Google’s record of obstructing government investigations is growing by the day. The latest example comes from Texas, where it is being reported that Greg Abbott, the Texas Attorney General, has launched legal proceedings against Google for failure to co-operate with the state’s antitrust investigation into Google’s search and advertising monopoly (The State of Texas v. Google Inc., case number D-1-GV-12-000887, in the District Court of Travis County, Texas).
The Texas Attorney General (an office established in 1836 to defend the laws and constitution of Texas and represent the state in litigation) launched the antitrust investigation two years’ ago. The focus is on Google’s monopolisation of search advertising, which is the closest equivalent to the EU’s prohibition on abuse of a dominant position.
The investigation also covers Google’s search discrimination and manipulation practices described in the recent case as “preferential placement of Google vertical search services, demotion of rivals in Google’s search results rankings and the unauthorized use of user reviews, star ratings and other content that Google scrapes from competing vertical search sites”, as well as “whether exclusivity provisions in Google’s contracts with web site publishers unlawfully foreclose competition for search advertising syndication deals”.
The new legal proceedings relate to Google’s refusal to hand over more than 14,500 documents which are necessary for the Attorney General to carry out the investigation. The formal requests for these documents were made in July 2010 and May 2011.
Google has argued that the documents are covered by lawyer-client privilege, which allows the client to decline to produce them in court proceedings or government investigations. The Attorney General does not accept this claim and believes that Google’s claims are improper and overreaching in an attempt to prevent disclosure of sensitive and relevant documents. For example, Google claimed privilege for an email between non-lawyer Google executives “discussing their recommendation to change how Google uses review content taken from competing sites” (aka scraping).
Refusals to co-operate fully with government investigations seem to have become the default setting for Google.
In January 2012, it was reported that the most senior Korea antitrust official intended to impose maximum fines on Google for obstructing an investigation. This followed reports that when the Korea Fair Trade Commission raided Google’s offices in Seoul in September 2011, the company obstructed the investigation by deleting key files from PCs and asking its employees to stay away from the office. In May, it was reported that further raids had been carried out, again in response to Google obstructing the KFTC’s investigation.
In April 2012, the US Federal Communications Commission fined Google $25,000 after concluding the company deliberated impeded an investigation into Spy-Fi, the Google project that scooped up emails, passwords and other personal information transmitted over unsecured wireless networks in homes located around the world.
In May 2012, the French Data Protection Authority (the CNIL) wrote to Google expressing its regret that responses to earlier questionnaires concerning Google’s privacy policies were “often incomplete or approximate”.
Apart from the general concern that obstructing and delaying government investigations may mean justice delayed or denied for Google’s victims, there is a specific concern that Google does not feel bound by the same rules as apply to other companies. It is bad enough to ignore the complaints of customers, it is quite another to act in disregard of government agencies.
There is another angle to this which is also extremely interesting. The Texas antitrust investigation is remarkably similar to that being undertaken in the EU. In May, the European Commissioner responsible for Competition Policy (and Commission Vice President), Joaquin Almunia announced that he had written to Eric Schmidt, Google’s Executive Chairman, informing Schmidt that he had reached the preliminary conclusion that there are (at least) four areas “where Google business practices may be considered as abuses of dominance” and therefore unlawful under EU competition law:
- Google’s preferential treatment of its own vertical search services over those of competing offerings.
- Google’s unauthorised copying of content belonging to vertical search services and using this content on its own properties.
- Google’s de facto exclusivity with partner websites requiring them to obtain most or all of their search advertising from Google, foreclosing competing intermediation services.
- Google’s restrictions on portability of online search advertising campaigns from its AdWords platform to competing platforms, particularly for software developers.
It will not have escaped the attention of the European Commission officials undertaking this investigation that the rules on lawyer-client privilege are much narrower in the EU than in the US. The main difference in European antitrust investigations is that communications between lawyers and their clients are only privileged if the lawyer is from an independent law firm (ie not in-house) and is a member of a recognised EU Bar. Therefore, even if some of Google’s claims for privilege are upheld by the Texas court, similar claims would be very unlikely to be upheld in Europe. It is just possible that Google has inadvertently handed the European Commission a roadmap to find out exactly what has been going on at the heart of Google.
ICOMP Legal Counsel
*The full Attorney General’s complaint, can be viewed here.