Google Settles Concerns of FTC Over Competition

WASHINGTON (CN) - Google agreed Thursday to give its competitors access to certain patents and adopt other changes to improve competition, settling charges from the Federal Trade Commission.

In a complaint filed simultaneously with a decision and consent order, the FTC said Google had reneged on its commitments to license standard-essential patents on terms that are "fair, reasonable and non-discriminatory," or FRAND.

The company had paid about $12.5 billion in 2012 to acquire Motorola Mobility and its patent portfolio of more than 24,000 patents and patent applications.

These patents have been a blockbuster source of revenue for the last decade, ingratiating themselves in industry standards used to provide wireless connectivity, the FTC said.

It added that "these standards are essential for smartphones, tablets, gaming systems, operating systems, and the increasing number of devices offering wireless connectivity or high definition video."

Many companies tried to license the standard-essential Motorola Mobility patents on FRAND terms, but Google allegedly pursued - or threatened to pursue - injunctions against them.

The FTC said Google pursued such injunctions in U.S. district court and before the International Trade Commission - creating the very "hold-up" that standard-setting organizations sought to prevent by instituting FRAND licensing requirements.

"If left unchecked, this type of patent hold-up can lead to higher prices, as companies may pay higher royalties for the use of Google's patents because of the threat of an injunction, and then pass those higher prices on to consumers," the FTC said in a statement. "This may cause companies in technology industries to abandon the standard-setting process and limit or forgo investment in new technologies, according to the agency."

Under the consent order, Google will stop seeking injunctions that would block willing licensees from using of any standard-essential patents set to be licensed on FRAND terms.

The FTC that Google also agreed to remove restrictions from its AdWords program that made it difficult for advertisers to manage their ad campaigns across competing ad platforms.

Under a separate commitment, Google has agreed to remove restrictions on the use of its online search advertising platform, AdWords, that may make it more difficult for advertisers to coordinate online advertising campaigns across multiple platforms.

Google furthermore will give websites the ability to opt out of display on Google vertical search offerings, while still having them appear in Google's general, or "organic," web search results.

The FTC said it investigated allegations that Google misappropriated content, such as user reviews and star ratings, from competing websites to improve its own vertical offerings, such as Google Local and Google Shopping. The practice is known as search bias, the commission said.

Approval of the consent agreement was not unanimous, the FTC said, noting that Commissioner Maureen Ohlhausen voted no.

In a statement, Ohlhausen said she would have closed the Google investigation without imposing any remedy.

Ohlhausen and Comissioner J. Thomas Rosch abstained from voting to issue the commission statement as to the standard-essential patents. In a separate statement, Rosch disagreed that an injunction enforcing the patents would constitute "patent hold-up."

The commission voted unanimously to close the investigation related to Google's search-related practices.

Rosch also abstained from voting to issue the commission statement relating to the search investigation.

He and Ohlhausen each issued separate statements on this matter as well.

Google employs more than 32,000 people, with annual revenues approaching $38 billion, according to the FTC.

The commission shared credit for the resolution with the European Commission's directorate-general for competition, and with the state attorneys general of Texas, New York, Ohio, Californiaan and Oklahoma.

A description of the consent agreement package will soon appear in the Federal Register, and the public has until Feb. 4 to comment.

The commission will then decide whether to make the proposed consent order final.

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