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Are Google’s Search Results Unfair or Deceptive Under Section 5 of the FTC Act?

19 Pages Posted: 8 May 2012  

Robert E. Litan

Council on Foreign Relations (CFR) - Council on Foreign Relations- Washington D.C.

Hal J. Singer

Economists Incorporated

Date Written: May 8, 2012

Abstract

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.

Keywords: Google, FTC, Section 5, Antitrust, Competition

Suggested Citation

Litan, Robert E. and Singer, Hal J., Are Google’s Search Results Unfair or Deceptive Under Section 5 of the FTC Act? (May 8, 2012). Available at SSRN: https://ssrn.com/abstract=2054751 or http://dx.doi.org/10.2139/ssrn.2054751

Robert Litan

Council on Foreign Relations (CFR) - Council on Foreign Relations- Washington D.C. ( email )

1777 F Street, NW
Washington, DC 20006
United States

Hal Singer (Contact Author)

Economists Incorporated ( email )

2121 K Street N.W.
Suite 1100
Washington, DC 20037
United States
202-747-3520 (Phone)

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