The FTC and Google: A Missed Opportunity

Posted by Dave Heiner
Vice President & Deputy General Counsel, Microsoft

The FTC took steps today to address some of Google’s improper business practices. We find it troubling that the agency did not adhere to its own standard procedures that call for the agency to obtain industry input on proposed relief and secure it through an enforceable consent decree. The FTC’s overall resolution of this matter is weak and—frankly—unusual. We are concerned that the FTC may not have obtained adequate relief even on the few subjects that Google has agreed to address.

Data Portability

For years Google has publicly championed the virtues of “data portability”—the idea that customers ought to be able to use their own data in products from various companies. But in practice, Google effectively prohibited its primary paying customers (advertisers) from using data about their own advertising campaigns on any ad platform other than Google’s. That made it much more difficult and costly for advertisers (especially small advertisers) to run their ad campaigns on Bing and other ad platforms. We therefore welcome Google’s announcement today that it will eliminate at least some of the contractual restrictions that it imposed to prevent customers from efficiently porting their own data from Google’s ad platform to another. But we are puzzled and concerned that the FTC did not follow its standard practice in exercising due diligence by obtaining feedback from the industry on the specific terms of Google’s promise before accepting it as a suitable resolution of this matter.

Had the agency asked, we would have explained that Google’s promise on ad campaign portability falls short of the mark in various ways. For example, Google inexplicably has not promised to allow all advertisers to port their campaign data to other ad platforms—only those with a primary billing address in the United States. But many firms based outside the United States advertise in the United States. What basis is there for excluding them from the protection embodied in Google’s commitments? Nor is it clear that Google has even promised to eliminate all of the contractual restrictions that had the effect of blocking data portability. And Google’s promise does not include language standard in antitrust remedies that would prevent it from circumventing its promise by other means.

Standard Essential Patents

The FTC concluded today that Google has abused its standard essential patents. The abuse is this: Google has not lived up to its promises. Google promised the standards community that it would make its standard essential patents available to all firms on fair, reasonable and nondiscriminatory terms. But then Google sought exorbitant royalties from firms implementing industry standards—rates as high as a thousand times those charged by others with larger patent portfolios reading on the same standards. And even though Google promised to make a license available to all, it filed multiple legal proceedings, in the United States and overseas, seeking to block Microsoft and others from shipping Windows-based PCs and Xboxes that implement the relevant standards.

As Microsoft announced nearly a year ago, we believe that firms that promise to make their patents available on reasonable terms ought to live up to that promise. When the Department of Justice urged Microsoft and Apple to make such a commitment in order to secure approval of certain patent acquisitions, both firms did so. Our commitment is simple and straightforward:

1. Microsoft will always adhere to the promises it has made to standards organizations to make its standard essential patents available on fair, reasonable and nondiscriminatory terms.

2. This means that Microsoft will not seek an injunction or exclusion order against any firm on the basis of those essential patents.

Full stop. No exceptions.

Google refused to accept these terms, as the DOJ itself noted in 2012.

Neither Microsoft nor Apple ever filed injunction lawsuits against any firm for their use of standard essential patents subject to a FRAND licensing commitment.   As the FTC recognizes today, Google did abuse its standard essential patents by seeking injunctions on the basis of them. Given this, we are disappointed that the FTC accepted less relief from Google than the DOJ obtained from Microsoft and Apple last year and the FTC obtained from Bosch in a separate case just a few weeks ago.

Microsoft’s commitment is two sentences.  The FTC’s proposed consent decree on patents runs for 13 pages, most of which spell out exceptions—the various circumstances when Google can sue for an injunction on its standard essential patents. This stands in stark contrast to the commitments made by Microsoft, Apple and Bosch.

During patent licensing negotiations, Google can continue to threaten that it will sue for an injunction, knowing that many would-be licensees will not be in a position to engage in litigation or arbitration with Google and also meet all of the other procedural requirements set forth in the decree that are imposed on the licensee. Google can even continue to use its standard essential patents to fend off patent infringement actions against it: the proposed decree gives Google leeway to sue for an injunction on its standard essential patents if it takes the position that injunctive relief sought against it is based on a patent that is standard essential.  Since it is often hard to tell which patents are standard essential, the risk of injunction lawsuits from Google may dissuade firms from seeking to enforce their non-standard essential patents against the company.

Other Issues

We are also disappointed that the FTC chose not to seek relief on other issues. Google continues to prevent Microsoft from offering a high-quality YouTube app for the Windows Phone. Google built its large lead in search and search advertising in part through a series of contracts requiring other websites and distributors to use Google exclusively. The latter issue is something that has plagued competition in the search market for years, and Google in fact has finally said that it’s prepared to address this with the European Commission. But the FTC, by contrast, has chosen not even to pursue the matter, thereby depriving American consumers of benefits that appear on the horizon in Europe.

And what of the search bias issues? Google has long said that it merely aims to offer customers the most relevant answer to their query, and the FTC Commissioners accepted that view. Yet we know that Google routinely and systematically heavily promotes its own services in search results. Is Google+ really more relevant than Facebook? Are Google’s travel results better than those offered by Expedia, Kayak and others? We also know that Google ranks shopping results (the most important category commercially) in part on the basis of how much advertisers pay to Google for placement, after very publicly promising that it would never do so. This does not sound like product improvement.

Google Declares Victory

As we know from experience, one of the litmus tests of any antitrust outcome is the set of statements made by a company on the day that the outcome is announced. Has the company truly learned from the experience? Does it acknowledge that its practices raise serious antitrust issues?

In response to a question at his press conference today, Chairman Leibowitz said that he doesn’t believe that Google will be emboldened by today’s FTC decisions. But Google seems to be walking with a new spring in its step today. As Google’s official statement on its public blog today put it, “The U.S. Federal Trade Commission today announced it has closed its investigation into Google after an exhaustive 19-month review that covered millions of pages of documents and involved many hours of testimony. The conclusion is clear: Google’s services are good for users and good for competition.”

In other words, there appears to be no reason, despite the FTC’s optimistic statements this morning, to believe that Google recognizes its responsibilities as an industry leader. That is certainly consistent with the lack of change we continue to witness as we and so many others experience ongoing harm to competition in the marketplace.

The good news is that other antitrust agencies, within the United States and overseas, are still examining Google’s conduct. In Europe Vice President Almunia has made clear that he will close his investigation of Google only with a formal, binding order that addresses search bias and other issues. We remain hopeful that these agencies will stick to their established procedures, ensure transparency, and obtain the additional relief needed to address the serious competition law concerns that remain.

Comments (48)

  1. Anonymous says:

    The IGNORANCE displayed in the comments posted herein are unbelievable. The hate for Microsoft that is displayed by commenters blinds them and prevents them from seeing the truth about Google which is that Google has abused its Standard Essential Patents, unfairly promotes its own services within its search results, and conducts other unfair business practices. To those commenters I say, go find something better to do than to display your hate for Microsoft via foolish and ignorant comments.

  2. Anonymous says:

    Microsoft, you have to admit "open search" alliances and lobbying politicians in Washington is not going to help you competing with Google. Why don't spend that money on the technical innovations and open competition?

  3. Anonymous says:

    The reality is both Google and Microsoft are at fault with regards to patent trolling and anti-trust practices, this all is quite clear. These are two mega-corporations; they are not people and cannot be expected to act as such and that is fine by me.

    As a true, working independent developer I am only loyal to my engineers and my customers not these mega corps.

  4. Anonymous says:

    Rarely have I seen a post by someone that is such a total fail of whine fest on behalf the company. In this case Microsoft. Basically, this post boils down to whining because Microsoft has failed to innovate and create product, be it video, be it social network, that works, and to which people flock.

    Google does not force its service down peoples throats. People flock to products such as Google+ because they work, they are not intrusive and a threat to privacy (like Facebook).

    And since the article mentioned the Bling, oh, sorry, Bing search service, let me say for the zillionth time as I have for years: Microsoft has proven itself incapable of writing a search engine that works. That is why people continue to use Google. That is why they laugh when the try Bing, after seeing how useless it is, and go back to Google.

    And the hypocrisy? Where should I begin? Microsoft has done everything in its power to bundle in everything from Internet browser to video and music apps, to search engine as defaults, so average users are sucked in, not realizing they have choices. A decade ago, when Microsoft was threatened with serious anti-trust and monopolistic practices litigation, Microsoft reps roamed the halls of Congress, handing out largess, and buying off Congress. That did not work out so well in Europe, where they were not able buy France off.

    For Microsoft to be blathering on about monopolistic practices provides the very definition of irony, hubris, and I am sure I could dig up a dozen other classical terms to describe it. Microsoft has been the very definition of a monopoly in its efforts to push its OS and apps on customers.

    Note that I speak from 30 years experience in the industry, including skill sets developing apps with Microsoft tools. I have an MSDN subscription, even though retired I still do consulting, and my choice of database tools include MS SQL Server, Visual Studio, C#, ASP.NET.

    But lets be honest here. This blog post is the most vapidly hypocritical thing to come out of Microsoft in some time.

  5. ricardo says:

    I actually didn't know about this whole deal with Google and FTC, and as I read more about it, it became quite blatant that the whole thing was schemed by Microsoft… That's a shady move, wasting government money on a dead end investigation just to stifle competition… Anyway, now that I'm aware of your practices, I won't take the bait anymore, and in my company, what has windows already, will stay as it is, and will take a look on what the competition has to offer. You lost a customer today, not by the merit of the competition, but by your practices…

  6. Microsoft should start innovating, instead of complaining. says:

    I find it funny that Microsoft and Bing commit to the same strategies and tactics that it is accusing Google of. Also, when it comes to Google+ and Facebook, that's not for you to judge. But Facebook has denied Google access to its information… so yes, Google+ information is more relevant for the entire web. It's not a walled garden.

    Microsoft, please stop complaining. Start innovating. The Internet is the most level, ultimate playing field. And just because you're losing doesn't mean you should try to paint the winner as evil.

  7. Dan_IT says:

    Apple litigates, Google innovates, Microsoft whines.

  8. gaurav says:

    Microsoft never did anything useful and stole or bought technology from others.

    Now you are crying fowl when you agree not capable of innovation.

    In the long run no one ever won with scheming and cheating. Grow up MS and learn to improve your own products else consumers would just leave you in totality….

  9. Donald McIntyre says:

    Google didn't have to modify its practices in search because there was nothing to modify. One thing is to use anti-trust law to protect the public from monopolistic practices and another is to protect competitors offering worse products and services. Anti trust is not to protect losing rivals its to protect consumers. ONLY anti-trust may be used to favor competitors if that leads to better products at lower prices. For now Google is offering the best search products at the best prices (zero $).

  10. Shmerl says:

    Microsoft's whining about Google's abuse of patents or monopoly in general is a pinnacle of hypocrisy. May be you first should look at your own abuses in the same areas?

  11. Bernd Lauert says:

    I hope Microsoft gets the Market Share it deserves (<2%) for over 2 decades of anti trust, illegal practices and bad software.

  12. "Google continues to prevent Microsoft from offering a high-quality YouTube app for the Windows Phone."

    Is there a high-quality Microsoft Office app for Linux? iOS? Android? Office documents cant even be opened on these OSes (yes, you can import them using other software, but that is a hit or a miss affair) Atleast Youtube is accesible through the mobile browser from Windows phone, and Microsoft is whining that a "high quality" app is not available.

    "Google routinely and systematically heavily promotes its own services in search results. Is Google+ really more relevant than Facebook? Are Google’s travel results better than those offered by Expedia, Kayak and others? "

    Is Bing images better than Google images? Is Bing maps better than Mapquest or Google maps? Is Bing travel better than Expedia, Kayak and others? Is Bing shopping better than Amazon, ebay or craigslist?

    If there is one thing Microsoft is better at than Google, it is hypocritical whining.

  13. Peter Conner says:

    One word for Microsoft… Hypocrites.

    Company with a sleazy marketing like you should not exist.

  14. Look into the mirror once in while says:

    Before you offer your interpretation of Google's response, you should look at yourself in the mirror & stop whining about competition.  

    You wasted 19 months of the courts time & now your not happy with the outcome?  

    Move ON!

  15. Heath says:

    Why is there no "Share on Google+ option from this page… You have every other option available -facebook, redit, linkedin etc….

  16. Steve Holden says:

    This just proves what I have said for ten years now – Microsoft is headed the same way as IBM, having lost control of its primary markets. It's only a matter of time before the management outsource software production in the interests of financial efficiency. Clearly the leadership Microsoft is now receiving, while retaining Bill Gates' aggressive attitude to competition, cannot provide the necessary moral element.

  17. Matt says:

    Biggest sin: Google didn't invent Microsoft BASIC.

    Until they do that, there's no justification for them doing exactly what Microsoft has done.

  18. Chromaniac says:

    People use Amazon for shopping because their search engine is superior to Google's.

    Develop a better product and you would find users using it.

  19. bill says:

    Bing  what a joke MS  more of a joke  spend your time making your STUFF work and no more whining when others have pushed you aside

  20. Lui says:

    Stop whining and move on, innovate! Ohhh…Microsoft forgot what that is 20 years ago.  

  21. CharlieFoxtrot says:

    I worked @ MS back when it was the target of anti-trust regulators.   Then MS accused its competitors of "resorting to litigation because they could not compete with MS in the market".   And that is exactly what MS has been doing here, but with even less legitimacy and far less success.  

  22. Hey Micro$ofr! says:

    Still burning for "delhipublicschool40 chdjob" on Bing?

  23. Carlos says:

    Microsoft been too busy starting anti-competition lawsuits it forgot to add Google+ above

  24. jackn says:

    micro who?

  25. Bright Idea for MSFT says:

    Buy Vringo (VRNG) and pick up the battle in court over Google's patent infringement central to their AdWords system!!  Vringo already won and Google is dragging their feet trying to squash the inventors that created the system that made Google sooooo much money.  Buy the little and stick it to Google!!!

  26. vadim says:

    As usual, Microsoft is busy with preventing competition instead of being busy with innovations and making good software

    What a shmoks…

  27. An embarrassed friend says:

    I really like Windows, even Windows 8, have been an avid Xbox user for years. But silly Microsoft stop whining about you tube and bring office to Android. You get access to Facebook, Google doesn't so they made the web more social and it works well. You are innovative, but these silly rants make you look like a jealous has-been.

  28. sam says:

    Poetic justice, Microsoft, poetic justice. Now please stop complaining and just pay Motorola their fair share of patent $$$. Unlike the low-quality FAT patents you are using to patent-troll Android manufacturers, Motorola deserves to get your money for their quality patents.

    Oh, while on that, can you please unwind your (Un)FairSearch consortium and low-quality search products. :p

  29. NC says:

    I bet that most of you commenting about Microsoft here learnt to type on Microsoft PCs and maybe are typing your comments on a windows PC; heck you probably used google first on a windows PC…so stop with your anti Microsoft rant

  30. Tim Acheson says:

    The FTC’s gentle treatment of Google is unsurprising when the corporation’s key executives and lobbyists are so firmly in bed with key personalities within the US administration. This is a text-book example of a major corporation subverting democracy and
    due process.

    Google’s “lobbying” (a euphemism for the subversion of democracy) is in a league of its own. Arguably, this is an area in which Microsoft has failed, retaining the moral high ground while losing the support of corrupt but powerful politicians..

    E.g. Google spends more on lobbying that Apple + Microsoft + Facebook COMBINED:…/google-record-lobbying

    And it’s not just about money. E.g. Google execs hold fundraising parties for politicians — often in the exec’s own homes.

    Read more:

  31. Tim Acheson says:

    Google has a vast army of PR people poised ready to give Microsoft flack in online comments and forums while defending and hyping Google.

  32. RradWrite says:

    The Shadow War

    For years Microsoft has devoted massive resources and energy to waging a sneaky shadow war against Google, fielding an army of lobbyists and front groups that exist almost completely to spread anti-Google propaganda, including, the Association for Competitive Technology, FairSearch and SafeGov.

    They call themselves “industry groups,” and they have lots of members, but they’re basically Microsoft fronts devoted to hating on Google. Take a glance through ICOMP’s “newsroom” and “Voices” section and white papers and “ICOMP in the News” section. It’s pretty much all Google, all the time — and all negative. It’s a whole website devoted to bashing Google, and frankly it’s kind of incredible, in a twisted way.

    FairSearch does much the same. Its site is loaded with Google bashing. FairSearch's spokesman is Ben Hammer, who works for the Glover Park Group, a lobbying and PR firm in Washington, D.C., that used to lobby for Microsoft. Before taking on his role at FairSearch, Hammer worked on the Microsoft account for Glover Park.

  33. Dan_IT says:

    Hmm… Odd… I can't seem to find the +1 button on this blog.

  34. Unbelievable says:

    And of course you won't post the comment I just made.

  35. Shmerl says:

    @TiredC: All this complaining about abusing FRAND patents being not OK, but at the same time implying that abusing other patents is OK show not ignorance, but support for unethical business practices. So don't complain if you support them.

  36. BR says:

    Wow, how everybody likes to dump on Microsoft. The truth of the matter is that if it weren't for the hundred of millions of PCs running Windows, Google would not even exist today. And if Apple depended solely on their OS platform to run iTunes, where would iPhone and iPad be? Ingratitude is indeed an ugly thing…

  37. Sgt. Snuffy says:

    Meanwhile Google is laughing all the way to the bank.

  38. Enough already says:

    Everyone forgets that Google is it's own company and search is just one of their services/products.  

    Perfect parallel:  Go into a grocery store, do they carry ALL the brands of cereal you like?  Can you complain when they change their inventory?  No.   Can you complain when they put your cereal on a different shelf?  No. The store can stock whatever they want, however they want.

    FYI – your Microsoft logo is OLD on your blog header.

  39. Seriously says:

    Please just go bankrupt already. You would the world a favor.

  40. Bob Hyatt says:

    Today, one presumes to celebrate the victory over FTC, Google has modified specifically to stop Google maps from being available on Windows Phone 7 and 8. An interesting move by the dominant player in the smartphone market.

  41. mobile app jobs Mississauga says:

    thanks for your post.but i have no experience about i agree with  ricardo.thanks.

  42. Steve Ballmer says:

    Developers! Developers! Developers!

  43. Abhishek says:

    Why am I not entitled to an excellent "Microsoft Office" experience while using Linux?

  44. user159 says:

    instead of complaining others MS should improve improve their own products

  45. Glass houses says:

    Do you assume Microsoft behaved well when the good folks working on the SPF standards tried to make progress?

  46. Dev says:

    Bing is a pathetic joke. Google is an innovation! Period. Go, whine Micro$oft!

  47. Anonymous says:

    Pingback from Microsoft Rages Over FTC’s Google Decision – Dice News

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