Regulatory Clouds Over Google Have Largely Cleared

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Google once appeared headed for major clashes with regulators — in the United States or Europe, or both — as government officials sought to curb alleged abuses by one of the world’s most powerful and profitable technology companies. But the clouds over Google’s Silicon Valley headquarters have largely cleared over the past several months.

The Federal Trade Commission, which this time last year was touting a hard-charging outside litigator to lead its antitrust investigation of Google, closed its case in January after negotiating only modest reforms. The Europeans in recent weeks have gone a bit further, issuing preliminary findings that Google may be abusing its dominance of the search industry to hurt competitors and, by extension, consumers. Regulators there also are insisting on changes to how Google designs its results pages, with clearer labeling of its own products and links to rival search engines.

The company’s many critics were not impressed and are pushing for more concessions during a public comment period over the next few weeks. But for anyone expecting a confrontation resembling the epic Justice Department showdown with Microsoft in the 1990s, the outcome surely is disappointing, far more whimper than bang.

There are many reasons for this, but the most important may be Google’s ability to learn from Microsoft’s mistakes. Major antitrust battles on both sides of the Atlantic sapped the focus of a company that once was the unquestioned titan of tech. Microsoft was slow to adapt to the Internet economy, slow to see the potential of Web search, slow to build the world-changing products that consumers have come to expect from Apple and, yes, Google.

Google declined to comment for this article. But in remarks public and private — and more importantly, through its actions — Google executives have made clear their determination to avoid a big regulatory battle. Rather than challenge government officials to a public fight, they’ve negotiated hard behind closed doors. And, so far, they’ve given enough to get regulators off their back without ceding anything essential to how Google’s businesses work.

The European deal is instructive: Google made no acknowledgment of wrongdoing but agreed to tweaks in how it presents search results to assuage regulatory concerns. In doing this, it appears to have avoided the possibility of more intrusive government sanctions, such as oversight of how it generates results or limitations on ways that it now encourages consumers to visit other Google products.

“There are still things that could happen, but the chance of it happening gets smaller and smaller every day,” said John Simpson of Consumer Watchdog.

Simpson and others hasten to add that regulatory pressure could build again. Several state attorneys general, led by Texas, have been investigating Google over antitrust allegations. The Europeans have a separate investigation into the company’s Android operating system, again over antitrust allegations.

Yet a grudging admiration of Google’s savvy has taken hold. Even those who are convinced that Google has dangerous monopoly power over the search business express little hope that this will be curbed any time soon.

The bigger danger may be that recent successes will create hubris, which could eventually create mistakes.

Google already had to pay a record FTC fine of $22.5 million last summer after violating the terms of an earlier privacy agreement. State attorneys general — including some of the same ones pursuing antitrust allegations — reached a settlement with Google that cost the company $7 million because of allegations related to its controversial Street View program, in which the company admitted to pulling private data from wireless connections.

The prospect for another round with European regulators is particularly serious for Google. Their agreement, should it be ratified in the months ahead, contains the potential for fines totalling 10 percent of global revenue if the terms are later violated.

With billions of dollars at stake, it may seem unlikely that Google would stumble into such a trap. But it’s worth noting that just last year Microsoft — long after emerging from its antitrust battles determined not to cross government regulators again — failed to follow through on a promise to give European consumers the option to choose a browser other than Microsoft’s own Internet Explorer.

The result was a whopping fine — $730 million. You can be sure that Google added it to the list of mistakes it’s determined not to make.


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