percent of the US search market, and pushes 90 percent in some parts of Europe; in mobile search, it utterly dominates, with around 98 percent. Google's market share in the US would surely be even higher but for all of the computers pre-installed with Microsoft software.

When a company gets that big, its biggest threat starts to come not from its competitorsâ€"who, at least in the Web search business, are fewâ€"but from governments, or big public-relations slip-ups. "We’ve always accepted that with success comes regulatory scrutiny" was Google's very diplomatic way of describing that predicament yesterday.

Now the FTC's antitrust investigation is over, with no charges brought, and some quite minor changes to Google's business practices. On the patent front, Google will make a sacrifice that's more substantialâ€"but still doesn't outweigh the enormous benefits of being "in the clear" as far as the feds are concerned.

Is it a good thing that regulators won't be messing with Google? On balance, yes. Corporations that amass too much power are worth worrying about, and need to be watchedâ€"by governments, by non-profits, by journalists and by citizens at large. But at the end of the day, the insistence that Google wasn't playing fair wasn't coming from an enraged citizenry. It was coming from Google's rivals.

Google didn't make the Internet, and it doesn't own the Internet. But it has become a dominant force in navigating the net. Today, those tools of net-navigation touch everyone, like it or not. It's hard to imagine what the net would look like without them. Much of the war against Google that's getting pushed in courts and in Congressâ€"by newspapers, by the entertainment industry, by traditional software makersâ€"is, in reality, a proxy war. The real battle is an impossible fight against the disruption and change wrought by the Internet itself. That's not a fight worth cheering for, even for those deeply concerned with Google's power.

The antitrust attack that rivals pined for

Microsoft and other rivals had hopes for an assault from government regulators against Googleâ€"ideally, the same kind of massive antitrust litigation Microsoft had to endure back in the 1990s. Now, it's quite clear that such action isn't forthcoming in the US, and it's less likely to happen in Europe now, either.

As the regulatory probes against Google dragged on, it has became clear that in the antitrust area, they were sponsored by the company's chief corporate rivalsâ€"Microsoft especially. Almost no consumer or public interest groups expressed concerns about "search bias." The competitors' criticisms reached a new volume when Google completed its acquisition of ITA a few years ago, and a coalition called FairSearch was formed, which ultimately included Oracle and Microsoft.

When FTC Chairman Jon Leibowitz announced the end of his investigation yesterday, he seemed to be speaking to some of Google's competitors/critics directly. And he sounded ready to head them off at the pass.

"Some may believe that we should have done more," said Leibowitz yesterday. That may come out of a "mistaken belief that criticizing us will influence other jurisdictions," he added.

In other words, he knew the criticism of Google would keep coming, in hopes to get the EU to take a tougher line against the company. And that's exactly what happened.

FairSearch quickly called the FTC's decision to not charge Google "premature," and today put up a second blog post saying that it's the EU and state attorneys general who will get the final word.

Microsoft took a similar position."[T]here appears to be no reason, despite the FTC’s optimistic statements this morning, to believe that Google recognizes its responsibilities as an industry leader," wrote Deputy GC Dave Heiner in a blog post.

The only silver lining in the end of the antitrust investigation against Google, in his view? That the other investigations still aren't over. "In Europe Vice President Almunia has made clear that he will close his investigation of Google only with a formal, binding order that addresses search bias and other issues," wrote Heiner.

A patent "loss" that isn't too bad

On the patent front, Google did suffer a meaningful setback. The company has agreed it won't use its big stash of standards-essential patents to get injunctions or "exclusion orders" in most cases. A hefty chunk of the $12.5 billion purchase price of Motorola was understood to be for its 17,000 patents, which it could use to counter-sue against attacks that Microsoft and Apple brought against the company, or its Android partners.

So was that purchase a bad deal now? Hardly.

First of all, no one should think the Moto purchase was all about patents. Google got much more than that: Motorola Mobility had manufacturing facilities, research facilities, more than 20,000 employees.

But it also got a giant stash of useful patents, the best of which are "standard essential" patents that have become controversial. Google did need those patents; and they're now somewhat encumbered because they can't be use to ask for injunctions. Microsoft and Apple, meanwhile, are flush with "feature" patents that aren't related to the international standards, so they're still in a position to try to kick products off the market.

That's not as big a setback as it may seem, though. First of all, Google and its partners can still use those patents to fight back in court. They can ask for significant damages based on such patents. Injunctions aren't going to be the end-all of the patents wars; Apple didn't get one in its court battle against Samsung, but it's still fighting and Samsung has the potential to suffer significant setbacks from that litigation. And the Moto patent portfolio is a big moneymaker in its own right, which has already been licensed to parties that aren't interested in fighting all the time.

The clearest sign that Google didn't get hit hard here? It's that arch-rival Microsoft is so unhappy about it. "The FTC’s proposed consent decree on patents runs for 13 pages, most of which spell out exceptions," the company notes in its responsive blog post. And Google can still threaten an injunction if it believes the patents being used against it are standards-essential themselves, even if its opponents disagree. That's often a murky line.

An unfortunate focus

Google's competitors have been lobbying for regulatory intervention for years now. In hindsight that focus is unfortunate, and probably misguided, as former FTC policy director David Balto noted in a recent article in The Hill. (Balto has done work for Google in the past.) Google's critics have switched up some of their theories and have tried turning to the DOJ, the other main antitrust regulatory agency; but at the end of the day, it really was an exhaustive investigation that, in terms of the evidence, never got past the first step.

"This came down to a simple propositionâ€"are consumers harmed?" said Balto in an interview with Ars. "They never got past that first initial question." Even if consumer harm had been found, Google may have had defenses. It could have pushed evidence supporting its line that its industry is competitive, with the competition just "a click away," as the company has said before. Or it could have argued that search results are a kind of editorial product, protected under the First Amendment just like the front page article selection on the New York Times (which obeys its own mysterious, if more human, algorithms.) But it never got that far.

The government's investigation of search was exhaustive. It went on for 19 months, and involved millions of documents and countless discussions and interviews with Google executives. The FTC also spoke to Google's rivals, as well as small businesses that were concerned they were getting a raw deal from a leading search that favored its own services. (Some of those businesses continue to be highlighted by FairSearch.)

Maybe the government will have to take a close look at Google's algorithm again one day. But for now, the right regulators have taken a very close lookâ€"it has been one of the most comprehensive investigations in the history of the FTCâ€"and the company has come up clean. Critics' continuing hope that Google will get snared in a brawl with the government is misguided.

"They'd rather try to win by hobbling Google through regulatory action rather than through inventing better products," said Balto. "Now Google will be able to innovate as much as they want, and price as aggressively as they want, without leading to an over-aggressive regulator." And that will be good for consumers.