September 22, 2011
Google's Eric Schmidt Appears Before The Senate Judiciary Committee
Google’s chairman, Eric Schmidt, appeared before the Senate Judiciary Committee yesterday. The witness testimony is available in prepared remarks and an archived webcast. The hearing was titled “The Power of Google: Serving Consumers or Threatening Competition?” Other witnesses included Jeff Katz, the Chief Executive Officer of Nextag, Jeremy Stoppleman, Co-founder and Chief Executive Officer of Yelp, Thomas O. Barnett, Partner at Covington & Burling LLP, and Susan A. Creighton, Partner in Wilson, Sosini, Goodrich & Rosati, PC. Barnett is a former Bush administration antitrust official and represents Expedia. Creighton is part of a firm that acts as outside counsel to Google.
The main question raised by the hearing is whether Google is too dominant in search and whether it uses that search leverage to favor its own properties. The statements and testimony of the parties were somewhat predictable in their points of view. For Schmidt, Google does not cook its results to favor itself. For the others, the dominance represents the ability to steer searchers to Google’s own sites to increase revenue and profits. Senator Mike Lee (R-UT), was hostile to Schmidt. Lee’s background included representing 1-800-Contacts in actions against Google and pushed for laws limiting the use of keywords. According to the Wall Street Journal (subscription), a Lee spokesman said the Senator’s call for hearings was not related to his past work. I’ll take him at his word and leave it at that.
All in all, the hearing did not reveal much in terms of new or startling information. Is Google a monopoly? Schmidt said “We’re in that area,” which could be taken as Google may or may not be considered a monopoly. The company is big enough, has undisputed dominance in search, but whether Google is categorically a monopoly, that answer was not forthcoming in any definitive form.
Some questions and answers were related to what Google could do voluntarily to prevent government intervention into its practices, and even these were somewhat vague despite the biases of the parties on the issue. Google tried to portray itself as a provider of information while its antagonists tried to portray it as a company that leveraged its properties to increase revenue. If anything, no one could consistently agree on such things as what would be the defining market to measure Google’s dominance and practice. Was it a local advertiser? A national advertiser? Did it try to manipulate the use of content from sites such as Yelp in Google Places? Was any of this in the best interest of consumers? Google is free after all. Does that matter? There was a lot of discussion, but no real answers in the legal sense.
Then there were self-serving questions such as whether Stoppelman would start Yelp in today’s search market. He responded that he would not. Who knows, really? Schmidt was at times making similar statements. He apologized for the business mistakes that Google made in accepting ads for Canadian pharmacies that led to a $500 million fine. What else was he going to say? That Google pushed it until the revenue the ads generated was no longer worthwhile?
It was a good show on the part of everyone involved, and possibly a preview of the positions the parties will stake out in the real inquiries that are starting up in the European Union and before the Federal Trade Commission. The Senate may be in a position to explore policy issues, but I can’t imagine legislation aimed at Google and its practices coming to the fore without being driven by some administrative or court ruling in place. I wouldn’t be so sure that legislation would be forthcoming even then. Otherwise, the Senate hearing was a nice bit of competent theatre with very important people playing the actors. How anyone will view it will depend on their biases on the issues and Google. [MG]