By Jack Nicas
Google is facing a new front in its regulatory battles after
Missouri's attorney general launched a broad investigation into
whether the internet giant's business practices violate the state's
consumer-protection and antitrust laws.
Missouri Attorney General Josh Hawley on Monday said he issued
an investigative subpoena to probe Google's collection of user
data, its use of other sites' content, and its alleged manipulation
of search results to favor its own services.
Google, a unit of Alphabet Inc., has so far skirted the scrutiny
in the U.S. that it has faced in Europe, where regulators levied a
record $2.7 billion fine against Google in June for allegedly
favoring its shopping ads in its search results. Mr. Hawley said
his investigation was in part prompted by the European fine. "We're
concerned they're engaged in a similar pattern of behavior in the
United States," he told reporters.
Google said in a statement: "We have not yet received the
subpoena, however, we have strong privacy protections in place for
our users and continue to operate in a highly competitive and
dynamic environment." It has disputed European regulators'
charges.
The Federal Trade Commission ended a nearly two-year antitrust
investigation into Google in early 2013 after the company agreed to
make some changes to its business practices for five years -- a
period that is about to expire. In the U.S., some federal lawmakers
such as Sen. Al Franken (D., Minn.) have called for new probes into
the company's power. Congressional committees are also
investigating how Russian agents allegedly used Google, Facebook
Inc. and Twitter Inc. to try to influence last year's election.
Mr. Hawley said the FTC went too easy on Google. "That seemed to
me to be short even of a slap on the wrist. Now this is why I think
there needs to be a fuller inquiry," he said in an interview. "I
don't see a lot of action coming out of Washington. I don't see a
lot of action coming out of the FTC....So I think that it's
important that some law enforcement agency actually steps
forward."
The FTC pointed to past comments from commissioners that stated
its "exhaustive investigation" into Google found the company's
practices weren't "on balance, demonstrably anticompetitive."
Mr. Hawley, a 37-year-old Republican lawyer who was elected as
Missouri's attorney general last year, announced last month that he
is running for Democratic U.S. Sen. Claire McCaskill's seat in
2018.
Some critics and competitors of Google see state attorneys
general as potentially the most likely route to regulatory action
in the U.S.
Mississippi Attorney General Jim Hood has sued Google several
times, including in January over its collection and use of data on
Mississippi public-school students who use its services. Mr. Hood
is looking closely at other aspects of Google's business and
considering further action, a person familiar with the matter
said.
Utah Attorney General Sean Reyes and District of Columbia
Attorney General Karl Racine last year called on the FTC to reopen
its antitrust investigation into Google. This year, when Mr. Reyes
was a candidate for FTC chairman, Google deployed Republican
lobbyists to dissuade Trump administration officials from naming
him to the post, according to people familiar with the matter.
Mr. Reyes said in an email that the FTC never replied to his
call for a new federal probe. "We may have to take matters into our
own hands as state attorneys general on those and possibly other
issues," he said. "In many ways, we can be more effective
investigating and if necessary, holding companies accountable at
the state level." He declined to say whether his office was
investigating Google.
States usually team up to prosecute large corporations like
Google, with bigger states like New York or California leading the
way, said New York University economics professor Nicholas
Economides. He predicted Missouri would try to recruit other states
if it seeks charges. "Google is going to be a significant case," he
said. "If it's going to be just Missouri, that would be a very
unequal fight."
States can be effective regulators. In 1998, after years of
lawsuits, 46 states agreed to a $206 billion settlement with
tobacco companies that required the firms to change their marketing
practices, among other changes.
The federal government's antitrust case against Microsoft Corp.
in 2001 began with an investigation by the Texas attorney general,
said Gary Reback, a key attorney who persuaded the Justice
Department to sue Microsoft.
European Union officials have been the most aggressive
regulators of Google in recent years, with four separate probes
ongoing.
Google has disputed antitrust allegations and said the internet
remains a competitive marketplace. The company says it has several
webpages that shows users what data it has on them and enables them
to delete data and opt out of future collection.
Mr. Hawley's examination focuses on allegations that regulators
and academics have scrutinized for years. A 2012 staff report that
was part of the FTC's investigation concluded Google illegally
pulled content from other sites and recommended the commission file
a lawsuit, The Wall Street Journal reported. Three commissioners
said they had "strong concerns" about Google's so-called scraping
behavior but opted against filing a suit.
The staff report also said Google's practice of favoring its own
services in its search results harmed competitors but would be
difficult to prosecute.
In September, reviews site Yelp Inc. sent a letter to the FTC
alleging Google was using Yelp photos for its local-business
listings, breaking a promise to not scrape content from certain
sites that was part of its FTC settlement. Yelp also sent the
letter to all the state attorneys general, and Mr. Hawley said
Monday that he would be investigating the Yelp example.
Google said at the time that if Yelp went to Google before
regulators "we would have immediately taken steps to look at the
issue and update these results -- as we're doing now."
Write to Jack Nicas at jack.nicas@wsj.com
(END) Dow Jones Newswires
November 13, 2017 17:34 ET (22:34 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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