Fair Play: Yelp's Revenge


FAIR PLAY

Antitrust deciphered

By Liz Crampton

Yelp

Yelp Inc. this month accused Google Inc. of skirting agreements with the government intended to curb anticompetitive behavior, a move that raises questions about whether antitrust regulators should revisit closed investigations more often and better monitor corporate behavior.

Yelp claims in a letter to the Federal Trade Commission that Google violated a promise not to scrape content from third-party sites. Yelp says that in just one hour of searching, it found 385,888 images of local businesses posted by Yelp users that appeared in Google’s local search results, a violation of a settlement with the FTC. The agency a few years ago agreed to drop its investigation after extracting promises from Google. Google agreed to allow third-party website owners to opt out of their content showing up on Google web pages for five years. And yet, Yelp says, they’re obviously not following through.

It’s a familiar refrain. “Behavioral fixes” – promises made to the government by a company to stop an investigation or to clear a merger – might not actually work. How can regulators be sure the companies are doing what they say they’ll do? If the case is closed, does the government really need to babysit the company? The DOJ and the FTC, as officials regularly remind the antitrust bar, don’t have unlimited resources.

The issue surfaced in another case in 2011 when the Justice Department instructed Comcast Corp. to share its cable TV programming with online competitors like Netflix. Comcast’s merger with NBC Universal hinged on that condition and others. A year later, Comcast was fined by the Federal Communications Commission for failing to adequately promote the availability of stand-alone broadband services, a violation of the agreement.

Antitrust regulators could take a page from DOJ fraud investigators, who are increasingly turning to third-party corporate monitors to ensure that companies abide by their promises. As my colleague Eleanor Tyler wrote in a white paper earlier this year, the process is voluntary and the DOJ usually allows the company a say in naming the monitor. (They are, after all, paying for it.) But that’s a complicated relationship. Corporate monitors say there’s not model for how it should work, and companies are often confused by the absence of guidelines.

In the Google investigation, which lasted for months in 2012, some FTC commissioners were concerned that Google's use of content from competing websites, such as user reviews and star ratings, might chill companies’ innovation. The settlement was designed to address those concerns, and Google agreed to comply for a period of five years and regularly report how it complied with the terms.

Yelp now claims Google violated that agreement and is still scraping image content of local businesses posted by Yelp users and displaying the pictures as part of Google’s own search results.

“A conservative estimate suggests Yelp content is being displayed in violation of Google’s commitments to the FTC at the rate of thousands of violations per minute,” the online rating service said in a Sept. 11 letter to acting FTC Chairman Maureen Ohlhausen. The letter was also delivered to FTC Commissioner Terrell McSweeny, several lawmakers, and state attorneys general.

The question of whether to reopen this investigation may fall on deaf ears. Ohlhausen was serving as a Republican commissioner at the time of Google investigation. She voted with the Democratic majority in favor of closing it. But in a separate statement at the time, she said that she's "not aware of any evidence that the alleged scraping resulted in either a decline in traffic from Google to the parties complaining about the scraping or any reduction in innovation."

What’s Happening This Week

The Roosevelt Institute is hosting today an event to discuss how competition policy should apply to the tech and telecom sectors. FTC Commissioner Terrell McSweeny will be there.

McSweeny will also appear at Global Competition Review’s conference on Thursday, along with acting Assistant Attorney General of the Antitrust Division Andrew Finch.

This week marks the official end of McSweeny’s seven-year term, but she plans to stay on until the White House names her replacement. No word on when that’ll be.

Quote of the Week

“We look at competition policy and monopoly issues as fundamental to almost any political or economic discussion you’re going to have in America today,” said Barry Lynn, founder of think tank the Open Markets Institute.

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