Google CEO Schmidt Talks Antitrust, FTC and YouTube

Google is again wrestling with the FTC over antitrust issues, this time concerning CEO Eric Schmidt's seat on the Apple board of directors. Schmidt also suggested in a meeting with reporters before the annual shareholder meeting that YouTube, Google's popular streaming-video site, will eventually become a source of increased revenue and even profit.

Google CEO Eric Schmidt volunteered that his company will doubtlessly face deeper antitrust scrutiny in the short term, even as Google General Counsel Kent Walker confirmed that the search-engine giant was in talks with the Federal Trade Commission over Schmidt's service on the boards of both Google and Apple.

"What is changed is that we are more careful about when and how we do things," Schmidt told reporters May 7 before the annual Google shareholder meeting.

The FTC has reportedly expressed interest in examining Schmidt's presence on the Apple board of directors, as well as the seating of Apple board member Arthur Levinson on the Google board. Under the Clayton Antitrust Act of 1914, competitors are forbidden from each others' boards if that reduces competition between the companies.

Google also ran into potential antitrust issues with the FTC in 2008, when it proposed a non-exclusive advertising deal with Yahoo that the Justice Department felt would stifle competition. In addition, a settlement concerning Google Book Search is under antitrust review.

Also at the briefing, according to news reports, Google executives suggested they were exploring ways to monetize social-networking technology as well as YouTube. Google has refused to confirm analyst predictions that the streaming-video site is costing the company nearly half a billion dollars a year to keep running.

During the meeting, Schmidt suggested that YouTube would one day "be a successful and profitable business."

According to a recent ComScore study, Google and YouTube had the largest portion of market-share for the watching of online streaming video, with 40.9 percent, for March 2009. Fox Interactive Media came in second with 3 percent, followed by Hulu with 2.6 percent.

Roughly 77.8 percent of the U.S. Internet audience watches online video, according to the same report, but companies are still trying to figure out ways to effectively monetize those eyeballs searching out the latest "24" episode or clips of cats on skateboards. Google has begun including ads into videos' stream. In addition, the enterprise has begun incorporating viral video-monitoring programs into their products as a way of tracking the dissemination of their messages throughout the public sphere, potentially opening up another line of revenue there.