Google Senate Hearings: The Post-Game Show

Earlier this morning I predicted that today’s three-hour Senate subcommittee hearing on Google and competition would be more theater than fact-finding. (You can read Danny’s live blog here and here.) And while there were lots of numbers and statistics thrown around by the witnesses (many of them inaccurate) there were few new facts; it was mostly a he said/she said affair.

Google’s Eric Schmidt, the first witness, came off better than most of the senators questioning him. One of his major themes was that Google creates jobs and economic value and regulation might impair job creation in the future.

Ranking Members Believe Google Is a Monopolist

Chairman Herb Kohl, a Democrat, and Utah Republican Mike Lee both seemed to agree that Google was a monopolist that needed to be restrained. Lee aggressively went after Schmidt like a cross-examining lawyer at trial. Lee presented a scatter plot chart showing that Google’s shopping/product search results consistently appeared in the same position on the page, while competitors’ results fluctuated.

Schmidt tried to explain Google’s universal search concept but Lee sought to trap Schmidt into admitting there was a “double standard” where Google uses one algorithm for third party content and a separate standard for its own content (e.g., Shopping, Maps). In other words Lee argued that Google didn’t hold its own content to the same standards or rules, which was inherently unfair in Lee’s line of reasoning.

Throughout the hearing the implication or subtext of many of the questions was that Google should not be allowed to promote its own products or services “above” those of competitors. Repeatedly the notion of Google having a “conflict of interest” was brought up: Google will always favor its own properties because that way it makes more money. Google Lawyer Susan Creighton, testifying on the second panel, disputed this assumption, although the issue wasn’t thoroughly explored.

A number of times public statements attributed to Google’s Marissa Mayer were used to support the claim that Google favors its own content. Schmidt was not as skilled in handling those remarks.

A surprising moment came when Senator Al Franken asked Schmidt about Google Places on mobile devices and Schmidt didn’t seem to know that Google Places was an app for both Android and the iPhone. Otherwise Schmidt was generally well spoken and dealt with most of the panel’s questions quite effectively.

Unintended Comedy from Senators

Both humorous and unseemly, several senators explicitly asked Google to consider their states for projects before launching into questioning. Most obnoxious was New York’s Charles Schumer (Democrat) who first offered a kind of commercial for New York and then asked Schmidt to consider investing in the Hudson River Valley, all but implying it was a condition of his support.

Connecticut Senator Richard Blumenthal (Democrat) kept repeating that he “hasn’t made up his mind yet” almost as often as Mike Lee cited his conservative credentials and professed his love of free markets as a kind of preamble to his questions. It was a Saturday Night Live sketch in the making.

Things Heat Up with the Second Panel

When it came time for the second panel the hearings became more contentious and more interesting. The panel included Thomas Barnett, attorney for parties in the anti-Google FairSearch coalition, Yelp CEO Jeremy Stoppelman, Nextag CEO Jeff Katz and Google attorney Creighton all seated next to one another. None of the witness were neutral or disinterested.

Creighton lent some historical perspective to antitrust investigations involving technology companies and tried to make a case that the market was too dynamic for regulators to get involved. She cited MySpace’s rise and fall as evidence of the market’s capriciousness and as a reason that government shouldn’t intervene; today’s monopoly power is tomorrow’s also-ran. She argued that there would be potential unintended consequences from regulation and argued that it takes 80 percent market share — over time — to be considered a monopoly.

She was also the first one (I believe) to bring up Facebook as a powerful competitor to Google, incorrectly arguing that most SMB advertising online happens on Facebook. Still, the argument that Facebook is a counterweight to Google is an important one for the company.

Her immediate opponent on the panel Thomas Barnett argued that nobody could compete with Google in search and thus should be regulated — period. He also professed his love of free markets and warned that regulation now would stave off more onerous or intrusive future regulation, which he argued was inevitable. Mike Lee embraced this argument.

Google Was Good . . . but Now They’re Not

Nextag CEO Katz credited Google with being a good partner in the past but now it was more self-interested and less fair and reasonable. I wish he had used the word “evil.” Alas he did not.

The most effective testimony against Google came, however, from Yelp CEO Jeremy Stoppelman. He described a timeline of events in which Google and Yelp were partners. But after that ended, Google later began including Yelp reviews in Places (a competitive product) without permission. Yelp said that the company asked that those reviews be removed, which Google declined to do without removing Yelp from the index entirely. It was only after the FTC investigation was announced, said Yelp, that Google complied.

Barnett had a similar story about TripAdvisor.

Yelp’s testimony made Google look like an unfair competitor using its dominant market power to wring concessions from a smaller company dependent on it for 75 percent of its traffic. Stoppelman added that he probably wouldn’t start Yelp today given Google’s push into local and ability to drive traffic to its Places results. The message is that competition and the ability to compete are being diminished by Google’s behavior.

While none of these remarks were new, for those who hadn’t been paying attention (including many in Washington) they may be surprising and harmful to Google’s image. For those inclined to believe that Google is anti-competitive, they will confirm that viewpoint.

Looking Like a Long Road Ahead for Google

Committee Chair Kohl implied there may be more hearings. But the hearings are PR largely. The real action is with the FTC’s antitrust investigation. Given what came out today it seems almost certain to me that there will be some kind of case ultimately brought against Google. The hearings telegraphed some of the arguments that will be developed by the FTC.

Google might be able to preempt such a case by suggesting voluntary remedies. Indeed, the panelists were asked, including Schmidt, what should the remedy be if Google were found liable. There were few good answers and few specifics.

Franken suggested a technical oversight committee could supervise Google’s algorithm changes for fairness. Nextag’s Katz suggested that all of Google’s content should be labeled “promotional” to distinguish it from other organic content on the page. Senator Lee implied that Google’s own properties should be subjected to the Google algorithm, as though they were third party content sites.

However mostly people spoke in slogans (“level the playing field”) and generalities. Nobody suggested that Google should be banned from placing its own content on SERPs or that it should lose control over the layout and content on the page.

There seemed to be a quasi-consensus among committee members that Google enjoyed an excessive concentration of market power. But there was far less clarity about what to do about it. What does seem clear is that today’s hearings were just the opening scene in what may become a very long drama for both Google and government.

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Related Topics: Channel: Industry | Features: Analysis | Google: Antitrust | Google: Critics | Google: Legal | Legal: Regulation | Top News

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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  • http://www.organicintent.com Andrew Irvin

    “Google later began including Yelp reviews in Places (a competitive product) without permission.”
    It’s ironic that Yelp is complaining that Google is preferring their own results in SERPs when Yelp reviews were constantly coming up first through Google Places until YELP asked to be removed.

  • http://www.gravytrain.co.uk Matthew

    This becomes a tricky line for both Google and their opponents.

    If any changes are forced onto Google (either through legislation or other pressure) it’ll probably serve only to improve Google’s perception among consumers. Google could essentially use it as PR for themselves.

    There’s no doubt that for business, Google’s position can be a threat, but the problem is that for everyday consumers, Google don’t threaten them in any way. As long as Google keeps that the case, it’ll be difficult for anybody to turn public opinion against them.

  • http://ThoughtsCubed.com Greg J Powers

    The site belongs to Google. They should be able to place there own content where they want on the pages. As longs as they do not spam the results. If Google places there own content within the search results the same rules should apply for ranking the content. OR label the content a Google promotion.

    BUT the balance of the page is Google’s to do what they want.

    Any regulatory over site of the Google algorithm would destroy Google and search as a whole.

  • http://www.wickcentric.com W.P.

    Remember, being a monopoly isn’t illegal, using the power gained by it to reduce competition is.

    http://en.wikipedia.org/wiki/Monopoly

    Greg, Typo in next to last sentence: loose = lose.

  • http://www.wickcentric.com W.P.

    Typo in my mention of your typo. :)

    Typo in the next to last paragraph.

  • http://europeforvisitors.com Durant Imboden

    Why not solve the “monopoloy” problem by having all searches go through a government server farm, which would randomly assign each user’s search to Google, Bing, or any other company that wanted to get into the search business? Users might not get the results they wanted, but Google’s current and future rivals would be shielded from competition. (Surely that’s the intention of antitrust law?) As a bonus, the government could charge a tax (oops, a “fee”) for each search, so it would be a win-win situation: Every wannabe search engine–no matter how bad–would be protected from Google’s monopoly (well, not really a monopoly, but why quibble?), and our friends in Washington would be able to nibble away at the national debt with new “search service fees” instead of new taxes.

  • Matt McGee

    Thx WP, all fixed. Appreciate it.

  • http://gamepitstop.com kurnia lim

    If I’m Eric schmidt, I will say: Monopolis is when there’s no other Search engine except Google. Google belong to me, what website I want to show it’s my right, we never force you to use our search engine, for people that don’t like our result can feel freely move to Bing or other SE, For Webmasters, you can tell you audience to search on other SE, because we won’t show your site at first page, and don’t optimize for google, if you still do that, don’t whining when you get pandalized or sandboxed. once again, it’s our SE, our server, what we want to do with our server, it’s our right, you don’t pay us, even we pay taxes, you can use our SE or you can GTFO and STFU. simple

    Google own it, you can use it freely, no charge, you don’t pay for the server, what’s your right to tell them what they have to do. So funny, like I said, you don’t like the result,, you can freely kiss Bill Gates wth his Bing.

  • TimmyTime

    “Google own it, you can use it freely, no charge, you don’t pay for the server, what’s your right to tell them what they have to do”

    kurnia lim,
    how are things in your country? Good? I’m glad for you.

    Now, here we have different laws and what some people think does not matter.

  • http://www.homecliq.com Zakary Venturo

    Any investigation is going to realize blended search is being done by all the search engines. Bing has its version of Google Places too, and the fact remains, Yelp probably has a better chance on Google than it does on Bing.

    The difference, however, is that Google has a much bigger part of the search market share, so they are the target. Yelp, for instance, received all this traffic because of this big imprint of search market share, and the reason they put up a fuss was due to brand recognition, not because nobody was finding them through these blended search results.

    Google often talks about producing search results useful to the user because this is their customer. This is why Google Places and Google Products have come about.

    I expect interesting changes however. I think the peak inside search from the government will make an impact, but the rules to do so can’t just effect Google, it will effect Bing and Yahoo as well, because it is a look at blended search more than anything else.

    Also, Google Places has had some negative focus from other sources, like the NY Times, spotlighting issues with real companies competing with fake ones.

    Something is going to take place, but how and what is yet to be seen. But it certainly won’t be all about regulation.

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