Several of Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) controversial business practices were recently exposed in a leaked FTC document published by The Wall Street Journal. The document, which was part of the FTC's investigation of Google in 2012, reveals some tactics which arguably betray the company's motto of not "being evil."
Let's take a look at three disturbing revelations, and whether the FTC was right to dismiss the investigation in 2013 after Google made a few minor changes.
1. Google's exclusive deals and search bias
The FTC staff found restrictions in Google's deals with websites which prevented them from signing subsequent deals with competing services like Microsoft (NASDAQ:MSFT) Bing. If companies wanted to advertise on other search platforms, they had to buy pricier plans than Google-exclusive partners.
Those charges were eventually dropped due to a lack of clear evidence, but Google revised its policies to give advertisers more control over their own ad campaigns.
2. Scraping rival sites for content
The FTC also investigated accusations that Google copied content from rival sites to improve its own. For example, Google would "scrape" Amazon's (NASDAQ:AMZN) product rankings and use that data to rank its own results for product searches. Google was also accused of scraping "snippets" of reviews from Yelp (NYSE:YELP) and Tripadvisor (NASDAQ:TRIP) to enhance its own search results.
The FTC also found that Google "threatened to remove" sites like Yelp and Tripadvisor from its search results unless they allowed their sites to be scraped. Google responded to the charges by letting companies opt out of "specialized" searches but remain in the search engine.
This strategy has troubling implications for Twitter (NYSE:TWTR), which recently let Google directly jump to tweets and bypass its News Feed, which it uses to generate ad revenue from Promoted Tweets, Trends, Accounts, and Videos.
3. Search bias
The FTC also looked into claims that Google favored its own shopping, local, travel, and finance deals over its rivals' sites in search rankings.
The FTC staff acknowledged that Google's actions caused "harm to many vertical competitors." The commission later found that Google "improved the quality of search results" for competing sites, although Google continued promoting its first party services over third party ones.
The FTC's inaction is bad news for any website which directly competes against a Google service. In video searches, for example, Google could boost its own YouTube results while sinking rival platforms like Orange's (NYSE:ORAN) Dailymotion. It could funnel visitors to its own local delivery service instead of Amazon's.
Is this Google's Achilles' heel?
The FTC won't reopen the investigation just because the report leaked. However, it gives the European Union more ammo to use against Google, which it proposed to split into several smaller companies last November.
Back at home, Google could face the wrath of state governments. Mississippi's Attorney General Jim Hood is already building an antitrust case against the company. Speaking to legal and policy newsletter MLex, Hood called antitrust legislation Google's "Achilles' heel," and that his office planned to "keep gathering evidence" against the company.
In response to that investigation, Google sued the state of Mississippi to freeze Hood's case, arguing that it would suffer "irreparable harm" if it had to answer the subpoena. However, if more state governments follow Mississippi's example, Google could face a lot of pressure at home and abroad, which could force the FTC to reopen its investigation.
The road ahead
Google could soon find itself in the same hot seat that Microsoft was forced into in the early 2000s. Back then, Microsoft was accused of leveraging its dominant market share in PC operating systems to promote the use of Internet Explorer over rival browsers.
Today, Google owns the largest search engine and mobile OS in the world, giving it tremendous clout in Internet search and advertising. One could argue that Google's primary product is its search engine, and it should have the right to promote its own services before competing ones. However, that argument -- which is similar to the one Microsoft once made about Windows -- hasn't held up well in courts.
Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google (A shares), Google (C shares), Orange (ADR), TripAdvisor, Twitter, and Yelp. The Motley Fool owns shares of Amazon.com, Google (A shares), Google (C shares), Orange (ADR), and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.