By Alexandra Burlacu | Oct 13, 2012 01:10 PM EDT
The U.S. Federal Trade Commission (FTC) is getting closer to charging Google with violating antitrust laws, with four of the five FTC commissioners believing that Google has abused its market dominance in search to harm competitors.
The government's move against Google is the most far-reaching antitrust probe of a corporation since the federal case against Microsoft back in the late 1990s. While four of the five commissioners at the FTC believe that Google has wrongfully used its position against competitors, the fifth member reportedly remains skeptical.
According to an exclusive report from Reuters, citing "three people familiar with the matter," the majority of FTC commissioners believe that an antitrust case should be brought against the search giant, which means Google could soon be headed into negotiations.
The four commissioners' conclusion that Google illegally used its dominance in the search market to hurt competitors comes after more than a year of investigation, said one of the sources. The three sources asked not to be named to protect working relationships.
The FTC could reach a decision on how to proceed in late November or early December, said two of the sources. The FTC's investigation of Google's practices follows numerous complaints from companies arguing that the agency should take measures against the search giant.
While most companies usually do not publicly discuss their affairs with the FTC, consumer reviews Web site Yelp and comparison shopping Web site Nextag have both voiced concerns about Google during open hearings in Congress.
Meanwhile, Google competitors who specialize in travel, shopping, and entertainment have also accused the search giant of unfairly giving their Web sites low quality rankings in search results in a bid to steer online users away from their Web sites and toward Google products offering similar services. Google is the world's top search engine, and its search results can carry great weight.
Internet users are far more likely to click on the top results in any given search. According to one source, the low ranking often forces companies to buy more ads on Google in an effort to improve their visibility. Google, for its part, has repeatedly denied any wrongdoing.
"We are happy to answer any questions that regulators have about our business," Google spokeswoman Niki Fenwick told Reuters, when asked about the discussions with the FTC. Meanwhile, the FTC declined to comment on the matter.
A little over a year ago, during a congressional hearing in September 2011, Google CEO Eric Schmidt denied accusations that his company manipulated its search results.
"May I simply say that I can assure you we've not cooked anything," Schmidt told the antitrust panel of the Senate Judiciary Committee.
According to one of the sources, the FTC commissioners have also taken into account other complaints that Google refuses to share data that would enable advertisers and developers to create software to compare the value they get on Google versus advertisement spend on Bing or Yahoo.
Moreover, the FTC is also looking into how Google is handling valuable patents considered essential to smartphones. The agency is reportedly seeking to determine whether those patents are licensed fairly and whether patent infringement lawsuits are used to hinder innovation.
Back in mid-September, FTC Chairman Jon Leibowitz said he expected a decision in the case to come by year end. Google is also under scrutiny by European regulators, who are conducting a similar antitrust investigation.
If the FTC finds that Google acted illegally, the search giant could reach a settlement with the agency or. If settlement negotiations fail, however, the issue could result in a lengthy and costly court battle.
The FTC's announcement in April that it had hired seasoned Washington lawyer Beth Wilkinson to lead the probe was largely seen as a sign that the agency was seriously considering filing a lawsuit against Google. In another sign that it's dead serious about the matter, last week the FTC hired Richard Gilbert of the University of California, Berkeley, a well-known economist, as a consultant.
According to antitrust experts, the most likely outcome of these antitrust investigations is a settlement. In broad lines, said the experts, Google would have to agree not to discriminate in favor of its own products to hurt smaller competitors.
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