These “default search” deals are common and Microsoft has done many of them. Like Spain and Portugal dividing up the “non-Christian world” in 1494 with the Treaty of Tordesillas, default search deals on PCs, browsers and mobile devices are essentially divided up between Microsoft and Google. Late last year Google agreed to pay Mozilla $300 million annually to remain the default search provided on the Firefox browser.

According to a client note put out last week by Macquarie Capital, the firm estimated that in 2011 Google made just over $1.3 billion in paid search revenue from its default position on iOS devices. However Macquarie says that Google paid $1 billion of that back to Apple as part of the agreement between the two companies.

Google has roughly 95 percent of the browser-based mobile search market. It said last year that it was seeing a mobile advertising revenue “run rate” of $2.5 billion. However that may grow to more than $4-$5 billion this year.

If $1.3 billion of that $2.5 billion (some of which is mobile display) is coming from iOS devices it would mean the Apple default search relationship is quite strategic and important to the health of Google’s mobile ad revenues.

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According to The Economic Times, the French commercial court “upheld an unfair competition complaint lodged by Bottin Cartographes against Google France and its parent company Google Inc. for providing free web mapping services to some businesses.”

Bottin Cartographes provides mapping services for a cost, and its website boasts several business clients such as Louis Vuitton, Airbus and several automobile manufacturers.

The French court ruling requires Google to pay $660,000 (500,000 Euros) in damages and interest to Bottin Cartographes, along with a 15,000 Euro fine. That means Google’s total cost from the ruling is about $680,000.

A Google France spokesperson says the company is still studying the court’s decision and reviewing its options, adding that Google is “convinced that a free high-quality mapping tool is beneficial for both Internet users and websites.”

As you can see from the related stories listed below, this is far from the first time that the French have raised legal issues with Google.

SOPA and PIPA are supported by a range of corporate entities and media companies that elicited these draconian bills from Congress to address global IP piracy, copyright violations and the “rogue” sites allegedly responsible. (See Chris Sherman’s comprehensive run-down of SOPA.)

Somewhat ironically, CNET parent CBS Corp. is among the companies supporting SOPA. Indeed, many of the news outlets reporting on SOPA have corporate owners that support the measure. The full list is a veritable “who’s who” of American corporations.

Google has been a vocal opponent of SOPA/PIPA since the beginning. As the tide has turned against SOPA/PIPA  in recent weeks, support for the bills in Congress has waned. In addition, the White House just came out against SOPA and PIPA in their current form.

Google’s homepage link will be another nail in the coffin of these dreadful bills. But while they may now seem dead, rest assured that like a zombie this legislation will probably rise from the grave again in some modified form. There are too many powerful entities that want to see this legislation pass.

A couple of years ago, Piper Jaffray analyst Gene Munster calculated the value of a hypothetical ad placement on Google’s homepage to be worth between $4 and $5 million (at a $15 or $20 CPM) if it actually had to be bought.

Postscript: See our follow-up stories:

• Why The Web Is Going Dark Over SOPA & PIPA
• Google Blackens Its Logo To Protest SOPA/PIPA, While Bing & Yahoo Carry On As Usual

(Photo of U.S. Capitol licensed under Creative Commons from Flickr user natalie419)

On Thursday, January 5th, U.S. District Judge Edward Davila turned down the class action suit brought against Google. He said he would not allow the suit because “it was more appropriate for companies who had bought the ads to show any alleged harm on an individual basis,” according to paidContent.

Here is the 25-page court document with the ruling:

Google Parked Domain Class Action

We covered the suit back when it was first filed in July 2008.

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Image credit to ShutterStock for lawsuit graphic.

Here’s what the US Trade Representative said in February:

Baidu exemplifies the problem of online services engaged in “deep linking,” which provide links to online locations containing the allegedly infringing materials. The [notorious markets] list also includes numerous examples of websites involved in BitTorrent tracking and indexing, which facilitate the high speed transfer of infringing materials between users, as well as Internet markets involved in specific activities such as piracy of sports telecasts, Smartphone software and physical products . . .

Some of the other companies on the list included the Alibaba-owned Taobao (as mentioned), Pirate Bay, IsoHunt, torrentz.com, Allofmp3 clones and a range of other sites mostly based in Eastern Europe or China.

In July, however, Baidu “settled” with the big music labels and agreed to offer royalty payments and to “distribute licensed songs through its mp3 search service,” according to Reuters. This agreement has prompted the US to now take Baidu off the “notorious markets” list. Were Baidu not listed on the NASDAQ exchange it probably wouldn’t care what the US Trade Representative thought or did in all likelihood.

This issue of piracy and copyright infringement is in large part what’s driving the effort behind the now notorious Stop Online Piracy Act (SOPA). Chris Sherman has written an extensive discussion of the bill and its potential impact over on Marketing Land.

While its intentions are valid its methodology is overbroad and draconian. The fate of the bill is uncertain but there’s still a reasonable chance that it will come to a vote in the US House of Representatives. It still must make it out of committee however.

Unable to come to a vote last week, the House Judiciary Committee has another hearing on SOPA this morning.

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As you’ve no doubt read there are two pieces of anti-piracy legislation before the US Congress: SOPA and the PROTECT IP Act (“PIPA”). While their stated purpose is to prevent piracy, copyright and trademark violations in another sense they can be seen as media companies and others using legislation to protect their legacy business models.

SOPA has been widely written about and criticized. It’s now increasingly unlikely to pass in its current form — luckily. The less-exposed PIPA is equally bad in many respects and grants sweeping powers to private litigants and courts in the interest of protecting copyright owners’ property.

This explanation of what SOPA would permit comes from the New York Times:

Under the bill, copyright owners could direct payment providers like Visa and advertising networks like Google’s to cut off business to a Web site simply by filing notice that the site — or “a portion” of it —“engages in, enables or facilitates” intellectual property infringement or is being willfully blind to it . . .

If copyright owners could starve a Web site of money simply by telling a payment processor that the site was infringing on intellectual property, the bill could stymie legitimate speech . . .

Another provision would allow the attorney general to sue foreign sites that “facilitate” piracy, and to demand that domestic search engines stop linking to them and that Internet service providers redirect traffic . . . 

Despite the fact that SOPA isn’t law, a federal (district court) judge in Nevada named Kent Dawson is acting as though it is. Numerous articles have been written this week about his order to Google, Bing, Yahoo, Facebook, Twitter and others to  ”de-index” the domain names of literally hundreds of websites that luxury goods maker Chanel alleges sell counterfeit versions of its products.

Here’s the relevant portion of Dawson’s order (.pdf) regarding de-indexing:

The Group II Subject Domain Names shall immediately be de-indexed and/or removed from any search results pages of all Internet search engines including, but not limited to, Google, Bing, and Yahoo, and all social media websites including, but not limited to, Facebook, Google+, and Twitter until otherwise instructed by this Court or Plaintiff that any such domain name is authorized to be reinstated, at which time it shall be reinstated to its former status within each search engine index from which it was removed.

There are numerous procedural and jurisdictional problems with the case. In particular, Google, Bing, Facebook, Yahoo and Twitter are not parties to the litigation. The court has no jurisdiction or authority to order de-indexing of these allegedly offending sites. However, under SOPA it would have such authority to order social networks and search engines like Google to de-index sites without having formal jurisdiction over them.

The implications are pretty scary from a legal-due process standpoint and from a free speech perspective as well.

We reached out to both Google and Microsoft for comment and they offered official “no comment” statements. It’s in their respective interests to not comply with the court’s order. Doing so would validate the actions of a “rogue judge” exceeding his authority.

Postscript: Texas Republican Congressman Lamar Smith “blasted” Google’s opposition to SOPA as self-serving. However many of the bill’s supporters in Congress are responding to intense lobbying by commercial interests in the US such as the motion picture industry. The problem is not piracy, which everyone agrees is bad, but the potential authority granted private litigants and the courts on their behalf to seize domains, chill speech and shut down businesses, with limited due process.

Neither position is entirely accurate. Google is far from the monster its critics portray. But it’s also not truly vulnerable the “one click” hypothesis or the “next new thing” either.

On Friday Matt McGee discussed some of Google Executive Chairman Eric Schmidt’s written responses to follow-up questions posed by the US Senate Subcommittee on Antitrust, in the wake of his appearance on Capitol Hill in September. As Matt points out some of what Schmidt is saying is “semantics” or spin.

Expanding the Definition of Competitors

Schmidt (or more accurately Google legal counsel) contradicts earlier public statements of other Google executives and massages definitions in an effort to cast Google as a company operating in a highly competitive environment. This is partly correct.

This effort to play up competition extends to Schmidt’s remarks on Android and mobile search generally. Here are some representative Schmidt statements on mobile:

Google is clearly the dominant provider of web search services worldwide. In the United States, 65% or more of all general Internet searches take place on Google. In Europe, Google has 94% of this market. The explosion of smartphones has provided a new search market – and in that space, Google processes a whopping 97% of all searches. . . 

Q: Mr. Schmidt, your company is overwhelmingly dominant – it really has only one rival, and that rival is losing incredible sums of money each year. Given the tremendous market power of your company, do you believe it’s fair to characterize Google as a monopoly?

Schmidt: First, I would disagree that Google is dominant. By investing smartly, hiring extremely talented engineers, and working very, very hard (and with some good luck), Google has been blessed with a great deal of success. But given the rapid pace of change in the technology industry, we take nothing for granted.

As I acknowledged during the Committee hearing, Google is “in the area” of 65% of queries in the U.S., if you look only at Google’s general search competitors, such as Microsoft’s Bing and Yahoo!. In fact, we find that the monthly general search query figures released by comScore and Hitwise don’t reflect the reality of how many sites Google competes with in search. Google has many competitors that are not general search engines, including specialized search engines, social networks, and mobile apps. So inferring that Google is in any way “dominant” in search would be incorrect.

At the hearing, I noted that the question of whether such a market share, if accurate, would constitute a monopoly, is a legal determination; Ms. Creighton is more qualified to speak to those points. At a minimum, though, I am confident that Google competes vigorously with a broad range of companies that go well beyond just Microsoft’s Bing and Yahoo!, and that Google has none of the characteristics that I associate with market power. The technology industry is one of the most competitive and dynamic spaces in the entire economy, with small companies as well as larger companies competing hard against each other in lots of areas. Google has many strong competitors. We compete against a broad array of companies, including, for example, general search engines (e.g., Microsoft’s Bing, Yahoo!), specialized search engines (e.g., Kayak, Amazon, WebMD, eBay), social networks (e.g., Facebook, Twitter), mobile apps, and voice-activated search tools like Apple’s Siri. The Internet is incredibly competitive, and new forms of accessing information are being utilized every day.

Unlike technologies of the past, on the Internet, competition is one click away. In addition, the history of the technology industry shows that technologies usually get supplanted by completely new models. Therefore, the question is not necessarily, “Who is going to beat Google in search?” but also, “What new model might take the place of search?”

What Schmidt says as a technical matter is correct: Google has a wide range of “competitors,” defined in this case to mean suppliers of information or content. He’s also right that mobile apps and Siri do represent alternatives to using Google search in mobile. Siri, strictly speaking, isn’t “competition” for Google but it does represent a “new model” that could take the place of conventional mobile search over time.

Rhetoric vs. “Facts on the Ground”

Mr. Schmidt’s technically accurate comments about mobile competition are largely contradicted by the “facts on the ground.” Google does control roughly 97 percent of mobile search. It goes without saying that Google dominates paid-search advertising on mobile devices as well. Indeed, Google dominates mobile advertising in the US (and globally) as a whole.

Android is the leading smartphone platform — though iOS has more overall share due to the success of the iPad and iPod Touch — with 43 percent of the US market to the iPhone’s 28 percent. On a global basis Android will be the leading smartphone platform by early 2012. And while hardware makers and carriers have some discretion what goes on the handset, the overwhelming majority of Android devices are Google devices.

Consumers Seem OK with Google-Android Connection

Let’s be clear: most consumers seem fine with all that. To my knowledge there has been no consumer outcry about Google’s primacy on Android or its “default” search presence on those handsets. In fact, when Verizon made Bing the default search engine on some of its BlackBerry devices there was a loud user backlash.

Google repeatedly talks about Android being an “open platform” that Google doesn’t control. But that’s not entirely correct.

Google sees Android as its own platform and sees itself and Android as largely inseparable (that’s partly what the Nexus program reflects). And so when a third party threatens to get in-between Android and a core function on the device Google has a reaction — as in the case of Skyhook Wireless striking deals with Motorola and Samsung to replace Google’s location positioning technology.

Is Google Abusing Android Control?

Google may ultimately be within its contractual rights, as the company has argued in the Skyhook case, to enforce certain rules and effectively compel hardware OEMs to use Google’s technology. However the apparently “strong-arm tactics” on display are, at a minimum, inconsistent with Google’s rhetoric about Android being “open.” Google critics would go farther and call it an ”abuse of power.”

I have written extensively that it makes no sense for the US to start regulating the SERP or Google’s algorithm. And I’m not generally a strong critic of Google (I’ve been accused of being a Google “fanboy” in fact). Arguably, however, Android is a much different case than PC search.

Mobile internet access is projected to overtake the fixed internet by 2015. Android will likely become the dominant mobile computing platform next year with all that implies for Google, mobile search and ad revenues. Accordingly, it’s not unreasonable to look very closely at Google’s relationship to Android and potentially consider rules or a process to ensure the reality of the Android ecosystem lives up to Google’s rhetoric about openness.

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As we reported when the suit was first filed in February 2010, the plaintiffs — which included a veterinary hospital in Long Beach, California — claimed that Yelp’s sales team said it would remove a “false and defamatory review” only if the vet bought advertising at about $300 per month. As CNET points out, that original suit was dismissed earlier this year and the plaintiffs were given a month to refile, which they did.

Now it’s been dismissed again.

In a blog post today, Yelp CEO Jeremy Stoppelman called the lawsuits “misguided” and said he’s “pleased” that the lawsuit was dismissed with prejudice today, meaning it can’t be refiled.

While we were confident that Yelp would ultimately prevail because we knew the allegations were false, it is helpful to have the matter resolved early so we can put these allegations behind us.

This isn’t the first time Yelp has been hit with accusations of wrongdoing. (And may not be the last.) From reading numerous articles over the years, anecdotal evidence suggests that Yelp’s sales staff can be overly aggressive in courting small business owners, while also unable to explain to small business owners why certain reviews remain on their Yelp business listing and others are filtered out — not a good combination for communicating with many SMBs. Adding to the confusion was that Yelp used to offer advertisers the ability to promote positive reviews on their profile pages — a feature that Yelp finally killed in April 2010, just a couple months after this class action lawsuit was originally filed.

Blumethal characterizes Franken as “shilling for Google.” It’s not clear to me whether Franken’s promotion of the Google campaign gives rise to a true conflict of interest. However, the concern here is the appearance created by the fact that Franken is a member of the Senate Judiciary Subcommittee on Antitrust and Competition, charged with investigating Google’s business practices.

In the video below Franken praises the Google (and Intuit) effort to get Minnesota businesses online. Google is doing this in many states. There don’t seem to be senators or other public officials in these other videos however.

During the recent Senate hearings Franken was a critic of Google’s reputed conduct toward Yelp. Franken didn’t receive any compensation for the Google video and his oppositional stance toward Google seems to suggest that he’s not “going easy” on the company. But his participation in the Google “Get Your Business Online” campaign raises eyebrows.

Yet almost without exception the senators on the panel who spoke, at one point or another, pitched Google on locating offices and investing in their states. The worst was NY Senator Charles Schumer.

Take a look at the commercial Franken did for Google’s program and decide if you think it’s improper for him to both promote Google’s program and be part of a body investigating Google’s business practices.

Click here to view the embedded video.

NOTE (4:47pm PT): You can no longer watch the video above here on our site, because about three hours after this post, permissions were changed so that the “embedded” play outside YouTube wasn’t allowed. That’s not the case for several other videos of the same nature in the Google Business channel. We’re checking on why this happened. You can see the video here.

NOTE 2: (5:02pm PT): Alan Bleiweiss notes that comments have also been disabled, unusual for videos for this channel.

NOTE 3: (Sept. 25): Heard back from Google, which told the embedding and comments were turned off temporarily and mistakenly, because a marketing person involved with the video production wanted to double-check that she’d included the right logos.  They’ve since been reenabled. Franken made no request to disable embedding or comments and has not contacted Google.

Franken has come a long way from his days as a comedian on SNL (think Stuart Smalley). And, arguably, being a senator and political figure has made him too serious. I prefer his earlier incarnation as a comedian (in the video below he’s impersonating Mick Jagger). Quite a far cry from where he is today.

Postscript From Danny Sullivan: It is pretty weird to watch the same senator who was grilling Google last week to be saying things about the Google program like “It’s something that you all should take advantage of” or asking that people “give a round of applause” to Google.

Of course, Franken did say during the hearing that he loves much of what Google did, and it’s hard to see that any sitting senator isn’t going to be happy about something they can associated themselves with as giving small businesses something free. Heck, during the hearings, two senators blatantly seemed to ask for Google handouts.

Postscript 2: During the hearing, pitches to get Google to bring high speed internet access to the states of various senators were raised. Everyone wants what Kansas City got, it seems.

I just noticed now looking at related videos on YouTube that Franken had done a pitch to Google back in 2010 to bring fiber to Duluth, Minnesota:

Click here to view the embedded video.

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List of Speakers

However most of what we’ll hear will be critical testimony from Google’s competitors or their representatives. Here’s the list of those who will testify:

• Eric Schmidt, Google
• Jeff Katz, CEO, Nextag
• Jeremy Stoppelman, CEO, Yelp
• Thomas O. Barnett, Attorney, Covington & Burling LLP (also a former Asst. Attorney General for Antitrust)
• Susan A. Creighton, Attorney, Wilson Sonsini Goodrich & Rosati, PC

No Neutral Parties

No one on this list, unfortunately, is “neutral” or a detached industry observer. And there are no advertisers or search marketing firms to lend a “third party” perspective.

Schmidt and Creighton will probably repeat familiar statements about helping consumers and creating economic value (Wilson Sonsini represents Google). By contrast, Yelp, Nextag and attorney Barnett will argue that Google is highly anti-competitive and should be restrained.

Barnett has represented parties in the FairSearch.org coalition, which has been aggressive in promoting the idea that Google is an anti-competitive monopoly. The group was formed to oppose the acquisition of travel-software company ITA.

The Wall Street Journal previews testimony from Nextag CEO Jeff Katz, which will argue that Google seeks to punish or unfairly hinder competitors. One specific argument will apparently be: Nextag doesn’t have access to Google’s Product Listing Ads and its ads are only allowed to appear in secondary positions on a SERP:

Jeff Katz said Google also prevents his company’s site from bidding on the prominent ads that show up next to search results for products such as running shoes. Instead, he said, because Google sees his company as a threat, Nextag can only bid to appear in text ads lower down on the results page, limiting its exposure to consumers.

Yelp’s Testimony May Be Most Damaging

Yelp has published a link to CEO Jeremy Stoppelman’s expected testimony on its blog. I was previously wondering how aggressive Yelp was going to be in saying that Google was favoring its own content or “building its local business on the backs of others’ content.” The statements are going to be pretty strong it appears:

In 2010, Google appointed a new executive to lead Google Local, and they launched a series of anticompetitive initiatives designed to shore up the threat posed by partial substitutes like Yelp . . .

In 2010, Google began incorporating the content that it indexed from its competitors into Google Local without permission. . . In some instances, Google even presented this content to its users as if it were its own . . .

In response to our objections, Google informed us that it would cease the practice only if we agreed to be removed from Google’s web search index, thereby preventing Yelp from appearing anywhere in Google web search results.

These claims are well documented and we’ve reported numerous times in the past on the dispute between Yelp and Google over reviews: Yelp: Google Told Us “Our Way Or The Highway. If it were on the list one would expect TripAdvisor to make similar statements.

Google has since complied with Yelp’s request and purged all third party reviews from Google Places, resulting in the necessary acquisition of Zagat Ratings for a reported $125 million.

The idea that Google gave Yelp a kind of “all or nothing” ultimatum is a highly problematic piece of testimony for Google and may be the most damaging thing that comes out today. Stay tuned.

More Theater Than Fact Finding

Indeed, Google is very conscious of the probability that most of the testimony today will be heavily weighted against it. Accordingly the company released its own guide to the Senate judiciary hearing yesterday to try and get out in front of some of the criticism. This morning it also sought to rebut the most inflammatory elements of Nextag, Yelp and Barnett’s anticipated testimony with a “claim” and “response” blog post that lays out each argument and Google’s position.

Unfortunately the fact that the subcommittee didn’t include any third party analysts, observers, advertisers or search marketing agencies to testify — in other words (relatively) disinterested parties — is a critical flaw in the design of these hearings. Accordingly they emerge as a kind of theater and not so much a fact-finding inquiry.

Postscript: In related news out this morning, the FTC is reportedly investigating whether Google “illegally increased advertising rates 50-fold for rival Microsoft Corp.”

Postscript II: Below is Google Executive Chairman Eric Schmidt’s written testimony to be delivered today before the committee.

Eric Schmidt Testimony

Related Entries:

• Google Releases A Guide to the Senate Judiciary Hearing
• Google, Yelp, Others To Appear At Antitrust Hearing Wednesday
• US Senate Schedules Hearing On ‘The Power Of Google’
• Google’s Schmidt Agrees To Testify Before Senate Committee About Search Competition
• EU Antitrust Complaints Against Google Grow To Nine
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