FTC Tells Google: "Don't be Evil"

Written for and first published here: http://mobilemarketingmagazine.com/content/ftc-tells-google-stop-being-evil

Google has agreed to change some of its business practices following a large-scale investigation by the Federal Trade Commission (FTC) into the company's operations.

The FTC criticised Google for breaches of licensing agreements on patents essential to the development of the industry. The agreement could spell the end of the wave of costly class actions over patent infringments between technology companies.

Google has also promised to stop using content from other companies’ websites for use on its own vertical offerings, and will also give advertisers more flexibility to manage ad campaigns on Google AdWords, along with other rival ad platforms simultaneously. While Google was investigated for manipulating search algorithms to favour its own vertical websites, the FTC concluded that this ‘could be plausibly justified as innovations that improved Google’s product and the experience of its users’.

Standardised patent ruling

Motorola, bought by Google in June, is accused of reneging on commitments to give competitors fair, reasonable and non-discriminatory access to patents needed to develop products including iPhones, iPads and Xboxes. Google continued this, seeking injunctions against companies that wanted to license these patents, which ‘constitute unfair methods of competition, as well as unfair acts and practices’, the Commission said.

Should the terms be accepted following a period of public comment, this could set a precedent for similar disputes across other industries where companies amass patents for ‘for purely defensive purposes’. The judgement should prevent firms from performing a ‘patent ambush’, where the cost of royalties incurred by businesses can be passed on to consumers, or prevent products from being developed at all.

“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,” said FTC chairman, Jon Leibowitz. “This was an incredibly thorough and careful investigation by the Commission, and the outcome is a strong and enforceable set of agreements.”

Some members of the Commission criticised the FTC’s use of Section 5 of the Federal Trade Commission Act as an abuse of the its authority and claimed that this judgement is in conflict with a previous ruling concerning Apple and Motorola.