Google Inc defended itself against allegations of threatening competition in a Senate Judiciary committee hearing held in Washington recently. The hearing titled- “The Power of Google: Serving Consumers or Threatening Competition” was conducted in the presence of Chairman Herb Kohl and ranking member Mike Lee.
The Allegations Against Google-
The search engine giant was accused of monopolizing the web. Questions were raised against policies adopted by Google and how it operates. Whether it is truly the promoter of consumer-oriented content or is it just interested in destroying its competition. The company was represented by Eric Schmidt, Executive Chairman, who acted as the first witness.
The Complainants–
Three Internet companies have brought these charges against Google. These are-Nextag Inc., Yelp Inc. and Expedia Inc. They claim that Google is trying to overcome the compeGoogle Inc defended itself against allegations of threatening competition in a Senate Judiciary committee hearing held in Washington recently. The hearing titled- “The Power of Google: Serving Consumers or Threatening Competition” was conducted in the presence of Chairman Herb Kohl and ranking member Mike Lee.
The Allegations Against Google–
The search engine giant was accused of monopolizing the web. Questions were raised against policies adopted by Google and how it operates. Whether it is truly the promoter of consumer-oriented content or is it just interested in destroying its competition. The company was represented by Eric Schmidt, Executive Chairman, who acted as the first witness.
The Complainants–
Three Internet companies have brought these charges against Google. These are-Nextag Inc., Yelp Inc. and Expedia Inc. They claim that Google is trying to overcome the competition represented by them by unfairly punishing them on its search engine. They believe that Google abuses its dominance on the Web, by driving people who search to its own sites, that compete with theirs. The CEO of Nextag, Jeff Katz is believed to have said that Google also prevents his company's site from bidding on the prominent ads that show up next to search results for various products. These companies have alleged that since Google sees them as threats to their company and that is why it brings them down.
One of the accusers, Yelp Inc. has given this statement in the regard- “Because Google competes against Yelp to provide consumers with the best information about local businesses, these government groups have asked Yelp to discuss our experiences with Google’s conduct.
We have responded to these requests and told officials that we believe Google has acted anti-competitively in at least two key ways: by misusing Yelp review content in their competing Places product and by favoring their own competing Places product in search results.”
And The War Of Words Begins!
The Accusation- Google Promote Its Own Products!
Chairman Herb Kohl and Mike Lee both alleged that Google was a monopolist and must be restrained. On the allegation that Google promotes its own services, Mike Lee presented a chart that showed that Google’s shopping/product search results stuck to their positions on the page, but the results of the competitors fluctuated. Lee came on aggressively about a “double standard” where Google uses one algorithm for third party content and a separate standard for its own content. The bottomline that Google did not apply its own ranking rules to its own products. The panel implied that Google should not be allowed to promote its own products or services “above” those of competitors.
The Defense–
Schmidt defended himself by explaining Google’s universal search concept. Google attorney Creighton defended the company by saying that regulators were really not needed in the internet scenario. Creighton said that in the case of technology companies, the market was too dynamic for the regulators to step in. By citing the example of MySpace’s rise and fall as evidence of the market’s changing nature. One thing which seems monopolistic today may be gone tomorrow. There is no reason for the government to intervene. She brought out the figure of 80% that was required to be considered a monopoly.
The defendant– Google's Monopoly? We have Facebook against us!
She cited Facebook as a powerful competitor to Google, however her argument that most SMB advertising online happens on Facebook was incorrect. Facebook being the competition for Google, and the case of the search engine being monopolist is ruled out.
The accusers- Facebook irrelevant in search! Google definitely monopolist in search!
The complainants lawyer Thomas Barnett argued that in search Google had no competitors. That is why it must be regulated.
The Accusation- Google Unfair On Competition!
Nextag CEO Katz said that earlier Google had been a good partner, but now it was unfair and totally self-interested. Yelp CEO Jeremy Stoppelman caused quite a few ripples. He said that after Yelp and Google's partnership ended, Google later began including Yelp reviews in Places without permission. He said that Yelp requested those reviews be removed, which Google refused to do, unless it removed Yelp from the index entirely. Google gave in only after the FTC investigation became pending. The TripAdvisor story was the same. Google was said to have used its dominant market power to get what it wanted from smaller company.
Google Unfairly Diminishes Competition!
This is what was implied in this accusation, however, Google stuck to its just algorithm.
The Verdict–
Committee Chair Kohl has hinted that more hearings are likely in the future. But according to industry experts, the FTC’s antitrust investigation will yield real results.
What If Google Was Found Liable?
How will the authorities regulate-
- A technical oversight committee to supervise Google’s algorithm changes.
- 2Nextag’s Katz suggested that Google’s content must be labeled “promotional”. This will allow the people to distinguish it from other organic content on the page.
- Senator Lee suggested that Google’s own properties must be ranked according to the the Google algorithm.
A sort of quasi-consensus was there among committee members- Google was monopolist. But what to do about it, was unclear. Lets see what the future hearings bring in! More on the hearing in this Webmaster thread.
