Google Won't Evade Rivals as Easily as Feds

Agenda-Setting Financial Insight.
Jan. 7 2013 10:34 AM

Google Won't Evade Rivals as Easily as Feds

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Google will pursue arbitration before seeking injunctions against those it believes are violating mobile patents it bought from Motorola

Photo by ERIC PIERMONT/AFP/Getty Images

Google evaded the feds but won’t so easily do the same with rivals. The U.S. Federal Trade Commission’s extensive antitrust probe into the dominant search engine ended with a whimper: the company promises to behave. The government’s case always looked shaky. If it couldn’t nail Microsoft, Google was a pipe dream. Just as well. For now, it’s still a problem for the market to sort out.

The settlement announced on Jan. 2 contains a few tiny bones for the watchdog. Google will pursue arbitration before seeking injunctions against those it believes are violating mobile patents it bought from Motorola. Companies that don’t want their data scraped and displayed on specialized Google pages can opt out and rest assured they won’t be punished by Google with lower rankings in general searches. Finally, advertisers will be allowed to export their data from Google, making it easier to run simultaneous campaigns on rival sites.

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These concessions aren’t significant. Google walks away able to display search results the way it wants. That means, for example, if a user queries “Thai restaurant,” a Google map with reviews from Google-owned Zagat can turn up – and first. That gives it a serious edge. It also means advertisers must deal with Google if they want to reach these searchers. 

While this Google advantage is powerful, regulators and rivals face an uphill climb in court. They’d have to prove consumers were harmed. In reality, web surfers can always bypass Google by using another search engine or entering a site address directly.  

Small wonder the government emerged nearly empty-handed. After all, when it doggedly pursued Microsoft more than a decade ago, the computer giant claimed a larger share of its market than even Google, more clearly abused its leading position and locked in consumers to its services. And that case essentially ended similarly, with Microsoft pledging to act more responsibly.

The case also showed how rivals in the technology industry can be more effective than the government at demolishing powerhouses. Microsoft has been unable to make much of a mark in search, smartphones or tablets. Eventually, Google is destined to the same fate.

In the meantime, the likes of Facebook, Yelp and Microsoft will be forced to make their case directly and prove their information is more timely and their services better than Google’s. Given the current state of affairs, it’s a better outcome for consumers than heavy-handed government interference. 

Read more at Reuters Breakingviews.

Robert Cyran moved from the London office to New York, where he covers global technology, pharmaceuticals and special situations. Rob began his career at Forbes magazine, where he assisted in the start-up of the international version of the magazine.

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