How The Feds Got Googled

After much Sturm and Drang, the Federal Trade Commission’s landmark antitrust investigation into the most powerful company on the Internet ended with a wheeze that left most observers scratching their heads.

The Google settlement the FTC announced on Jan. 3 was less about Google’s search algorithms than its recently acquired Motorola Mobile patents, and dealt hardly at all with the allegations of anticompetitive “search manipulation” that supposedly formed the basis of the whole investigation:

…the FTC concluded that the introduction of Universal Search, as well as additional changes made to Google’s search algorithms – even those that may have had the effect of harming individual competitors – could be plausibly justified as innovations that improved Google’s product and the experience of its users. It therefore has chosen to close the investigation.

The only real concession the FTC was able to extract from Google was to swear off patent trolling on its standards-essential Motorola patents, which other technology companies must be able to use for their products to operate on U.S. networks.  But Google only agreed not to go to court to prevent other companies from using the patents — it can still continue to charge them royally to license the technology.

And while Google had kept up Motorola Mobile’s aggressive patent enforcement policies following its $12.5 billion acquisition last year, the company had been speaking out against software patent trolling since at least mid-2011, so getting it in writing doesn’t really seem like a huge “get” for the FTC after a 19-month investigation.

Baffled and disappointed by the FTC’s statement on the Google settlement, nonprofit advocate group Consumer Watchdog is demanding to see the FTC’s internal staff report on the investigation, hoping to find out how it all went off the rails.

Rumors began swirling late last year that the FTC lacked the evidence to make the search-manipulation charges stick, and that the case was becoming a frustrating embarrassment to the agency, which had won a hard-fought turf war with the Department of Justice in 2011 over who would lead the investigation into Google’s search practices.  The FTC even brought in a respected former DOJ prosecutor, Beth Wilkinson, last April in an effort to save the case, but clearly to no avail.

When the FTC case first appeared to be falling apart last November, Techdirt’s Mike Masnick suggested that the debacle may have had its roots in a legacy polishing exercise by the outgoing FTC chairman:

I keep hearing the same story over and over again.  They’re all variations on the following: FTC boss Jon Leibowitz is getting set to leave the job (and go into the private sector, of course), but would like a “defining moment.”  Somewhere in the last year or two, he decided that going after Google for anti-trust violations would be such a crowning moment.

So perhaps Leibowitz, like a Pentagon desk jockey officer pushing to get his combat ribbon before retirement, had wrangled a high-profile field command only to send his out-gunned troops up a hill they could never take.

Politico suggests that the FTC may have been spun by the prodigious lobbying effort Google unleashed.   Having seen how well Microsoft’s combative and aloof response to antitrust concerns worked in the 1990s, Google spent $25 million and hired a roster of Washington power players from both sides of the aisle to make its case to the FTC:

“It was a multiyear campaign focused on this very moment, knowing as the company  grew these issues were going to come up,” said Alan Davidson, former head of  Google’s office in Washington who left last year for the Massachusetts Institute  of Technology. “We had the benefit of watching those who had come before us, and  we saw the mistakes that were made. We didn’t want to replicate what they had  done.”

And the $25 million price tag for that charm offensive was huge bargain for the search giant, noted TheNextWeb:

Google, a company with cash and equivalents of roughly $50 billion, had to spend just 0.05% of its ready currency to fend of what could have been a nearly existential threat to parts of its core business.

But Google wasn’t the only one working the refs.   A driving force behind the “search manipulation” accusations was an industry group calling itself FairSearch, which includes Google competitors Microsoft, Kayak, Expedia, Hotwire, Nokia, Oracle, Allegro and several others.  After the FTC dropped the antitrust case, the anti-Google coalition released a statement calling for harsher judgments in separate investigations by state Attorneys General and European regulators.  The group has even launched a Eurocentric website — FairSearchEurope.eu — to press its case against Google on the other side of the Atlantic.

The FairSearch coalition isn’t alone in expecting Google to have a rougher ride in Europe, where the complaints from its competitors will carry more weight.  While U.S. antitrust enforcement relies heavily on finding direct harm to consumers, in Europe antitrust enforcement aims at fostering competition.

Indeed Google’s checkmate of the FTC’s antitrust case hinged on its lobbyists’ successful argument that no matter how its self-serving search algorithms might annoy Google’s competitors, they do not do measurable harm to consumers.   In Europe, Google’s rivals may have an easier time making a case that the company’s search tactics at least harmed them.

UN Agency Aims to Increase State Control Over Internet

The International Telecommunication Union, an international agency originally formed in 1865 to regulate international telegraph lines, will meet this December to debate handing governments more control over the Internet.

The World Conference on International Telecommunications  will convene Dec. 3 in Dubai to update the International Telecommunications Regulations treaty, and may mark an unprecedented encroachment by the ITU into Internet-governance.

Delegates will be discussing a number of proposals championed by authoritarian regimes like Russia, China and Saudi Arabia aimed at enhancing governments’ ability to block and spy on online traffic, and reducing the control of U.S.-based Internet-governance bodies like ICANN (which assigns Web addresses).

Most alarming to Internet freedom advocates is an initiative called “Requirements for Deep Packet Inspection in Next Generation Networks,” a technology standard that would allow state telecom authorities to decrypt Internet communications traveling within their borders. The coalition of authoritarian states is also seeking more control over the assignment of IP addresses (which advocates fear could be used to muzzle online dissent) and an spam-blocking powers that some worry could be used to silence activists.

Aside from those specific proposals, online-freedom advocates are inherently skeptical of the ITU’s attempts to assert authority over the Internet, in part because the body is dominated not only by governments but also officials from incumbent telecoms, which are both generally seen as the open Internet’s natural enemies.  Telecoms in developing countries, for example, want to treat the Internet more like international phone calls, charging online firms like Google high fees to pay for network upgrades and maintenance.

UPDATE: [Dec. 3]  The level-headed Sam Biddle over at Gizmodo marked the first day of the Dubai conference by pointing out that try as they might, Russia, China and the Gulf States have no chance of succeeding with their online power grab for a number of reasons.  First off the ITU operates on a consensus basis, meaning that basically every one of the 193 countries represented have to sign off on a proposal for it to be adopted.  Secondly — and perhaps more importantly — the ITU has no enforcement mechanism, so even if it decides that something should happen, it has no way to actually make it happen.

Biddle imagines the conversation thusly:

ITU: “Hey, United States, almost all of us agree that ICANN shouldn’t be in charge of this important function of the Internet. Hand it over.”
USA: “No.”
ITU: “Well, all right.”

So we can hop down off the barricades and go back to playing Fruit Ninja.

Apple in UK Admits Samsung Tabs Not Copies — Also “Not As Cool” As iPad

In complying with a British court’s order for Apple to publish a statement acknowledging its ruling that Samsung tablets were not copies of the iPad, Apple used the court’s own words to further note that their rival’s tables are also “not as cool.”

The court order came after Apple lost a preemptive lawsuit by Samsung seeking a ruling that the Korean electronics giant’s Galaxy tablet had not infringed on the iPad’s EU-registered design.  The UK court ordered Apple to link on its website and publish in prominent British media a statement acknowledging that Samsung hadn’t infringed on its design, in order to “correct the damaging impression” the Galaxy was a copy of the iPad.

Though the print ads have yet to appear, the statement linked to Apple’s site snarkily highlights an excerpt from the original ruling by High Court Judge Colin Birss:

“The extreme simplicity of the Apple design is striking. Overall it has undecorated flat surfaces with a plate of glass on the front all the way out to a very thin rim and a blank back. There is a crisp edge around the rim and a combination of curves, both at the corners and the sides. The design looks like an object the informed user would want to pick up and hold. It is an understated, smooth and simple product. It is a cool design.”

“The informed user’s overall impression of each of the Samsung Galaxy Tablets is the following. From the front they belong to the family which includes the Apple design; but the Samsung products are very thin, almost insubstantial members of that family with unusual details on the back. They do not have the same understated and extreme simplicity which is possessed by the Apple design. They are not as cool.”

Brazilian Media Wax Links Off Google

Brazilian newspapers have gone a step further than the French media, stripping Google News of the right to post article headlines and ledes when the news aggregation service links to their sites, unless it pays for the content.

The 154 members of Brazil’s National Association of Newspapers, which account for 90% of the country’s print media, have opted out of Google News en masse.  The association took the action in the wake of a contentious Inter-American Press Association General Assembly in São Paulo earlier this month when Google refused to discuss a compensation arrangement.

Association president Carlos Fernando Lindenberg Neto told the Knight Center for Journalism in the Americas:

“Google News’ presence in the Brazilian market is small. We believe (the loss of traffic) is an acceptable price to protect our content and brands.”

Lindenberg asserted that, contrary to the conventional wisdom that appearing in Google search results boosts traffic, “providing the first few lines of our stories to Internet users” actually reduces the chances that readers would click through to read an entire article.

When responding to a similar controversy regarding links to French news content, Google recently claimed to direct four billion clicks each month to French media sites.

Despite disappearing from Google News, stories from the 154 newspapers’ websites will still show up in regular Google web searches, often including the headlines and snippets of relevant text.

Dutch Police Want the Power to Destroy Your Computer

A proposal from the Dutch Ministry of Justice and Security would grant police powers to break into computers anywhere in the world, install spyware, search hard drives and destroy data.

According to the current wording of the proposal (Dutch, PDF), it’s unclear whether Dutch authorities would even be required to send a legal assistance request to police in the country where a foreign computer is located before remotely seizing control of it, as long as they have a warrant from a Dutch court.

If a computer’s location is obscured by means of anonymizing services like Tor, Dutch police would have no obligation at all to attempt to coordinate with authorities in other countries.

Dutch digital rights group Bits of Freedom is sounding the alarm on the proposal, which was unveiled by the Dutch Ministry of Justice and Security on Oct. 15.  The group is urging Internet users around the world to contact their relevant government agencies and ask them to make their opposition clear to the Dutch government.

Google Threatens to Guillotine French Media Links

A proposed French law to require search engines to pay for content could prompt Google to exclude links to French media sites from its search results.

French newspapers have pushed for the law in order to boost sagging revenue, and this week Culture Minister Aurelie Filippetti supported the idea in testimony to a parliamentary commission.

Google France responded to the proposal with a letter to relevant French ministries stating that it “cannot accept” the implications of having to pay to provide links in its search results and Google “as a consequence would be required to no longer reference French sites.”

Google said that such a move “would threaten its very existence” and “would be harmful to the internet, internet users and news websites that benefit from substantial traffic” from the popular search engine, which claimed to direct four billion clicks to French media pages each month.

Foxconn Admits Using Child Labor

Apple supplier Foxconn has admitted to using workers as young as 14 years old at its factories in China.

The Taiwanese manufacturer acknowledged to CNET that it found children ages 14 and 15 year’s old illegally working as “interns” at its factory in Yantai, Shandong Province, China — where the legal working age is 16:

“This is not only a violation of China’s labor law, it is also a violation of Foxconn policy and immediate steps have been taken to return the interns in question to their educational institutions,” the company said in an e-mailed statement to CNET. “We are also carrying out a full investigation, in cooperation with the respective educational institutions, to determine how this happened and the actions that must be taken by our company to ensure that it can never happen again.”

China Labor Watch  said it confirmed that Foxconn was using child labor at the Yantai facility over the summer as part of a program in which local schools and universities provided the company with cheap labor, with student “interns” earning about $61 a week along academic credits.

“These underage interns were mainly sent to Foxconn by schools, but Foxconn did not check the IDs of these young interns. The schools involved in this incident should take primary responsible, but Foxconn is also culpable for not confirming the ages of their workers.”

Foxconn’s internship program came under fire days before the launch of Apple’s new iPhone 5, when Chinese news media accused the company of using thousands of interns bussed in from area universities to ramp up production of the new smartphone to cope with surging demand.  While Foxconn denied that students were coerced, the schools reportedly canceled classes, and some students said they were pressured to sign statements their participation was voluntary.