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DealBook: Hertz Pulls Offer for Dollar Thrifty

October 27, 2011 by Leave a Comment

Hertz and Dollar-Thrifty operate rent-a-car lots near the Detroit Metropolitan airport in Romulus, Mich.Rebecca Cook/ReutersHertz and Dollar-Thrifty operate rent-a-car lots near the Detroit Metropolitan airport in Romulus, Mich.

The car rental company Hertz announced on Thursday that it was withdrawing its offer for the Dollar Thrifty Automotive Group, citing market conditions and Dollar Thrifty’s decision to pursue a share buyback program.

Still, Hertz, which has been seeking a deal with Dollar Thrifty for many months, said it was interested in a deal if it could gain regulatory clearance and settle on a fair price.

“Hertz continues to believe that a merger with Dollar Thrifty is in the best interests of both companies,” the company said in a statement.

Hertz said that “once antitrust clearance has been obtained, Hertz will reassess the appropriate price and other terms of the proposed transaction based on Dollar Thrifty’s share repurchase program, Dollar Thrifty’s performance, Dollar Thrifty’s outlook and prevailing market conditions at that time.”

Earlier this month, Dollar Thrifty announced that it had not received a suitable offer and was taking itself off the market. It also said it was pursuing an independent strategy, which included a buying back as much as $400 million in stock.

The decision by Hertz to officially bow out closes — at least temporarily — a multiyear tale for Dollar Thrifty.

Hertz, which began discussions with Dollar Thrifty back in 2009, first submitted a bid of $41 a share in April 2010. A bidding war ensued, and by late September 2010, Avis had upped its offer to $53 a share, trumping the Hertz bid by several dollars.

But the sale was bogged down by regulatory hurdles. While Avis tried to work through antitrust issues, Hertz returned to the table in May with a $72 a share offer, valued at $1.91 billion at the time.

The process continued to drag on, as Hertz also struggled to get approval from the Federal Trade Commission. Weary of the protracted battle, Dollar Thrifty asked the bidders to submit their best and final offers in August.

In a letter to Avis and Hertz, Dollar Thrifty’s chief executive, Scott L. Thompson, expressed optimism that a deal could be made. He cautioned, however, that Dollar Thrifty’s shareholders did not want to be on the hook for any antitrust risks like a higher breakup fee.

In a sign of frustration, Mr. Thompson also noted that the company had spent some $30 million over the last few years dealing with the barrage of takeover offers.

But Hertz did not raise its offer, while Avis officially backed out in September.

Dollar Thrifty concluded in October that it was better to go it alone. In a statement, Mr. Thompson said, “The fact remains that they have not made a proposal that addresses our board’s requirements.”

He added, “Having received no acceptable offer after conducting an unprecedentedly open process with clearly articulated requirements, it is time for us to move forward on a stand-alone basis.”

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DealBook: Justice Dept.’s Key Officials in Pursuing the AT&T Lawsuit

September 2, 2011 by Leave a Comment

Christine A. VarneyCarolyn Kaster/Associated PressChristine A. Varney and James M. Cole, below, presided over the government’s decision to block the planned merger of ATT and T-Mobile.James M. ColeChip Somodevilla/Getty Images

The names of 25 government lawyers are listed on the last page of the Justice Department’s lawsuit seeking to block the proposed $39 billion merger between ATT and T-Mobile USA.

But two senior lawyers who played crucial roles in bringing the lawsuit are nowhere to be found on the complaint.

Christine A. Varney, the government’s former top antitrust lawyer, oversaw the investigation into the planned merger until July, when she said she was leaving the Justice Department to join the law firm of Cravath, Swaine Moore. When she departed, the investigation was in its final stages but the government had not yet decided to bring a lawsuit.

And James M. Cole, the No. 2 official in the Justice Department, made the ultimate decision to bring what is the Obama administration’s most significant antitrust enforcement action to date. He announced the lawsuit at a news conference Wednesday, one of his more prominent public appearances since he assumed the post in January.

“The leadership transition has been seamless, and the right decision was reached in this case,” Mr. Cole said before he introduced Sharis A. Pozen, the acting head of the antitrust unit. “We are seeking to block this deal in order to maintain a vibrant and competitive marketplace.”

When Ms. Varney announced her departure, some lawmakers and consumer advocates had expressed disappointment that the Obama administration had not been tougher in antitrust. Instead of bringing legal actions, the division approved a number of large mergers, including Comcast and NBC Universal, as long as the companies made certain concessions.

And the Federal Trade Commission, which also has antitrust oversight, stole some of the Justice Department’s thunder in starting an investigation into whether Google had engaged in anticompetitive practices.

The legal action against ATT appeared to ease the concerns of antitrust enforcement advocates.

Ms. Varney had been skeptical of the T-Mobile acquisition since it was announced in March, said two people familiar with her thinking who requested anonymity because they were not authorized to discuss the case.

“Christine Varney set the table for this decision,” said Bert Foer, the president of the American Antitrust Institute. “We are delighted that the administration is committed to the vigorous use of antitrust even at a time of economic difficulties.”

President Obama’s appointment of Ms. Varney in January 2009 was seen as a step toward fulfilling his vow to “reinvigorate antitrust enforcement.” He had also criticized what he said was the Bush administration’s weak record in challenging mergers and failing to bring monopolization cases.

Ms. Varney was a Clinton administration antitrust veteran, having served as a former commissioner at the F.T.C. She joined the Obama White House from the Washington law firm of Hogan Hartson, where she focused on antitrust work.

One of Ms. Varney’s first moves was to name as her deputy Ms. Pozen, a fellow antitrust lawyer at Hogan Hartson and former colleague at the F.T.C. When Ms. Varney left the Justice Department, Eric H. Holder Jr., the attorney general, named Ms. Pozen as her temporary replacement. Ms. Pozen and another government lawyer, Joseph F. Wayland, led the decision to sue ATT.

Ms. Pozen then took the case up the Justice Department’s chain of command. Mr. Holder had recused himself from the investigation for unspecified reasons, so the final decision fell to Mr. Cole.

Mr. Cole, who wears a mustache like his boss, joined the Justice Department last December from the law firm Bryan Cave, where he was a white-collar defense lawyer.

Jumping between government service and private practice throughout his career, Mr. Cole, 59, is a longtime friend of Mr. Holder. The two worked together in the Justice Department earlier in their careers.

His confirmation as deputy attorney general was a bumpy one. It was delayed in the Senate in part because lawmakers expressed concern over his role as the independent monitor for the American International Group in the years leading up to the $182 billion bailout of the insurance giant. Mr. Cole’s work did not involve many of the issues at the center of A.I.G.’s collapse, including credit-default swaps.

As for Ms. Varney, she has moved to New York, where she starts her job at Cravath on Tuesday. She will advise the law firm’s clients on antitrust issues related to mergers.

Under government ethics rules, Ms. Varney is banned for two years from appearing in any matter before the Justice Department. And she is permanently prohibited from working on anything related to the ATT and T-Mobile deal, though at the moment Cravath is not involved in the case.

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F.T.C. Criticizes Agreements That Delay Generic Drugs

September 1, 2011 by Leave a Comment

Some drug makers are using an indirect method to delay competition from low-cost generic products by promising not to introduce their own generic versions if a potential competitor delays its entry into the market, the Federal Trade Commission said in a report on Wednesday.

Until lately, the so-called pay-for-delay cases have focused mostly on cash payments by drug companies to settle patent litigation with generic competitors in return for concessions on when to enter the market. These new agreements add a twist to the patent settlements.

The industry contends they are legal business decisions.

The F.T.C. says they are illegal sweetheart deals that cost consumers $3.5 billion a year.

“Win-win for the companies, but lose-lose for consumers,” the F.T.C. chairman, Jon Leibowitz, said in an interview on Wednesday after the agency released a 270-page study on so-called brand-name generics.

The Generic Pharmaceutical Association called the study part of a “misguided policy to ban pro-consumer patent litigation settlements.” The system works, the industry trade group said, noting that 17 of 23 expected generic drug introductions this year, like Lipitor and Plavix, will be the result of patent settlements.

The F.T.C. report, based in part on industry documents, found that generic drugs made by the original company, when competing against a truly generic drug in the first 180 days of competition, reduced overall prices by 4 percent to 8 percent.

That was unsurprising, Mr. Leibowitz said. But it was disturbing, he said, how often agreements not to compete have been used to compensate generic firms for delaying entry to the market.

In the 12 months ended Sept. 30, 2010, 15 drug patent settlements combined a promise not to market a brand-name generic drug with a generic company’s agreement to delay its entry to market, the report said.

“Instead of saying, ‘Here’s $200 million, go away,’ they’re saying they could penalize them $200 million, but they won’t, so go away,” Mr. Leibowitz said.

The Pharmaceutical Research and Manufacturers of America, a Washington trade group, said the report proved that brand-name generics help reduce prices.

“However, it is unfortunate that the F.T.C. used this potentially valuable report on the benefits to patients of authorized generics to further its attack on patent settlements,” the group’s senior vice president, Matthew D. Bennett, said in a statement.

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Trade Commission Challenges a Hospital Merger

August 22, 2011 by Leave a Comment

The lawyers have put the transaction under a virtual microscope, taking hundreds of hours of testimony intended to show that the merger would stifle competition and drive up health care costs. In the process, they are scrutinizing details of the Toledo health care market that might seem more appropriate for investigation by state legislators or county commissioners.

Executives from the ProMedica Health System of Toledo and St. Luke’s Hospital in Maumee, a suburb, say their merger, which was consummated last August, will allow them to collaborate and provide care that is “more efficient and cost-effective” — an overarching goal of the new health care law espoused in scores of speeches by President Obama and administration officials.

The trial here, before the chief administrative law judge of the Federal Trade Commission, has implications far beyond Toledo. It illustrates the risks that arise when competing health care providers try to collaborate, as they are racing to do all over the country, in part because of incentives built into the new health law.

Federal officials are seeing a wave of mergers, consolidations and joint ventures in the health care industry. More and more hospitals are buying up medical practices that competed with one another. Groups of doctors, with the same or different specialties, are merging their practices.

Patricia M. Wagner of Epstein Becker Green, one of the nation’s largest health care law firms, estimates that “50 percent to 60 percent of physicians and hospitals are exploring ways” to team up. The health care law encourages such alliances and joint ventures but provides no exemption from antitrust law, which bans mergers that may substantially “lessen competition.”

Matthew J. Reilly, a senior lawyer at the trade commission, and his team of 14 lawyers have been hammering away at the Ohio merger for more than two months. Armed with thousands of confidential e-mails and dozens of depositions, Mr. Reilly said the merger would increase ProMedica’s market share and “bargaining leverage,” so it could force health insurance plans to pay higher rates to St. Luke’s and to ProMedica’s other hospitals.

St. Luke’s chose to join ProMedica even though it concluded that the affiliation could “stick it to employers, that is, to continue forcing high rates on employers and insurance companies,” according to an internal document unearthed by the commission.

“Soon after the acquisition was consummated,” Mr. Reilly said, “ProMedica approached certain health plans to obtain higher reimbursement rates.” The higher rates, he said, are typically passed on to consumers in the form of higher premiums, co-payments and other costs.

Numerous witnesses, including insurance executives and employers, have testified that Toledo has some of the highest health care costs in Ohio. In addition, they say that ProMedica’s rates are among the highest in the Toledo area, while St. Luke’s is a low-cost, high-quality provider. The government’s goal is to undo the merger and restore the competition that existed when St. Luke’s was independent.

In March, a federal district judge in Toledo issued a preliminary injunction blocking ProMedica and St. Luke’s from continuing to carry out their consolidation until the trade commission could hold a full administrative trial on the merits of the case. The judge, David A. Katz, said the injunction was needed because otherwise ProMedica would be free to carry out “its plans to increase hospital rates, terminate employees at St. Luke’s and eliminate important clinical services” there.

ProMedica, which has 11 hospitals in Ohio and Michigan and annual revenue of $1.7 billion, has described itself to a credit rating agency as having “market dominance” in the Toledo area. It owns and operates one of the largest commercial health plans in Lucas County, which includes Toledo, and is the largest employer of doctors there. For all these reasons, ProMedica says, it is “uniquely positioned for health care reform.”

Randy Oostra, the president of ProMedica, said the merger would benefit patients in many ways. “We could coordinate care,” Mr. Oostra said. “We could improve quality at St. Luke’s by adopting electronic health records and using clinical protocols to standardize the delivery of care. But the F.T.C. has stopped us in our tracks.”

ProMedica said it came to the rescue of St. Luke’s by promising to invest $35 million in the hospital, which it said was losing money and could not have survived on its own. One problem, Mr. Oostra said, was that prices charged to commercially insured patients at St. Luke’s were too low — “substantially below market rates” and, he said, below the cost of providing services.

The trade commission says it is investigating at least a dozen cases in which competing groups of doctors are linking up with one another or with hospitals under a single corporate umbrella.

“Such arrangements have the potential to generate cost savings and quality benefits for patients,” said Richard A. Feinstein, director of the Bureau of Competition at the F.T.C. “However, in some cases, the arrangements can create highly concentrated markets that may harm consumers through higher prices or lower quality of care.”

A study issued last week by the Center for Studying Health System Change, a nonpartisan research institute, said hospital employment of doctors was growing rapidly, “driven largely by hospitals’ quest to increase market share and revenue.”

The commission expressed “serious concerns” about plans by a hospital in Spokane, Wash., to acquire two competing groups of cardiologists. And it has challenged the merger of two hospitals in Albany, Ga.

For all practical purposes, the commission said, the Georgia transaction is “a merger to monopoly” because the hospitals, Phoebe Putney Health System and Palmyra Park, are the only two competing hospitals in the Albany area.

The Toledo case focuses on the market for inpatient hospital care and inpatient obstetrical services in Lucas County, where ProMedica has four hospitals, including St. Luke’s.

The government says the merger will enhance ProMedica’s dominant position in the county, increasing its share of the market for general inpatient hospital services to 58 percent, from 47 percent, and raising its share of inpatient obstetrical services to 80 percent, from 71 percent.

Jeffrey C. Kuhn, general counsel for ProMedica, insisted that his hospitals could not simply sharply increase prices. “If ProMedica charges too much,” Mr. Kuhn said, “health plans and employers can shift to other hospitals in the area, which have excess capacity.”

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F.T.C. Is Said Near a Move on Google

June 24, 2011 by Leave a Comment

For several months, lawyers at the commission have gathered information about Google’s search and advertising business and whether the way it orders search results and related advertising constitutes illegal anticompetitive behavior.

This month, commissioners privately debated whether to authorize its Bureau of Competition to issue subpoenas to Google and are close to moving forward. As of Thursday afternoon, commission formalities remained before the investigation is officially started, but two people with knowledge of the matter said a final decision to issue the subpoenas was imminent in a matter of days. They agreed to speak only on the condition of anonymity because the action was not yet final and because it could be postponed if the commission required additional information.

The commission’s action was first reported online by The Wall Street Journal on Thursday. Spokesmen for Google and the Federal Trade Commission declined to comment.

Google has been the subject of repeated antitrust inquiries in recent years, most of them involving proposed acquisitions. In the United States, the Federal Trade Commission and the Justice Department have conducted reviews of Google’s acquisitions of the Internet advertising companies DoubleClick and AdMob.

More recently, the Justice Department reviewed Google’s purchase of ITA Software, a travel services company. In that case, the government cleared the merger only after Google agreed to conditions and continuing government monitoring. Just this month, the Justice Department began an investigation into Google’s $400 million acquisition of Admeld, which provides advertising services to publishers.

In 2008, the Justice Department also blocked a proposed advertising pact between Google and Yahoo because of concerns about its effect on competition. Last year, it also opposed a sweeping court settlement between Google and publishers and authors, in part because the agreement would have given Google too much power over the market for digital books.

But unlike those cases, which affected only small portions of Google’s business, the current investigation focuses on Google’s main business: Internet search and advertising. If it leads to charges against the company, its impact could be more far reaching, according to antitrust experts.

“This is the main act,” said Ted Henneberry, a former trial lawyer at the Justice Department and partner at Orrick Herrington and Sutcliffe.

If Google is found to have abused its dominant position in Internet search and advertising, the F.T.C. would not levy fines. But it has the authority to issue cease-and-desist orders for violations of the trade commission act, and it can also file a lawsuit seeking a preliminary injunction against certain behaviors. The Justice Department and the F.T.C. share jurisdiction over antitrust issues. But as a matter of practice they alternate as to which agency takes the lead in an investigation.

Critics of Google have been pushing for a broad antitrust investigation into the company’s search business, where it controls about two-thirds of the market in the United States. In the past, company executives have said that the increased scrutiny from regulators is a normal byproduct of its success.

Addressing its search results specifically, company officials say that its ranking decisions are made to benefit users and that, as with any ranking system, some parties will be unhappy with their placing.

The company’s market share has remained steady in recent years. According to the research firm comScore, Google controlled 65.5 percent of the market in May; Yahoo had 16 percent and Bing had 14 percent.

Last year, the European Commission opened its own antitrust investigation into Google’s search business, after complaints from smaller companies, which claimed that Google downgraded their sites in its search results while giving favor to its own Web services. That investigation is pending.

By making a site more or less likely to rise to the top of its search results, Google theoretically could affect how much traffic a Web site got and therefore how much it could charge for advertising. If another company’s Web site for, say, a travel service, competes with an ancillary business of Google’s, manipulation of search results could be considered anticompetitive.

Google’s main search-advertising business accounts for most of the company’s revenue, which totaled $29.3 billion last year.

FairSearch.org, an organization that represents several of Google’s critics including the Web sites Expedia, Travelocity, Kayak and Microsoft, said it was encouraged by reports of the F.T.C. inquiry.

“Google engages in anticompetitive behavior across many vertical categories of search that harms consumers,” the organization said in a statement. “The result of Google’s anticompetitive practices is to curb innovation and investment in new technologies by other companies.”

According to comScore, Google in May became the first company to have one billion unique visitors to its site in one month, a rate that was up 8 percent over a year earlier. Google’s share price is down 19 percent since the beginning of the year.

Edward Wyatt reported from Washington, and Miguel Helft from San Francisco.

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DealBook: Avis Budget to Buy Avis Europe for $1 Billion

June 14, 2011 by Leave a Comment

Avis Budget Group said Tuesday that it would buy Avis Europe for $1 billion, in a sign that the car rental company may be moving on from its long campaign to take over Dollar Thrifty.

The deal, which values Avis Europe at £3.15 ($5.16) per share, is set to close in October, pending the customary approvals.

Avis Budget said it had received “irrevocable” commitments from the target company’s board as well as its controlling shareholder, D’Ieteren, a publicly traded Belgian company that holds nearly 60 percent of Avis Europe.

“The transaction reunites the global operation of the Avis and Budget brands under one corporate umbrella, and is both financially and strategically compelling,” said Ronald L. Nelson, chief executive of Avis Budget Group, predicting that operating synergies would reach $30 million a year.

“Because Avis Europe and Avis Budget generally do not have operations in the same jurisdiction, the acquisition is not expected to face significant antitrust obstacles,” he said.

Antitrust obstacles have been holding back Avis’s $1.8 billion offer for Dollar Thrifty, made last September and under review by the Federal Trade Commission.

It is also being challenged by Hertz, which has offered $2.24 billion to combine with Dollar Thrifty, the fourth-largest rental car company in the United States.

Both Hertz, the second-largest, and Avis Budget, the third-largest, having been trying to rival Enterprise, which dominates the sector.

But now Avis is looking abroad.

“While Avis Budget will continue to monitor the Dollar Thrifty situation, the company’s focus squarely will be on completing and integrating the significant acquisition of Avis Europe,” the car rental firm said, noting that it had “made progress” with the Federal Trade Commission.

The deal with Avis Europe, which draws 86 percent of its revenue from France, Germany, Italy, Spain and Britain, would give the newly combined group yearly revenue of about $7 billion and operations in 150 countries.

The European company, listed in London and based in the British town of Bracknell, employs more than 5,000 people and reported revenue of more than 1.5 billion euros last year, based on seven million rental transactions. It holds 18.3 percent of the European market, and has a presence in the continent’s 75 major airports.

Avis Europe shares rose 113 pence, or 57.7 percent, to 310 pence in early morning trading in London.

Avis Budget will finance the acquisition with a combination of cash reserves, debt and the issuance of $250 million in Avis Budget common stock.

The American group hired Morgan Stanley and Citigroup as its advisers and Kirkland Ellis as its legal counsel. Avis Europe hired Barclays Capital as its sole financial adviser, and chose Freshfields Bruckhaus Deringer as legal counsel.

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U.S. Clears Google Acquisition of Travel Software

April 8, 2011 by Leave a Comment

In a victory with strings attached for Google, the Justice Department proposed a settlement on Friday under which it would approve the search giant’s $700 million acquisition of ITA Software, a maker of travel search software.

After an intensive, eight-month investigation, regulators decided that Google could complete the acquisition, but outlined conditions that will limit how the company uses the technology, licenses it to competitors and handles complaints. The department’s proposed settlement will now undergo judicial review.

The deal is Google’s latest antitrust battle as it faces growing scrutiny from regulators worldwide. It recently agreed to 20 years of privacy audits by the Federal Trade Commission in a settlement over deceptive privacy practices in its introduction of Buzz, the social networking tool. And a federal judge in New York rejected a settlement that would have allowed it to create a digital library, saying it would give too much control to Google’s search engine.

The settlement over the ITA acquisition would be in place for five years, after which Google can use ITA’s technology however it chooses. But because it allows the government to monitor how Google offers travel search, the settlement it would open the door for regulators to collect information that could be used in a broader antitrust case.

“This merger monitoring actually creates an ongoing investigation of sorts,” said Rebecca Arbogast, an analyst with Stifel Nicolaus. “Anything related to search or travel, the government’s going to be permitted to get information, which looks very much like an investigation.” She compared it to early moves the government made in the antitrust case against Microsoft.

The Justice Department said the acquisition, without conditions, would have broken the law by lessening competition and reducing choice for consumers. Under the settlement, Google must continue to license the flight software to other companies and continue to develop ITA products and offer them to other companies. The settlement also said that Google must erect a firewall so it cannot see sensitive information from competitors, and develop a formal reporting mechanism for complaints that Google is acting unfairly.

“It’s important to us that ITA continue with business as usual, providing great service to its business partners,” Jeff Huber, Google’s senior vice president for commerce and local, wrote in a company blog post. “We indicated last July that we would honor ITA’s existing contracts. Today we’ve formally committed to let ITA’s customers extend their contracts into 2016.”

The department’s approving of an acquisition with restrictions is common, said Prof. Herbert Hovenkamp, an antitrust expert who teaches at the University of Iowa College of Law. “The Justice Department operates under what is sometimes called a ‘fix it first rule,’ which is that if you want us to approve your deal, we’re going to instruct you on some changes or terms you have to make.”

Professor Hovenkamp added, “It’s a victory for both sides because the parties get to go ahead with the merger and the Justice Department gets to go to the public and say, ‘We’ve protected you from the anti-competitive possibilities.’ “

Google announced its intention to buy ITA in July, and said at the time that it was bracing for close regulatory scrutiny.

ITA, which was started at M.I.T. in the 1990s, makes software to search for flights and compare prices. Many airlines and online travel agents license the software, including Orbitz, Kayak, American Airlines, United Airlines and Microsoft’s Bing Travel.

Google has said it does not plan to sell airline tickets itself. Instead, it will develop a flight search engine, similar to Microsoft’s Bing Travel, that sends shoppers to the airlines’ own Web sites or to online travel agencies.

It also wants to develop a more advanced kind of flight search. For instance, a traveler could tell Google to find someplace to go that was snowy and fewer than five hours away for less than $300 round-trip, and Google would present different itineraries.

Opponents of the acquisition, including Microsoft, Kayak and Expedia, said they worried that Google would not renew ITA’s licenses so their sites would no longer be able to use ITA’s software. Google could also show its travel results above links to other online travel sites, according to FairSearch, a group formed by companies opposing the deal. Ms. Arbogast said she expected the settlement to include government oversight of Google travel search results, which it did not. 

“The merger review did not impose any substantive search neutrality conditions on Google,” she said. “That remains to be decided another day.” 

FairSearch called the decision “a clear win” in a statement. “The department concluded Google’s unrestricted control over ITA’s key flight search technology would have violated the antitrust laws,” it said. “By putting in place strong, ongoing oversight and enforcement tools, the department has ensured that consumers will continue to benefit from vibrant competition and innovation in travel search.” 

Google has repeatedly said that it would renew the licenses and strike new deals, and that it would not poach traffic from other travel search sites because they get only a small percentage of their traffic from Google.

Christine A. Varney, head of the Justice Department’s antitrust division, has been aggressive about pursuing antitrust cases. But these issues become trickier online, where competition is a click away, an argument that Google often makes.

Google is still fighting other antitrust battles. The Texas attorney general is investigating whether Google has skewed search results in favor of advertisers or its own products and the European Union is investigating Google’s domination in search. Microsoft filed an antitrust complaint against Google in the European Union last month.

Google’s biggest loss was in 2008, when the Justice Department prepared to file a lawsuit to block a search advertising partnership involving Google and Yahoo, prompting Google to walk away from the deal.

Google also suffered a defeat last month when a federal judge in New York rejected a $125 million legal settlement the company had made with groups representing authors and publishers so that it could pursue its ambition to digitize every book ever published and make them widely available. In rejecting the deal, the judge cited antitrust, copyright and other concerns.

But Google has also had its share of victories in antitrust matters. Last year, the Federal Trade Commission approved Google’s $750 million acquisition of AdMob, the mobile advertising company, only after Apple eased antitrust concerns by buying a similar start-up. In 2007, the F.T.C. approved Google’s $3.1 billion acquisition of DoubleClick, the display advertising firm, after Google executives were called to defend it in Congress.

Article source: http://www.nytimes.com/2011/04/09/technology/09google.html?partner=rss&emc=rss

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Google Introduces New Social Tool and Settles Privacy Charge

March 31, 2011 by Leave a Comment

Google introduced its latest social tool on Wednesday, the same day it settled with the Federal Trade Commission over charges of deceptive privacy practices last year for Buzz, the social networking tool in Gmail.

Under the settlement, Google agreed to start a privacy program, permit audits for 20 years and face $16,000 fines for any future privacy misrepresentations. This is the first time the F.T.C. has charged a company with such violations and ordered it to start a privacy program, the commission said.

The new social networking tool, called +1, lets people annotate Google search results and ads so they can recommend Web pages to friends and acquaintances. It is the biggest feature yet in Google’s long-awaited social networking toolkit.

The introduction of +1 and the F.T.C. charges highlight two of Google’s biggest challenges: heightened competition from Facebook, and near-constant criticism from privacy advocates and policy makers over its practices.

As it tries to make its services more social, the company has come under intense scrutiny from people concerned about its broad access to personal information. But at the same time, it is in the unusual position of racing to catch up with a rival, as Facebook captures more of the time, information and ad views of Internet users.

Of particular concern to Google is the fact that many people now turn to Facebook with search queries, like seeking the best place to go on vacation, because they trust the advice of friends more than that of an anonymous search engine.

With +1, which began rolling out to users Wednesday, Google wants to personalize search results.

In an interview about the new tool, Matt Cutts, a principal search engineer at Google, took great pains to emphasize that the company had learned from the privacy outcry after it introduced Buzz, which let Gmail users share status updates, photos and videos.

The debut of Buzz in February 2010 unleashed a barrage of criticism from users and privacy advocates because it automatically included users’ e-mail contacts in their social network.

Mr. Cutts repeatedly stressed that anything people shared with +1 was public.

“If you wouldn’t feel comfortable telling your friends and broadcasting this to the world, then of course you don’t have to click the +1 button,” he said.

Still, some privacy advocates were wary.

“It’s ironic it’s coming out on the same day” as the F.T.C. settlement, said John M. Simpson, an advocate at Consumer Watchdog, a critic of Google. “It seems to me there are some of the same kinds of issues that happened with Buzz. The key is how transparent and open it is about what’s going to be shared and how you share it.”

The name +1 came from Internet slang that people use to indicate that they approve of what someone has said.

People logged into their Google accounts will be able to click a +1 button next to search results to publicly recommend the pages. People perusing results will see how many Google users recommended a page and see names and photographs of people they know. Google is considering whether to use the recommendations to influence the order of search results.

Google will find people that users know through Gmail and chat contacts, as well as people users follow on Google Reader or Buzz. Later it will include contacts from other social sites like Twitter and Flickr. But it will not include contacts from Facebook, because that information is not publicly shared on the Web, Mr. Cutts said. Google has been in a tussle with Facebook over sharing information between the two services.

People will also be able to recommend ads. And if someone recommends a search result that links to a hotel’s Web site and the hotel later advertises on Google, that person’s recommendation will appear with the ad.

“That’s going to be very powerful,” said Bryan Wiener, chief executive of 360i, a digital advertising agency. “A friend’s recommendation is going to have greater influence on consumer behavior than a marketer’s message.” He said it could also lower the cost of ads because Google charges less for ads that are clicked on more.

Google’s +1 is remarkably similar to Facebook’s Like button, which lets people recommend Web sites and ads to their friends.

Later, Web publishers will be able to include a +1 button on their pages, just as many include a Facebook Like button today.

Article source: http://www.nytimes.com/2011/03/31/technology/31ftc.html?partner=rss&emc=rss

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