In Google Antitrust Settlement, FTC Says Rivals' Pain Is Users' Gain

Google does indeed manipulate search results to favor some websites over others, federal regulators said in a much-awaited decision on Thursday.

But none of this really matters, they concluded, declining to bring a lawsuit against the online search giant for one basic reason: Consumers don't mind. In fact, consumers seem to prefer the way Google provides its search results.

That was, in essence, the rationale given by the Federal Trade Commission on Thursday when the agency announced it was taking no action on a major finding of its 19-month antitrust investigation -- that Google used its market power to demote competitors' listings in search results. Google was only looking to "improve the quality of its search results" and "any negative impact on actual or potential competitors was incidental to that purpose," the FTC concluded in reaching a settlement with Google.

The commission's decision was a bitter disappointment to rivals such as Microsoft and companies like Yelp and Travelocity who compete with Google's online services for plane flights, shopping and local listings.

As evidence of search bias, Google's rivals often cited examples of consumers looking for restaurants who would be shown the top results from Zagat, a Google-owned review site, while information from its competitor Yelp were pushed down the page. Or they pointed to Google's policy of listing only paid advertisers on Google Shopping, its comparison shopping service. The rivals argued that consumers were not seeing the best available shopping results, only those from retailers who could afford to pay Google's ad rates.

In its investigation, the FTC found that, at times, Google gave preference to the results of its own services and pushed rivals' websites "below the fold," resulting in "significant traffic loss" and thus less revenue from sales. Google's shopping queries, for example, demoted all but a few rivals' sites from the first page of search results, the commission found.

But Google maintained that it frequently tweaked its algorithm to show consumers the most relevant search results, whether they were Google services or not. And the FTC agreed, concluding that the evidence showed the search giant was working to improve the consumer experience. For example, Google often monitored the impact of placing its own services higher up in search results, going as far as demoting its own content if favoring it "adversely affected the user experience," the commission stated.

Ultimately, regulators decided that consumers weren't missing out because they seemed to prefer Google's services. As evidence, the FTC said data showed that more customers "clicked through" to Google's services than to rivals' offerings.

Danny Sullivan, editor of the industry blog Search Engine Land, said the FTC made the right decision by not taking action on the search bias charges.

"People who go to Google expect to receive Google search results, not Yelp search results or Bing search results," he said.

Google's rivals, however, said the commission's decision could spur the search giant to further suppress their services in results.

"The FTC's inaction on the core question of search bias will only embolden Google to act more aggressively to misuse its monopoly power to harm other innovators," FairSearch, an advocacy group backed by Google competitors, including Microsoft, Travelocity, Hotwire and Expedia, said in a blog post.

As part of Thursday's settlement, Google agreed to make small changes to its search practices, such as no longer using snippets from other websites for its own services. The search giant still faces potential action from antitrust regulators in Europe.

But the FTC's decision was a major victory for the world's largest search engine.

"The conclusion is clear: Google's services are good for users and good for competition," David Drummon, the company's chief legal officer, said on Google's blog.