Republican at FTC Backs Probe of Internet Search Competition

Thomas Rosch, one of two Republicans on the five-member U.S. Federal Trade Commission, said he would support an examination into whether there is fair competition among Internet search companies, a field dominated by Google Inc.

“The big danger is that you are going to have markets that have basically tipped so that they are in command of these monopolists or near monopolists,” he said in an interview. While declining to say if Google should be the target of a probe, Rosch said, “I’m not afraid to take a look” at its role.

With Google, Yahoo! Inc. and Microsoft Inc.’s Bing the only major search engines, Rosch said, it’s important that no single company uses its power to thwart competition.

Google, based in Mountain View, California, controlled 67 percent of the search market as of December, according to market-researcher ComScore Inc., prompting calls for a government probe of possible antitrust violations. The FTC and Justice Department, which share responsibility for ensuring corporate competition, have probed the impact of specific Google acquisitions on Internet markets.

FTC Chairman Jon Leibowitz, and Commissioners Edith Ramirez and Julie Brill, all Democrats, and Commissioner William Kovacic, a Republican, haven’t said publicly whether they would favor an examination of the search industry.

Texas Investigation

Texas Attorney General Gregg Abbott has begun a broad probe of Google. The European Union has also been aggressive, probing complaints that Google discriminates against other services in its search results and stops some websites from accepting rival advertisements.

Google has said it is working with European officials to address their concerns.

Adam Kovacevich, a Google spokesman, said social-networking and retail sites, specialty search engines and applications for mobile devices are providing options for computer users.

“Consumers always have the ability to choose, and they vote with their clicks,” he said in an e-mailed statement.

Investors have responded as Google has consolidated its position as owner of the world’s most popular search engine. The company’s shares have risen 14 percent to $611.32 from $535.07 over the past 12 months on the New York Stock Exchange.

Microsoft Case

A broad investigation by U.S. authorities into Google could be the government’s biggest antitrust case since it challenged Microsoft’s monopoly practices. That Justice Department case, begun by the Clinton administration, was settled under President George W. Bush.

Last year, the FTC approved Google’s purchase of mobile ad service AdMob Inc., and the Justice Department is expected soon to decide whether to challenge in court Google’s planned acquisition of ITA Software Inc., a company that sells travel search software.

Google in 2008 abandoned an agreement to place ads on Yahoo!’s site after the Justice Department threatened to challenge the venture in court.

If the FTC opens an investigation and decides to bring a case, it could rely on powers it used to reach a settlement with Intel Corp. last year, said Rosch, who was appointed to the FTC by Bush.

In the Intel case, the FTC invoked Section 5 of the law that established the agency in 1914 to challenge “unfair or deceptive” practices, going beyond what is specifically banned by other federal antitrust statutes.

‘A Huge Aid’

U.S. courts since the mid-1970s generally have limited what is illegally anticompetitive under those laws.

“Section 5 is a huge aid to us in our law enforcement,” Rosch said. “We ought to dust it off, think about how we can apply it sensibly.” The FTC is likely to bring a case under that provision before Rosch’s term ends in September 2012, he said.

Rosch also said he is concerned that FTC went too far in endorsing so-called do-not-track regulation that is aimed at restricting online marketers from collecting individuals’ Web- surfing habits.

The FTC may have underestimated the benefits to consumers of receiving advertising based on their Internet-browsing interests, Rosch said.

“Before any such mechanism is adopted, we have to be sure that consumers are warned about the consequences to them of what might occur if they subscribe to a do-not-track option,” Rosch said. Consumers should be told they may actually be exposed to more unwanted ads if they opt out of online tracking, he said.

“They could lose that relevancy option that I think is attractive,” Rosch said.

Self Regulation

He also said he doesn’t think industry should be allowed to self-regulate and opposes do-not-track options introduced by Microsoft, Google and Mozilla Corp., owner of the Firefox browser.

“I am not prepared to endorse any of the big browsers’ feasibility with respect to do not track,” Rosch said. “We need to be sure we are not putting the fox in charge of the chicken coop.”

To contact the reporters on this story: Jeff Bliss in Washington at jbliss@bloomberg.net and; Sara Forden in Washington at sforden@bloomberg.net.

To contact the editors responsible for this story: David E. Rovella at drovella@bloomberg.net. Mark Silva at msilva34@bloomberg.net and;

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