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FTC launches investigation of Google

Google acknowledges that the Federal Trade Commission is looking into its business practices, including search and advertising.

June 25, 2011|By Jessica Guynn and Jim Puzzanghera, Los Angeles Times

Yelp's chief executive, Jeremy Stoppelman, has spoken out against Google incorporating Yelp's user business reviews into Google's local business information service called Places. In 2009, talks for Google to buy Yelp for $500 million fell apart.

"There is no solution to the problem," Stoppelman told the Telegraph newspaper in Britain in a recent interview. "Google's position is that we can take ourselves out of its search index if we don't want them to use our reviews on Places. But that is not an option for us and other sites like us such as TripAdvisor as we get a large volume of our traffic via Google search."

Travel sites such as Microsoft's Expedia and TripAdvisor, health site WebMD and local reviews site have also complained that Google doesn't subject its own content to the same rules it applies to others, placing its own on top of search results.

Google denied wrongdoing. It says its users rely on the search engine to deliver the exact information they seek — not just links — as quickly as possible.

"There should be no barrier between what they seek and what we return to them," Singhal said. "That has been the guiding principle behind Google. We are totally obsessed with the speed of getting answers to users."

The FTC and the Justice Department share antitrust jurisdiction and take turns on major cases. The two agencies can largely levy the same penalties for violations, which in this case could force Google to stop any actions that are found to harm competition.

Unlike in the European Union, the FTC can't levy huge fines to penalize an antitrust violator, though there can be fines if a company fails to comply with an order to stop illegal practices.

But the FTC has the ability to conduct a broader inquiry than the Justice Department, and it can investigate not just for violations of antitrust law but for unfair methods of competition that could lead to violations if allowed to continue, Lande said.

The FTC is also more insulated from White House interference than the Justice Department, a potential factor given Google's close ties to the Obama administration.

The FTC is an independent agency with three Democratic commissioners and two Republicans. President Obama elevated Jon Leibowitz to chairman in 2009 and appointed the other two Democrats. But unlike Justice Department officials, FTC commissioners can't be fired by Obama.

At least three FTC commissioners have to approve an investigation involving subpoenas. An FTC spokeswoman would not say how many commissioners approved the Google inquiry.

The Senate's antitrust subcommittee also is looking into Google's power in the Internet search market.

The committee plans a hearing this summer and could end up issuing a subpoena for Google's chief executive or its former CEO, Eric Schmidt, to testify.

The committee's chairman, Democrat Herb Kohl of Wisconsin, and top Republican member, Michael Lee of Utah, have derided the company for offering only its chief legal officer.

Guynn reported from San Francisco and Puzzanghera from Washington.

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