Are Google’s Search Results Unfair or Deceptive Under Section 5 of the FTC Act?
Robert E. Litan
Ewing Marion Kauffman Foundation; AEI-Brookings Joint Center for Regulatory Studies
Hal J. Singer
Navigant Economics LLC
May 8, 2012
By any measure, Google is one of America’s most innovative companies of the last decade. Its search engine has literally changed the way people all around the world access information and conduct research. Google’s ability to continue innovating, as well as the ability of other companies to do the same, is threatened by the potential application of an untested and unbounded legal theory now being considered by the Federal Trade Commission (FTC). The FTC appears to be investigating theories that Google’s evolution from only offering traditional web search results into now providing specialized search results (such as flight, shopping or map results) — a relatively recent innovation in its business model and its services to users — somehow constitutes an unfair method of competition within the meaning of Section 5 of the FTC Act. In this paper, we critique such a basis for intervention in several ways. First, we will review the thin case law on Section 5 cases, and show the potential dangers to innovation broadly that such standalone investigations can pose. Second, although it is well established that the antitrust laws are designed to protect competition and not particular competitors, no equivalent doctrine has yet been articulated under the FTC’s unfair method of competition mandate. Third, to the extent that the FTC were to base its case — and courts were to accept any unfair trade practice or deception claim — on a claim that Google somehow reneged on a prior implicit or explicit promise not to offer specialized search results or to rank them in search results in accordance with the algorithms used for other web pages, then that result also would deeply impair the innovative process. We conclude by highlighting the potential threat to innovation posed to other companies, both inside and outside the technology sector, by the theories now apparently being pursued against Google. In sum, there is no basis in law or in fact for the FTC to proceed against Google under Section 5 of the FTC Act on the theories reviewed in this paper.
Number of Pages in PDF File: 19
Keywords: Google, FTC, Section 5, Antitrust, Competitionworking papers series
Date posted: May 8, 2012
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