An ethics watchdog thinks that the FTC may have misled Congress about how it protected Google, and highlights how the White House went into panic mode to limit the damage to the giant ad slinger over a newspaper report last year.

Last March, Google learned that the Wall Street Journal was about to publish details of how the Federal Trade Commission shut down an investigation into Google – contradicting some of the recommendations of its own investigators. The information had arrived by accident: a confidential report had been mistakenly included in a huge bundle of documents passed to the Journal, with every other page redacted.

The half-readable report nevertheless showed that staff had conducted an investigation of Google’s behaviour, similar to the one conducted by the EU*, which began in 2010. The report concluded Google was anti-competitive and recommended the FTC pressed charges.

FTC staff concluded that Google had violated the Sherman antitrust act in three areas, and continuing its behaviour would have “lasting negative effects on consumer welfare.” But their recommendations were overruled by the FTC’s high priesthood, the Commissioners, who are political appointees. Instead they shut down the probe and allowed Google to make some modest “voluntary” pledges, saying at the time these would deliver “more relief for American consumers faster than any other option.”

On March 18 last year, with publication imminent, a private meeting was hastily arranged between President Obama and Google chairman Eric Schmidt. The meeting was scheduled at 2:11pm for a meeting 24 hours later, on March 19. The meeting and the publication of the WSJ’s explosive story took place the next day.

Schmidt and Google lobbyist Johanna Shelton met three more times in the next six days. Shelton emailed the FTC’s head of staff complaining that the FTC’s silence on the WSJ story left her “deeply troubled” and “puzzled”. The email was among several which emerged in response to a public records request.

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