Sens. Herb Kohl and Mike Lee call for Google antitrust probe

The chairman and top Republican on the Senate antitrust subcommittee have asked regulators to investigate Google Inc.'s search practices, saying they were concerned the company was biasing results to favor its own products.

The senators -- panel Chairman Herb Kohl (D-Wis.) and Mike Lee (R-Utah) -- sent a letter Monday to the Federal Trade Commission, which already is conducting a broad antitrust investigation into Google's business practices, including search and advertising.

Kohl and Lee questioned Google Chairman Eric Schmidt at a contentious hearing in September. Schmidt's answers, along with testimony from two Google competitors, raised questions that should be explored by regulators, the senators said in their letter to FTC Chairman Jonathan Leibowitz.

"We believe these allegations regarding Google's search engine practices raise important competition issues," wrote Kohl and Lee, whose committee has been conducting its own review of Google. "We are committed to ensuring that consumers benefit from robust competition in online search and that the Internet remains the source of much free-market innovation."

At the hearing, senators heard complaints from the chief executives of local review site Yelp and online product comparison site Nextag that Google abuses its search engine dominance at the expense of smaller competitors.

Asked by Lee during the hearing whether Google "cooked" its search results on three product-comparison websites to favor Google Shopping results, Schmidt responded, "Senator … I can assure you we have not cooked anything."

Schmidt strongly denied the accusations. But Kohl and Lee said Monday that there were enough questions to warrant an FTC review.

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Photo: Google Inc. Chairman Eric Schmidt takes the oath at a Senate antitrust subcommittee hearing in September. Credit: Associated Press.

Facebook settles privacy complaint with Federal Trade Commission

Facebook has settled charges with the Federal Trade Commission that it deceived users by telling them they could keep their information on Facebook private and then repeatedly making it public, according to the agency.

The settlement of an eight-count complaint requires Facebook to warn users about privacy changes and to get their permission before sharing their information more broadly, according to the FTC. Facebook has agreed to 20 years of privacy audits, it said.

"Facebook is obligated to keep the promises about privacy that it makes to its hundreds of millions of users," Jon Leibowitz, chairman of the FTC, said in a written statement. "Facebook's innovation does not have to come at the expense of consumer privacy. The FTC action will ensure it will not."

In a blog post, Facebook founder and Chief Executive Mark Zuckerberg said Facebook is committed to giving its users "complete control" over what they share and with whom.

"I also understand that many people are just naturally skeptical of what it means for hundreds of millions of people to share so much personal information online, especially using any one service.  Even if our record on privacy were perfect, I think many people would still rightfully question how their information was protected. It's important for people to think about this, and not one day goes by when I don't think about what it means for us to be the stewards of this community and their trust," he wrote. "I'm committed to making Facebook the leader in transparency and control around privacy."

Facebook also has created two new positions to make sure it takes privacy seriously, Zuckerberg said.

Erin Egan, a former partner with Covington & Burling, will become chief privacy officer for policy. Michael Richter, Facebook’s chief privacy counsel, will take on a new role as chief privacy officer for products.

Privacy watchdog Jeff Chester, executive director of the Center for Digital Democracy, said the settlement shows that Facebook "has long misled users and the public."

But another frequent critic, Rep. Edward Markey (D-Mass.), applauded the settlement.

"The settlement's privacy protections will benefit Facebook users and should serve as a new, higher standard for other companies to follow in their own efforts to protect consumers' privacy online," Markey said in a written statement. "When it comes to its users' privacy, Facebook’s policy should be: ‘Ask for permission, don’t assume it."

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Photo: Facebook Chief Executive Mark Zuckerberg greets a student as he arrives to speak at Harvard University. Zuckerberg, who dropped out of Harvard in 2004, met with students as part of an East Coast trip to recruit for the social networking company. Photo credit: Kelvin Ma / Bloomberg 

Facebook close to privacy settlement with FTC

Facebook may be preparing to settle charges with the Federal Trade Commission that it deceived users when it changed its privacy settings, a person with knowledge of the settlement, who was not authorized to discuss it, told The Times.

The proposed settlement would require Facebook to get consent from users if it makes changes that are retroactive. The Wall Street Journal first reported the settlement Thursday.

As part of the settlement, which is in part based on a complaint from the Electronic Privacy Information Center, Facebook would have to submit to independent privacy audits for 20 years. (EPIC also filed a supplemental complaint).

The settlement is awaiting final approval from the agency commissioners. Google agreed to a similar settlement in March and agreed to audits.

Spokesmen for Facebook and the FTC declined to comment.

The investigation began in December 2009 when Facebook changed its privacy settings, making parts of users' profiles -- such as name, photo, gender and friends -- public by default.

FTC settles privacy complaints against Web firms

 

The Federal Trade Commission said Tuesday that it settled complaints alleging that two online companies  deceptively collected personal information from consumers, including children.

The founder of Skid-e-kids, a social networking site for preteens, was accused of violating the Children's Online Privacy Protection Act by gathering the names, ages, and email addresses from 5,600 children without obtaining prior parental approval.

In a separate case, the FTC alleged that online advertiser ScanScout Inc. used deceptive practices to track consumers’ behavior online even when they followed the company's instructions to block the data-gathering. The company uses information to deliver targeted advertisements to the consumer.

The FTC vowed early this year to take a tougher stance on protecting consumers’ privacy online. In March, the commission began cracking down on behavioral ads, which collect personal data from a user’s computer browser and then send targeted ads based on their interests.

In addition, federal regulators are looking to update rules regarding children’s privacy to reflect the changing online landscape in which social networks and smartphone apps are becoming more prevalent.

Last month, the FTC proposed tougher privacy protections for children younger than 13, broadening requirements covering the collection of personal information by websites and online apps, as well as how they obtain parental approval.

In the complaint against Jones O. Godwin, the operator of Skid-e-kids, the FTC alleged that he allowed children to register without seeking permission from their parents. The company’s online privacy policy says that children must provide a valid parent’s email address in order to register on the website. But the FTC found that the 5,600 children who registered were able to provide personal information, including their birthday, email address, first and last names, and city of residence without parental consent.

Godwin was ordered to pay a $100,000 civil penalty, which can be reduced to $1,000 if he complies with oversight provisions.

In the ScanScout case, the FTC alleged that the online advertiser deceptively claimed that consumers could opt out of targeted ads by changing their computer’s Internet settings to block cookies. What ScanScout used were so-called Flash cookies, which could not be blocked.The FTC ordered ScanScout to provide a user-friendly way for consumers to opt out of being tracked.

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Google agrees to buy Motorola Mobility for $12.5 billion

Google Inc. has agreed to buy Motorola Mobility Holdings Inc. for $12.5 billion in what would be the company's largest acquisition to date.

Motorola Mobility is one of the biggest hardware supporters for Google's Android mobile operating system, making both smartphones and a tablet computer, called the Xoom, that run on the software.

The deal would also give Google a hardware-manufacturing business, possibly to compete better with rival Apple Inc., which makes both the hardware and software for products such as the iPhone and the iPad tablet.

Google said that its $12.5-billion price would be a premium of 63% over the closing price of Motorola Mobility shares on Friday and that the proposed purchase was unanimously approved by the boards of directors at both tech firms.

In the proposed deal, Motorola Mobility would remain a licensee of Android and Android would remain open and available for use by other hardware manufacturers at no cost, as it is now. Google said it would run Motorola Mobility as a separate business.

"We expect that this combination will enable us to break new ground for the Android ecosystem," said Andy Rubin, who as Google's senior vice president of mobile oversees Android. "However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open-source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices."

Google is currently being investigated by the Federal Trade Commission and the Justice Department for its dominance in advertising, search and possibly other businesses. Android is the most widely used smartphone OS in the world and its usage is still growing, so federal regulators are likely to look into possible antitrust concerns with the deal.

Larry Page, Google's CEO, made his case for the deal in a company blog post, noting that Google would benefit from owning patents held by Motorola as it has been fighting against what he called "anti-competitive patent attacks on Android." These efforts, Page said, included the teaming up of Microsoft and Apple to buy mobile tech patents from the bankrupt Canadian firm Nortel.

"The U.S. Department of Justice had to intervene in the results of one recent patent auction to 'protect competition and innovation in the open source software community' and it is currently looking into the results of the Nortel auction," Page said. "Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies." 

The takeover is also subject to approval by regulators in the European Union and Motorola Mobility’s stockholders. Google said it hopes to see the purchase approved and finalized by the end of 2011 or early 2012.

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Photo: Sanjay Jha, CEO of Motorola Mobility Holdings, speaks in San Francisco in 2010. Credit: Paul Sakuma / Associated Press

Google hires FTC patent expert

Google may not have paid a lot of attention to patents for years. But the Internet search giant is certainly paying attention now.

Google has hired one of the Federal Trade Commission's top patent lawyers, the company confirmed Tuesday.

Suzanne Michel is leaving her job as deputy director of policy planning at the FTC to join Google's legal team. Why this matters? Google is gearing up for a patent war.

Michel worked for the FTC for more than 11 years, concentrating on patent antitrust issues and patent policy, and was the author of a patent report the FTC issued in March that examined the patent system in the U.S. with the goal of promoting innovation.

Google recently bought more than 1,000 patents from IBM Corp. to defend itself from an onslaught of patent infringement litigation.

Apple, Microsoft and other rivals outbid Google last month in the biggest patent auction in history, $4.5 billion for more than 6,000 patents and applications for wireless technologies purchased from bankrupt Nortel Networks. Published reports say the U.S. Justice Department is examining the sale to see whether it harms competition in the smartphone industry.

Google is also embroiled in high-stakes patent litigation with Oracle Corp. The company sued Google last year in federal court, claiming its Android mobile device software infringes Oracle's Java patents, which it picked up in 2010 when it bought Sun Microsystems Inc. Oracle is seeking billions of dollars in damages. The case is set for trial in October.

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Google's Eric Schmidt to testify at September Senate hearing

We have a date: Google Chairman Eric Schmidt will face a U.S. Senate antitrust subcommittee hearing Sept. 21.

The hearing, held by the Senate's Subcommittee on Antitrust, Competition Policy and Consumer Rights is officially called "The Power of Google: Serving Consumers or Threatening Competition?" and so far, the only witness announced is Schmidt, who will face questions regarding the Internet giant's dominating role in the online search market and search advertising.

The Senate announced the hearing's date and time Thursday.

Schmidt ended a 10-year run as Google's CEO in April, stepping aside for co-founder Larry Page.

Google is also dealing with an antitrust investigation conducted by the Federal Trade Commission, as well as questions from the Justice Department over its proposed purchase of AdMeld, an online advertising firm.

Google has previously said it will cooperate with federal regulators and investigators as they probe into its businesses.

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Photo: Google's Eric Schmidt at the World Economic Forum annual meeting in Davos, Switzerland, in January. Credit: Tomohiro Ohsumi/Bloomberg

Google's Eric Schmidt agrees to testify at Senate antitrust hearing

Google Inc.'s Eric Schmidt has agreed to testify at a Senate antitrust subcommittee hearing, ending the company's standoff with the panel's leaders over which executive would face expected tough questioning about the Internet giant's role in the online search marketplace.

Schmidt, the company's chairman and former chief executive, agreed Friday to appear after the subcommittee's chairman, Sen. Herb Kohl (D-Wis.) and its top Republican, Sen. Mike Lee of Utah, pressed Google to send one of its highest-ranking officials.

The senators were unhappy with Google's original offer of Chief Legal Officer David Drummond, saying they would "strongly prefer" questioning Schmidt or Chief Executive Larry Page as part of the subcommittee's examination of antitrust complaints about the company. Kohl and Lee implied in a June 10 letter to Schmidt and Page that the subcommittee might subpoena one of them.

So with the Federal Trade Commission having launched a formal investigation into Google's business practices, Schmidt agreed to testify at a hearing sometime in September, Kohl and Lee said.

"This will allow us to have a truly informational and thorough public hearing," Kohl said.

Lee said he looked forward "to discussing a number of important issues relating to Google and Internet search competition."

Kohl and Lee had wanted to hold the hearing before the Senate left for its August recess, but agreed to move it to September to accommodate Schmidt's schedule.

Google spokesperson Mistique Cano said the company was happy to accommodate the subcommittee's request for a top executive. "We appreciate their willingness to work with us to make it happen this fall," she said.

Google had been under pressure to deliver a high-ranking executive after Kohl and Lee sent a strongly worded letter June 10 to Schmidt and Page.

"Google is the preeminent provider of Internet search, and a hearing on this important topic would be incomplete without the direct perspective and views of one of Google's top two executives, each of whom has played a prominent role at the company throughout the last decade," Kohl and Lee wrote. "We strongly prefer to have one of you as the witness representing Google at the hearing, which will address fundamental questions of business operations rather than mere legal issues."

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Photo: Google Inc. Chairman Eric Schmidt at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho. Credit: Bloomberg.

Google says FTC is investigating its business

Google is being investigated by the Federal Trade Commission, the tech titan said Friday morning.

But just what the FTC is investigating, Google said, isn't yet clear to the maker of both the world's leading search engine and smart-phone operating system, Android.

"It's still unclear exactly what the FTC's concerns are, but we're clear about where we stand," Amit Singhal, a Google Fellow, said in a company blog post.

The FTC isn't the only government agency looking into Google's business practices. According to Reuters, the attorneys general of California, Ohio and New York are in the early stages of probing whether Google has used its leading share in the search and online-advertising markets to fight off rivals.

Reports of the FTC considering a deeper look into Google's business have been out as far back as April.

Singhal, in his post, said Google will keep running itself amid the investigations.

"We aim to provide relevant answers as quickly as possible -- and our product innovation and engineering talent have delivered results that users seem to like, in a world where the competition is only one click away," he said. "Still, we recognize that our success has led to greater scrutiny.

"Yesterday, we received formal notification from the U.S. Federal Trade Commission that it has begun a review of our business. We respect the FTC's process and will be working with them (as we have with other agencies) over the coming months to answer questions about Google and our services."

Singhal also emphasized that Google, despite its dominance, is not forcing anyone to use its products and services.

"Search helps you go anywhere and discover anything, on an open Internet," he said. "Using Google is a choice -- and there are lots of other choices available to you for getting information: other general-interest search engines, specialized search engines, direct navigation to websites, mobile applications, social networks, and more."

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-- Nathan Olivarez-Giles
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Photo: Google headquarters in Mountain View, Calif. Credit: Tony Avelar / Bloomberg

Apple gets FTC approval to bid on Nortel mobile patents

Apple Inc. has been given clearance by the Federal Trade Commission to bid on more than 6,000 patents belonging to the bankrupt Nortel Networks Corp. that could be crucial to the future of smartphones and tablets.

The FTC announced Thursday that it and the U.S. Justice Department had given Apple antitrust approval ahead of the normal 30-day waiting period that the Hart–Scott–Rodino Antitrust Improvements Act calls for in the case of such potential purchases.

The Nortel patents will be made available for auction Monday. Google, Apple's smartphone and tablet rival, which makes the hugely popular Android operating system, will also be bidding on the patents, which cover a wide range of technologies used in mobile phones, tablet computers, cellular infrastructure, online search and even social networking.

Google has made a $900-million bid for the patents -- but that will be merely a starting point for the auction, which is seen as vital for the tech and telecommunications industry, as well as the Web search giant, which has a thinner patent collection than its competitors.

Google's weaker patent portfolio has left the Android maker vulnerable to suits over the operating system; some of which it has lost and others which are ongoing.

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Photo: Steve Jobs, Apple's chief executive, waves to the audience before unveiling the iCloud storage system at the Apple Worldwide Developers Conference in San Francisco on June 6, 2011. Credit: David Paul Morris / Bloomberg