"We did what we’re paid to do and what the law requires", says Chairman in new interview

Facing heavy criticism from Microsoft Corp. (MSFT), Yelp Inc. (YELP), and a slew of other online service firms, the U.S. Federal Trade Commission's Chairman Jon Leibowitz is firing back in a new interview with Talking Points Memo (TPM).  In the interview, he defends the decision to reach a settlement [PDF] with online search and services giant Google Inc. (GOOG) which called for big changes, but allowed Google to avoid a full blown antitrust lawsuit brought by the federal government (which was the approach Microsoft, et al. demanded).

I. FTC Claims That Its Google Ruling Was Fair

Responding to his critics, Chairman Leibowitz comments, "We did what we’re paid to do and what the law requires.  We went after a company [Google] where the law required us to do so, and forwent bringing a case where the law required us not to bring one."

He points out that the decision was unanimously approved by the FTC's five commissioners, including Leibowitz.  He remarks, "Under facts we found, all five of us, from liberal Democrat to conservative Republican, agreed that the evidence militated against an antitrust case.  The fact that we managed to have both Google and Google’s rivals unhappy, in an odd way that’s maybe unique to Washington, that puts us in the right place substantively."

FTC Leibowitz
U.S. FTC Chairman Jonathan Leibowitz is defending his Commission's settlement with Google against critics like Microsoft. [Image Source: UPI]

He argues that the settlement is significant as it not only pushes Google to change certain search/data-mining practices its critics considered unfair, but it also pushes the company to pursue patent peace in the mobile space.  The FTC voted 4-to-1 to adopt a settlement demand that forces Google to pursue arbitration with smartphone rivals, before taking them to court and eating up judicial resources.

Explains Chairman Leibowitz, "We took a pretty meaningful step forward to stop one of the most drastic abuses in patent litigation.  [Google] won’t be able to engage in patent holdup, where the threat of an injunction is used as a 'Sword of Damocles.'"

He was pleased to note that Google had responded already, withdrawing two key patent assertions in its nearly finished legal battle against Microsoft in U.S. District Court for the Western District of Washington.  The FTC did allow Google to sue in cases where a rival is looking to ban its products (so Google may be able to still pursue action against Apple, Inc. (AAPL)), but the Chairman calls such applications "exceedingly limited defensive uses."

He argues that the FTC's approach is consistent with both Google and its rivals in the smartphone space, commenting, "We don’t want them [smartphone makers] to be able to get injunctions, and we prohibit that except in the one-in-a-million hypothetical.  If someone makes a FRAND commitment and reneges, we will go after them."

II. Google Still Faces Antitrust Threats

In regards to media commentary that the settlement was a "win" for Google, he responds, "Reporters think of this in some ways as a horse race.  [I]t’s really about doing the right thing.  Perhaps to some extent we helped to build up expectations [by the length of the probe], but I also think complainants created great expectations of their own. I think that as time goes on, more and more people will recognize we did justice."

The Chairman also rejected the notion that the tens of millions of dollars that Google poured into lobbying officials in the federal government on both sides of the political aisle impacted the Commission's vote.  He comments, "My sense is that the lobbying makes the companies feel good and lobbyists feel good.  At the end of the day, whether you want to say lobbying had any influence, or canceled itself out because there was lobbying on both sides, if you’re going to do what lobbyists want you to do in a regulatory agency, you’re not doing your job."

The decisiveness of the ruling (5-0) may be enough to placate the U.S. Department of Justice (DOJ), but an FTC ruling does not necessarily preclude an antitrust lawsuit by the DOJ.  For example, in 1991 the FTC probed Microsoft, in an investigation that wrapped up in 1993 with a deadlock -- 2-2 vote -- effectively closing the investigation.  Despite that the DOJ would go on to independently investigate and sue Microsoft in a court battle that was considered a milestone in modern U.S. antitrust enforcement.

EU flags
The EU says it won't go as easy on Google as the FTC did. [Image Source: AFP]

And meanwhile the EU has indicated it will be substantially stricter in its settlement demands from Google.

Sources: TPM, FTC [PDF]

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home

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