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Leaked FTC antitrust report gives EU cover to rule against Google

Leaked FTC antitrust report gives EU cover to rule against Google

The leak shows that concerns were raised about Google's competitive behavior on both sides of the Atlantic

A leaked report by U.S. Federal Trade Commission staff gives the European Commission political cover to rule against Google as it moves forward with its own antitrust inquiry, sources familiar with the process said.

The FTC report was mistakenly shared with the Wall Street Journal and revealed that FTC staffers found in 2012 that Google manipulated search results to favor its own services over those from competitors in a way that had caused "real harm to consumers and to innovation." The FTC eventually took no action against the company and closed the investigation.

In the European Union however, a similar investigation into Google's search practices is ongoing. Various people familiar with the process said that the FTC notes help take political pressure off Competition Commissioner Margrethe Vestager, who is responsible for making a ruling.

"I have the impression the Commissioner won't be much influenced by anything apart from her own assessment of the case," a source working for one of the complainants in the case said. "But it'll take political pressure off her, should she decide to return to formal proceedings against Google, which I'd assume she'd find helpful."

Some members of the European Parliament (MEPs) were outspoken on the matter. "This new element and evidence is crucial and could not come at better time," said MEP Ramon Tremosa in an email, adding that the Commission will have to take the FTC leak into account. Tremosa is from Spain and is a member of the ALDE party (Alliance of Liberals and Democrats for Europe).

The European Parliament wants the Commission to move on the case, which has been dragging on since 2010. A large majority of the Parliament backed a report in which it called on the Commission to find a solution as soon as possible, or risk losing its credibility on digital issues.

The FTC report also shows that the complaints made to the European Commission both by European and U.S. companies focus on competitive behavior of Google, rather than the place of origin of the company, said David Wood, legal counsel for ICOMP, an industry association representing Google opponents, including Microsoft. That's important in light of recent arguments painting the EU's move against Google and other U.S. tech companies, as protectionism. U.S. President Barack Obama for instance said in a recent interview with Re/Code that he thinks European scrutiny of U.S. tech companies like Google and Facebook is sometimes more commercially driven than anything else.

However, it is clear from the FTC leak that very serious concerns were raised about Google's competitive behavior on both sides of the Atlantic, Wood said. U.S.-based companies Amazon, TripAdvisor, Expedia and Yelp were some of the complaining companies in the U.S. case, the FTC report showed.

Meanwhile Vestager, who took office in November, is taking the necessary time to update information in her files and form her own view before deciding on next steps in the case, Commission competition spokesman Ricardo Cardoso said in an email. She met with Google's chairman Eric Schmidt and other company officials earlier this month to discuss the case.

It is important that the application of competition law in individual cases remains independent from politics and that antitrust procedures are not put into question, Cardoso said, adding that it is the Commission's obligation to respect the rights of all the parties involved.

So far, no deadline for a decision has been set by the Commission. However, the case might soon start moving forward, as complainants were recently asked to allow Google access to secret evidence they gave to the Commission, the source working for one of the complainants said. This probably means that the Commission is preparing a Statement of Objections, the source added.

Such a statement is a formal step in a Commission's antitrust investigation that can lead to the prohibition of specific conduct, as well as to a fine of up to 10 percent of a company's worldwide annual turnover. The preparation of such a statement doesn't mean the Commission will do any of that, but it is a possibility.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, online payment issues as well as EU technology policy and regulation for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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