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Schmidt Under Scrutiny During Senate Antitrust Subcommittee Hearing On Google

Google executive chairman Eric Schmidt came under some tough questioning from both Democrats and Republicans as he faced a Senate Antitrust Subcommittee audience during Wednesday's hearing, "The Power of Google: Serving Consumers or Threatening Competition?"

Schmidt said the company was doing the best it could in employing a complicated algorithm -- it changes about once every 12 hours -- to provide the most useful answers to its users. He said that sometimes the best thing for consumers is for Google to send them to Google content for the answers, but that its goal was to serve those users, not other Web sites. Still, he conceded the system was not perfect and sometimes gets it wrong.

He also signaled at the outset that Google was a different company from one a decade ago that drew the government's attention--he did not say 'Microsoft," but did not have to. He said Google was a different company and should be treated as such.

The title of the hearing teed up the challenge succinctly, with Senators from both parties saying they were keeping an open mind, but were clearly concerned about allegations Google was serving its own businesses interests rather than consumers.

Google is already under investigation by the Federal Trade Commission for its dominance in search and its associated ad-placement business. Wednesday, though, marked the first congressional hearing on Google's power over information in a world increasingly being pushed online.

The Senate Judiciary Committee's Antitrust Subcommittee chairman Herb Kohl (D-Wis.) said the issue at hand was whether Google was biasing its search results or simply presenting them in the best way to get consumers from its site to their Web destination, and whether there was an inherent conflict now that Google had gone on a buying binge and morphed from a search company to a net conglomerate. He said he had an open mind.

Schmidt argued that it makes it easy for users to move to a competitor, like Bing, but various legislators pointed out that Google has 65%-70% of computer search, 75% share of advertising, and somewhere between 95% and 97% of the search market on mobile devices, where many in government assume online search is migrating.

That, suggested Kohl, fits the antitrust law definition of a monopolist with special obligations. Schmidt said Google understood its obligations, had thought about what it should do when it got "big enough to be evil," and had taken steps to address that. He said he understood the company was "in the area" of legal definitions of monopoly, but suggested that was an issue for a court.

Although ranking member Michael Lee (R-Utah) had some of the toughest questioning, ticking off a list of reasons he was still concerned following Schmidt's testimony, Democrats, including Kohl, expressed plenty of concerns.

Sen. Richard Blumenthal (D-Conn.) said it appeared that Google both owned the race track, ran the races, owned the horses, placed the horses, and appeared to be winning the race. Sen. Al Franken (D-Minn.) added that he forgot to add "doping the horses."

Schmidt said the analogy was all wrong, suggesting Google was more like a GPS service for the geography of the Web.

Blumenthal suggested Google has some work to avoid government intervention in their business, which he was not advocating.

Franken said he loved Google, but he was not there to praise it. He said that as the company adds separate products and services--YouTube, Motorola--to its search dominance, its incentives shift and its fiduciary responsibility to shareholders shifts and "people have reason to worry that you aren't going to play fair.

"He also said he was concerned about companies that owned both the content and the distribution. He was also taken back by one Schmidt answer during the hearing.

Asked earlier in the hearing if Google's rankings "reflect an unbiased algorith," Schmidt said, "I believe so." Franken called that a "fuzzy answer" given that the crux of the hearing was to determine whether Google favored its own content. "If you don't know, who does." he said.

Franken drew the parallel to the government's actions against Microsoft, and said Google's answer can't just be "trust us."

Sen. Amy Klobuchar (D-Minn.) raised the issue of pirate content sites coming up in Google searches. Schmidt said that was an ongoing problem and concern, but gave reasons why those sites would still be coming up. For one, he said, Google avoided censorship and wanted to present the Web as it is, not as they would wish it to be. He also said that it was difficult for a computer to identify a pirate site, and that it was also difficult to determine who has copyrights on content.

Schmidt exited relatively unscathed and saying the company could do better in telling people how it was ranking search-while still protecting its proprietary algorithm's and protecting them from being gamed, but having been sent a clear signal that the subcommittee had concerns and questions that remained to be answered.

There was apparently plenty of online interest in the hearing. The Senate subcommittee's stream was full of hiccups, attributed to the fact that the stream had reached its capacity according to a subcommittee staffer. C-SPAN 3 also streamed the hearing.

A second panel was dominated by critics of Google, including Nextag CEO Jeff Katz, who said Google had begun helping its business, but wound up co-opting it. Katz said 65% of its referrals come from Google, its self-favoring content would severely hurt it. Jeremy Stoppelman, CEO of Yelp, said Google "forces review websites [like his] to provide their conten for free to benefit Google's own competing product - not consumers."