Since mid-2011, the Federal Trade Commission has been investigating Google's business to determine whether the company is manipulating its search results, using dirty tricks to crush rivals, and generally just being evil.
The FTC finally issued its verdict yesterday, and while it did uncover some questionable behavior on the part of the search giant, Google largely emerged unscathed. The biggest setback actually related to Motorola, which Google acquired in the midst of the FTC probe. Otherwise, Google made a few mild changes, and walked away without any major penalties - much to chagrin of detractors like Microsoft and Yelp.
The order, however, has a few layers to it. So let's break down what actually happened.
What did Google do wrong? Basically, three things. First, its Motorola Mobility subsidiary failed to provide standard-essential patent licenses to companies willing to pay for them (more on this below). Second, it included data from rivals in certain search results and passed it off as its own, and it made life difficult for advertising partners that wanted to coordinate campaigns across multiple platforms.
Standard-essential patents? Yes, if a patent is "standard-essential," it basically means that it covers a technology that most of today's gadgets need to function. A patent on 3G or wireless connectivity, for example. If Motorola was the only company allowed to make a phone that connected to wireless networks, it would have a monopoly on cell phones, and that's no good.
So it has to let its rivals use its tech? Yes, but they have to pay for it. As long as a company like Microsoft or Apple is willing to pay the licensing fee, Motorola has to grant them a license.
So what's the problem? Basically, the price. Rivals think Motorola is asking for too much money. Motorola thinks its rivals are being unreasonable. So, Motorola has taken to asking judges for injunctions on products that use the patents without a license.
Where does the FTC come in? The FTC says Motorola can no longer ask for injunctions against products that use standard-essential patents as long as those companies have made good faith efforts to license the tech.
And Google? Google acquired Motorola Mobility for $12.5 billion in Aug. 2011 and "inherited" all this patent trouble, according to FTC Chairman Jon Leibowitz.
So what happens next? All the cases that Motorola filed before the International Trade Commission asking for bans on products that violate standard-essential patents will be dismissed. Cases making their way through district courts will also likely be amended.
What if Motorola doesn't comply? The FTC can step in and fines or other penalties can be imposed.
OK, so what about Google's search business? The FTC said it conducted an "exhaustive" investigation into Google's search practices and found that, for the most part, it does not manipulate its search results in such a way that would require FTC intervention.
How would it manipulate search results? Detractors accused Google of highlighting its own products in search results - Zagat over Yelp, for example, or Google Shopping links instead of direct links to other shopping sites. The FTC, however, said that any changes Google has made to its search results over the years have been done to enhance the user experience, not solely boost Google's status on the Web.
What about companies that complained about being demoted in search? The FTC also found that algorithm changes have largely benefited the user, citing companies that try to game Google and gain a higher search ranking even if they are not relevant.
So, Google is in the clear? Not exactly. Google did agree to stop "scraping" data from rivals and presenting it as its own - something about which Yelp has complained. Things like Google Places would include reviews from sites like Yelp, so Yelp was losing traffic while Google got a boost thanks to Yelp's work.
Why didn't Yelp and others just tell Google to stop? They did, but Yelp and others said that when they complained, Google threatened to pull their data from Google.com altogether - a potentially devastating move for a Web-based firm. As a result, Google has agreed to allow companies to opt out of having their data scraped without repercussions.
Is that it? Nope, if you use Google's AdWords program, meanwhile, Google has agreed to remove restrictions that made it difficult for AdWords customers to coordinate online advertising campaigns across multiple platforms.
Didn't Google just get a $22.5 million fine for violating a previous FTC order? Are they going to comply with this? Yes, late last year, the FTC fined Google after it misrepresented how users of Apple's Safari browser were having their Internet activity tracked. When asked about this at a press conference, Chairman Leibowitz said he likes to believe the best in people, and does not think Google will want to go through the hassle of another inquiry if it violates the new rules. If it does, however, there will be consequences, he said.
So everything's cool now? For Google? Sure. But Yelp said it was displeased that Google was not found guilty of search manipulation on a larger scale. And long-time Google foe Microsoft penned a blog post last night in which it said the FTC deal was a missed opportunity. "We find it troubling that the agency did not adhere to its own standard procedures that call for the agency to obtain industry input on proposed relief and secure it through an enforceable consent decree," Microsoft said. "The FTC's overall resolution of this matter is weak and—frankly—unusual. We are concerned that the FTC may not have obtained adequate relief even on the few subjects that Google has agreed to address."
So does this really affect me? Google users probably won't notice much of a change. If you own an online business, it might be easier to get Google to stop scraping your data without retribution or manage your online ad campaigns. Meanwhile, if Motorola can't ask for as many bans, it might reduce the chances that your new smartphone will be stuck in Customs thanks to a patent fight. Overall, though, it'll be business as usual across Google.
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