U.S. Escalates Google Case by Hiring Noted Outside Lawyer

Eric Schmidt (R), who was Google's CEO for 10 years before assuming the role of executive chairman last year, is pictured in a court sketch being questioned by Google lawyer Robert Van Nest as U.S. District Judge William Alsup (L) watches during a trial., a photo by Pan-African News Wire File Photos on Flickr.

April 26, 2012

U.S. Escalates Google Case by Hiring Noted Outside Lawyer

By DAVID STREITFELD and EDWARD WYATT
New York Times

Federal regulators escalated their antitrust investigation of Google on Thursday by hiring a prominent litigator, sending a strong signal that they are prepared to take the Internet giant to court.

The Federal Trade Commission is examining Google’s immensely powerful and lucrative search technology, which directs users to hundreds of millions of online and offline destinations every day. The case has the potential to be the biggest showdown between regulators and Silicon Valley since the government took on Microsoft 14 years ago.

Then as now, the core question is whether power was abused. The agency’s inquiry has focused on whether Google has manipulated its search results, making it less likely that competing companies or products appear at the top of a results page.

A spokeswoman for Google, which is based in Mountain View, Calif., declined to comment.

Federal Trade Commission officials cautioned that no decision had been made about whether to bring a formal case against Google. But the hiring of Beth A. Wilkinson, a former Justice Department prosecutor who played a lead role in the conviction of the Oklahoma City bomber Timothy McVeigh, immediately catapulted the investigation to another level. The agency has hired outside litigators only twice in the last decade.

“It’s a watershed moment when you hire someone like this,” said David Wales, a former Fed-eral Trade Commission official now in private practice with Jones Day. “This shows Google that if it doesn’t give you the remedy you want, you’re going to litigate.”

Several antitrust experts compared the hiring of Ms. Wilkinson — who has brought about 40 major cases in government and private practice and won them all — to the government’s hiring of David A. Boies to represent it against Microsoft.

“It increases the likelihood that there will be a case,” said Douglas Broder, a law partner at K&L Gates in New York and the author of several textbooks and articles on antitrust law.

The Microsoft case in the late 1990s transformed the tech industry, reining in its most powerful company and allowing for the rise of new companies like Google. Now Google wields the same sort of power that Microsoft once did, and is under the same sort of scrutiny.

It has been involved in one privacy controversy after another over the last year. Indeed, the announcement of the hiring of Ms. Wilkinson — made by the Federal Trade Commission’s chairman, Jon Leibowitz, at a meeting in San Francisco with reporters — eclipsed Google’s formal response earlier Thursday to a fine by the Federal Communications Commission for obstructing a separate investigation.

“In an important case, you want to do a thorough investigation,” Mr. Leibowitz said, calling Ms. Wilkinson “a world-class litigator.”

Ms. Wilkinson is a partner at the law firm of Paul, Weiss in Washington. She previously worked at Latham & Watkins, where she was co-chairwoman of the white-collar crime practice group. Her work at the F.T.C., which will be part-time, begins on Monday.

“Technology is transforming our society,” Ms. Wilkinson said in an interview. “It affects people at every level. As a mother, I see it with my kids. As a professional, I see it affecting our work. And in society, it impacts privacy, competition, our interactions with other people — just about everything.”

She added: “Working on the investigation will be a great challenge. I don’t underestimate Google.”

No one else was underestimating it Thursday either.

Mr. Broder said antitrust cases charging the abuse of a monopoly are difficult to prove.

“There is a lot of very complex economics involved,” he said. “It can be done. But Google will undoubtedly bring to bear tremendous resources itself.”

Any decision about filing a suit is likely to be months away.

“Judgments about litigation are made at the end,” said Richard Feinstein, director of the Federal Trade Commission’s Bureau of Competition. “We’re not at the beginning but we’re not at the end either.”

The general issue underlying the investigation is whether Google abuses its power in the market for Internet search. Google controls about 66 percent of the United States search market, according to comScore. Microsoft’s Bing accounts for about 15 percent of Internet searches, with Yahoo gathering 14 percent.

Competitors have said that Google at times adjusts the algorithm that produces its search results to lower the likelihood that a link to a competitor or a potential competitor for its products appears near the top of the results.

For example, if Google were to program its system so that a consumer’s search for “washing machines” is more likely to produce as its top result a link to Google-related shopping sites, that could be interpreted as putting its competitors at a disadvantage.

Questions have also been raised about whether Google has done the same thing with the paid advertisements that appear on the right-hand side of a Google search page.

While critics might say that Google is manipulating its results to hinder competitors, Google might assert that it is tweaking its model to provide the best results to consumers.

“Google’s power in my view comes not from its large market share, but from the fact that consumers are unable to evaluate the product,” said Mark R. Patterson, a law professor at Fordham who focuses on antitrust law. “It would be difficult to decide in many cases whether the results are exclusionary in a bad way or in a way that helps consumers.”

Google argues the latter, and has said many times that “competition is a click away.” When the company announced in June that the F.T.C. had begun a review of its business, it noted that it makes public much information about how its rankings work.

Earlier Thursday, Google formally denied obstructing a Federal Communications Commission investigation into whether privacy laws had been violated in its Street View project, but agreed to pay a small fine anyway.

David Streitfeld reported from San Francisco. Edward Wyatt reported from Washington.