The Federal Trade Commission is raising the ante in its antitrust confrontation with Google with the commission staff preparing a recommendation that the government sue the search giant.
The government’s escalating pursuit of Google is the most far-reaching antitrust investigation of a corporation since the landmark federal case against Microsoft in the late 1990s. Although the investigators have looked at a wide range of Google’s business practices, a main line of inquiry has been whether Google has manipulated its search results to favor its own products, and to make it harder for competitors and their products to appear prominently on a results page.
The staff recommendation is contained in a detailed draft memo of more than 100 pages that is being shared with the five F.T.C. commissioners, said two people briefed on the inquiry.
The staff memo is still being edited and changes could be made, but these are mostly fine-tuning and will not alter the broad conclusions reached after an investigation that began more than a year ago, said these people, who spoke on the condition that they not be identified.
The commission is also building a team to take Google to court, if it comes to that. Last spring, the commission hired a seasoned litigator to help with the case, Beth A. Wilkinson, a partner in the firm Paul, Weiss in Washington. In a further sign that it means business, the commission brought on a well-known economist last week as a consultant: Richard Gilbert of the University of California, Berkeley.
Google said in a statement on Friday, “We are happy to answer any questions that regulators have about our business.”
The F.T.C. staff memo does not mean that the government will sue Google for antitrust violations. Next, the vote of three of the five F.T.C. commissioners would be required. And each step is a further prod for Google to make concessions to reach a settlement, before going to court. Last month, Jon Leibowitz, chairman of the F.T.C., said a final decision on whether to sue Google would be made before the end of this year.
The American inquiry is moving in tandem with a major antitrust investigation in Europe. The European authorities are pressing ahead and seeking changes in Google’s behavior.
Speaking in New York last month, Joaquín Almunia, the European Union’s competition commissioner, pointed to antitrust regulators’ concerns that Google is “using its dominance in online search to foreclose rival specialized search engines and search advertisers.”
Mr. Almunia said that he had met several times with Google executives, and that the search company has “agreed to propose solutions.”
Google is also being investigated by the attorneys general from six states: Texas, Ohio, New York, California, Oklahoma and Mississippi.
Given the momentum of the investigations, antitrust experts say, the F.T.C. staff recommendation was to some extent expected. “With all the effort and resources put into this, that makes it all the harder to stand up and say forget about it,” said William E. Kovacic, former chairman of the F.T.C.
“But after you find a problem,” said Mr. Kovacic, a professor at George Washington University, “then the challenge is what to do about it that makes things better.”
Individuals at companies that have been questioned and received subpoenas from the agency say the inquiry is broad. The areas include accusations of manipulating the search results it displays to favor Google commerce services it has developed like Google Shopping for buying goods and Google Places for advertising local restaurants and businesses. In the civilian subpoenas, the F.T.C. terms this “preferencing.”
The investigators are also looking into whether Google’s automated advertising marketplace, AdWords, discriminates against advertisers from competing online commerce services like comparison-shopping sites and consumer- review Web sites.
The government is also investigating Google’s practices in the smartphone industry, inquiring if its contracts with handset makers and carriers prevent them from removing or modifying Google products, like its Android operating system, or Google search. It is also looking into Google’s use of smartphone patents.
Claire Cain Miller contributed reporting from San Francisco.
This article, Drafting Antitrust Case, F.T.C. Raises Pressure on Google, first appeared in the New York Times.
