The European Commission should think carefully before acting on FTC Google memo

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

The FTC found no grounds to prosecute Google for breaking competition law. [Robert Scoble/Flickr]

European regulators should ignore the misleading publicity surrounding the US Federal Trade Commission’s anti-competition case against Google and concentrate on finding the facts, argues Thomas Leary.

Thomas Leary served as a commissioner of the United States Federal Trade Commission from 1999-2005. He now councils the law firm Hogan Lovells, which does work for Google.

Last month it was revealed with considerable fanfare that staff members in the Federal Trade Commission’s Bureau of Competition had once recommended antitrust action against Google. The European Competition Commissioner’s announcement this week that it had filed its own legal case against Google has again brought that internal staff memo into the spotlight. The accidental disclosure has caused some (particularly Google’s competitors) to question the FTC’s decision to close the case late in 2012, and advocate action by EU regulators today.

Amidst news that the European Commission has issued a statement of objections, it’s more important than ever to put the FTC staff memo into context: while both involve Google, that is where the similarities end. As a former FTC Commissioner, I know from personal experience that it is not at all unusual for the agency to take final action that differs from the recommendations of some staff members.

First, it is critical to note that this single memo does not represent the view of the entire FTC staff. FTC Commissioners receive several additional recommendations from staff, including economists, Bureau Directors, and their own advisors. Commissioners also review documents submitted by the target of its investigation, as well as by complainants and other third parties. The FTC’s statement closing the Google investigation specifically refers to these other sources of information, and notes the “empirical analyses” conducted by FTC economists and “the many white papers, letters, and presentations made by industry participants, consumer organisations, and other stakeholders.”

It is also significant that the staff memorandum did not recommend a case based on Google’s specialised search results — which was considered the most important issue in the FTC’s investigation and is now the central issue of the European Commission’s investigation. In this respect, competition staff agreed with the agency’s economists, who did not believe a lawsuit was justified on any theory. Moreover, Google voluntarily made remedial commitments in those areas where the competition staff thought a lawsuit would be justified.

It is also striking that the five FTC Commissioners reached a unanimous, bipartisan decision to close this investigation. The FTC investigation was also conducted in coordination with five U.S. state attorneys general, and those states also appear to have concluded that there was no case to bring.

Nothing released to date undercuts that ultimate conclusion. In fact, three of the current five Commissioners (who were also Commissioners when the agency closed the original investigation) recently reaffirmed that unanimous decision. They wrote: “As we stated when the investigation was closed, the Commission concluded that Google’s search practices were not, ‘on balance, demonstrably anticompetitive.’”

The innovation and success we see today in the tech industry from well-known companies like Facebook, Amazon, Google and Apple to new entrants like Uber, Pinterest or Snapchat, has vindicated the FTC’s decision.

As the European Commission reviews the facts and conducts its analysis, European regulators would do well to ignore misleading publicity about the FTC staff memo, and rather follow the facts and evidence to their appropriate conclusions.

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