Google's Schmidt to Testify for Senate on 'Power of Google'
Google Executive Chairman Eric Schmidt has a set date with the Senate on Capitol Hill to discuss the search engine's expansive Internet market power.
Schmidt, who served as CEO of Google (NASDAQ:GOOG) for a decade before co-founder Larry Page retook the reins in April, will testify in front of the Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights Sept. 21 in Washington, D.C.
If the title of the hearing, "The Power of Google: Serving Customers or Threatening Competition?" is any indication, the meeting could make for some awkward and confusing moments.
Senate subcommittee Chairman Herb Kohl (D-Wisc.) and his cohorts will apparently explore whether Google's rise to power online is good for consumers-1 billion-plus users Google serves in search-or bad for Google's rivals.
The fact is that it's not an either/or proposition. What is good for consumers-better search-is bad for Google rivals such as Microsoft (NASDAQ:MSFT) Bing, Yahoo (NASDAQ:YHOO) and the litany of smaller companies-Yelp, Citysearch, etc.
Generally speaking, when consumers find a Web service that works for them repeatedly, they tend to return to that source over and over. It's a positive reinforcement the Internet sector knows as customer engagement.
Google searchers tend to be happy with the results they receive- the company has 65 percent of the U.S. search market and more abroad-and so they keep going back to that well for information. This creates a maddening, unbreakable loop for Google's rivals.
The mechanics of the meeting between the Senate and Schmidt will be crucial for Google, which is defending itself both from a broad antitrust inquiry opened by the Federal Trade Commission and a similar investigation in Europe.
Getting Schmidt to appear on Capitol Hill is a coup for Kohl and his subcommittee. When the politicians in June requested either Schmidt or Page testify, Google told them they wanted to send Chief Legal Officer David Drummond, who in 2007 testified before the committee regarding Google's DoubleClick acquisition.
Google's position was that a legal issue required a legal expert to speak for the company. Kohl and Co. threatened to subpoena the leaders. Google relented and agreed to send Schmidt, who told the media recently he was happy to oblige.
The question is: Will he change that tune by the conclusion of the hearing, which appears set up as a severe critique of Google's search practices?
FairSearch.org, which opposed Google's $700 million acquisition of travel-search enabler ITA Software last year, applauded the hearing.
"Congress is right to investigate these issues and to examine the threats that Google's unchecked dominance poses to the Internet ecosystem," FairSearch.org said in a statement.