Microsoft Rages Over FTC’s Google Decision

Champagne corks must have popped at Google headquarters when the Federal Trade Commission announced it wouldn’t push antitrust action against the company. But Microsoft immediately took to the blogosphere to vent its displeasure.

“The FTC’s overall resolution of this matter is weak and—frankly—unusual,” Dave Heiner, vice president and deputy general counsel for Microsoft, wrote in a Jan. 3 blog posting. “We are concerned that the FTC may not have obtained adequate relief even on the few subjects that Google has agreed to address.”

Under the terms of its agreement with the FTC, Google must allow competitors access to select patents on fair, reasonable and non-discriminatory terms (FRAND). Google also agreed to give advertisers “more flexibility” in simultaneously managing campaigns on Google’s AdWords and rival advertising platforms, and said it would refrain from “misappropriating online content from so-called ‘vertical’ websites,” such as shopping or travel portals, for use on its own subject-specific Websites.

Microsoft took issues with all those points, starting with the advertising. “Google inexplicably has not promised to allow all advertisers to port their campaign data to other ad platforms—only those with a primary billing address in the United States,” Heiner wrote. “But many firms based outside the United States advertise in the United States. What basis is there for excluding them from the protection embodied in Google’s commitments?”

He also hammered the wording of the patent agreement, claiming it gives Google room to threaten potential licensees. In addition, he wrote, “the proposed decree gives Google leeway to sue for an injunction on its standard essential patents if it takes the position that injunctive relief sought against it is based on a patent that is standard essential.” In other words, given the ambiguity over which patents are truly “standard essential,” Google can use the risk of a lawsuit as a club.

Heiner followed this up with a plug for Windows Phone, Microsoft’s smartphone operating system. “Google continues to prevent Microsoft from offering a high-quality YouTube app for the Windows Phone,” he added, after bemoaning that the FTC declined to pursue Google on other issues. Then comes the claim that Google built its search business “in part through a series of contracts requiring other websites and distributors to use Google exclusively.”

Microsoft’s reasons for pursuing Google are obvious: the two companies compete in mobility, search, operating systems, and online advertising. Back in 2009, Wired published a long article on the battle between the giants, and how Microsoft pulled various legal levers to help scuttle an impending deal between Yahoo and Google. “The war today is being fought in Washington, in the press, and perhaps even in the Justice Department again,” that article concluded. “And these aren’t battles you can win with engineers and algorithms.”

The intervening years, the rivalry’s only intensified. Google’s Android operating system dominates the mobile-device segment, while Windows Phone struggles to move beyond single-digit market share. Google continues to hold a comfortable lead in search and online advertising. And Google Docs, the company’s cloud-based productivity software, is making a dynamic play for business customers. With nearly every aspect of its business threatened, Microsoft seems only more than happy to use every tool at its disposal—and voice its disappointment when things like the FTC’s investigation conclude without damaging Google in a meaningful way.

But Google isn’t out of the regulatory woods yet: investigators from the European Union continue to investigate whether the company is violating antitrust regulations on that side of the Atlantic. “We have taken note of the FTC (Federal Trade Commission) decision, but we don’t see that it has any direct implications for our investigation, for our discussions with Google, which are ongoing,” a spokesperson for the European Commission informed Reuters.


Image: Microsoft