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Nothing catches the attention of the Senate at an antitrust hearing more than the world “monopoly,” and Google’s (NASDAQ:GOOG) rivals didn’t miss an opportunity to drive that point home repeatedly during Congress’ antitrust hearing Sept. 21.
Most who attended or watched the hearing online agreed Google Executive Chairman Eric Schmidt largely held his own. For the most part, he answered questions respectfully and appeared as forthcoming as possible.
There were some instances where he looked bad, namely when he couldn’t confirm answers to some questions. Senator Al Franken (D-Minn.) properly admonished Schmidt for his fuzziness in certain answers. Yet Schmidt’s candor and expertise in the industry outshone those instances.
On the second panel, Thomas Barnett, of Covington & Burling, NexTag CEO Jeffrey Katz, and Yelp CEO Jeremy Stoppelman did everything but call Google the second coming of Microsoft, which was found to be monopolistic a decade ago.
What follows is a summary of their testimonies under oath before Congress-not a summary of the question and answer sessions between them and the Senate. That’s for another analysis.
Barnett, who led the Justice Department’s antitrust division from 2005 to 2008 and is counsel for Expedia, spoke first for the opposition. Turning Schmidt’s comment that Google “gets” what it’s like to behave badly as company against company, Barnett said Google won’t even admit to reality.
“Google has monopoly power in paid and search advertising. You don’t have to take my word for it. You heard it. Both the Department of Justice and the Federal Trade Commission have conducted extensive investigations, and both of them, the expert agencies, reached factual determinations that show that Google has monopoly power.”
Barnett explained that Google has built a search engine so good that no rival can match it. And frankly, consumers rarely leave it, as evidenced by Google’s 65 percent U.S. search share, which is vastly greater in places overseas. The issue isn’t so much that Google has monopoly power. Schmidt himself acknowledged in his testimony that Google plays “in that area” of monopoly.
Where Barnett fell short was in arguing Google abuses its monopoly power, noting that there are results within Google search where it offers links that are not algorithmic that take users to its own Places local search service. Google makes money from those clicks.
The problem is that Google does not disclose those links as non-algorithmic. What’s not clear is whether the majority of those clicks lead to Google results and whether that constitutes an unfair business practice. Barnett failed to prove that.
Local-Search Rivals Call Out Google, as Expected
Next, NextTag’s Katz painted Google as a formerly honest company that let its search-engine success lead it astray. As founder of Orbitz before creating price-comparison engine NexTag, Katz said his companies early on enjoyed great access and Web penetration by advertising with Google.
“But Google abandoned those core principles when they started interfering with profit growth. Today, Google doesn’t play fair. Google rigs its results, biasing in favor of Google Shopping and against competitors like us. Google says that competition is just one click away, but that’s not even the question. The question is, should Google be able to use its market power to make it difficult for users to find us?
Specifically, Katz said that when consumers search for running shoes or washing machines, Google doesn’t return the results it did a decade ago. Instead, he claimed, it points shoppers to its own Product Search engine most of the time to bolster its own monetary gain. Show us the evidence.
The most compelling testimony against Google came from Yelp’s Stoppelman, whose brushes with Google have been well-documented and who has successfully influenced the blogpsphere to portray his company’s dust-up with Google as a case of David vs. Goliath.
Stoppelman alleged that after partnering with Google, Yelp terminated the arrangement only to discover that Google last year began scraping its content, including local review snippets, for its Places local-search product. The CEO also claimed that Google said Yelp had to allow its content to be indexed to appear in Google’s Web search.
Adding insult to this injurious scraping, Google then provided preferential treatment to its own, newer reviews recommendation engine, over Yelp’s content. Stoppelman said Yelp and other rivals “take a back seat to Google’s own competing products” as Google provides larger text, great graphics and isolated placement.”
Google did something that might seem suspicious. Google-after admitting in late June that it was facing an antitrust inquiry from the FTC-in July yanked Yelp and other review snippets from its Places product.
Stoppelman questioned whether this was an admission of anticompetitive conduct. It certainly didn’t look good, even if it was the right thing to do.
He concluded: “When one controls the market, it ultimately controls consumer choice. If competition were a click away as Google suggests, why have they invested so heavily to be the sole choice in Web browsers and phones. They are not taking chances.”