In what is sure to lead to a customer scandal and heighten a U.S. Antitrust Probe, Federal Trade Commission (FTC) staffers determined in an undisclosed report that Google, Inc. allegedly used an algorithm to manipulate search results to favor their own less relevant search over competitors. The alleged Google fraudulent practice only became public when FTC staffers inadvertently shared the document with the Wall Street Journal.
Staff noted: “Where Google’s algorithms deemed a comparison shopping website relevant to a user’s query, Google automatically returned Google Product Search – above any rival comparison shopping websites. Similarly, when Google’s algorithms deemed local websites, such as Yelp or CitySearch, relevant to a user’s query, Google automatically returned Google Local at the top of the [search page].”
As a result, according to the leaked document, staffers recommended that the Bureau of Competition should take legal action against Google. Google is “in the unique position of being able to make or break any web-based business,” the report said, adding that Google’s biased favoring of its own properties and demoting rivals’ sites “resulted in significant loss of traffic to many competing vertical websites.”
However, the report also reveals that staffers acknowledged Google may have good legal defenses for claims they violated antitrust laws, “because of the strong procompetitive justifications Google has set forth.” Those defenses could include that Google’s search results were the consequence of a desire to innovate constantly to produce a higher quality customer search product due to strong competition.
In a stunning revelation, FTC staff found that to improve Google’s shopping results, the company allegedly “scraped ratings and user reviews from Amazon.com site.” Google also allegedly used Amazon’s product rankings to determine the order to rank products in Google Product Search. Although Google provided search services on Amazon’s website, which generated almost $170 million in revenue, Amazon shifted some search traffic to less-profitable Microsoft’s Bing in an effort “to try to foster a more competitive marketplace.”
The FTC staff found the market for search results was “not robustly competitive,” because “Google has been unilaterally reducing revenue share percentages to many of its syndication customers (in effect raising prices) with apparent impunity.”
The timing of the leak of the FTC report may be especially negative for Google, which just launched its own search tool for car-insurance quotes to compete with market leaders Allstate Corp. and Esurance. Google is also expanding its hotel listing service to compete with TripAdvisor, Inc. and Expedia, Inc.
A legal source told Breitbart News that the FTC report will probably serve as a “litigation railroad track.” Local-listings site Yelp, Inc. formally complained to the FTC during the investigation that Google was copying reviews to give its own local listings more credibility. Google rivals have long complained about biased searches and discriminatory practices, but lacked this type of regulatory data to make their case.
Google’s Executive Chairman Eric Schmidt may also be criticized for testifying under oath on September 21, 2011 before the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights that, “he was not aware of any strange boosts or biases” in Google’s results. “I can assure you we’ve not cooked anything,” Mr. Schmidt added. Schmidt also submitted a document as evidence regarding how rigorous Google’s testing process is to prevent bias and discrimination.
Google General Counsel Kent Walker said in a statement to the Wall Street Journal, “After an exhaustive 19-month review, covering nine million pages of documents and many hours of testimony, the FTC staff and all five FTC Commissioners agreed that there was no need to take action on how we rank and display search results,”