April 23, 2024

Google’s Competitors Square Off Against Schmidt

Those two headline narratives competed for credibility in a three-hour hearing on Wednesday before a Senate antitrust panel, which heard testimony from Google’s chairman, Eric E. Schmidt, and competitors of the search giant.

Google’s story: The company is zealously dedicated to helping people find the most useful information on the Internet, and Google’s prosperity and the economic opportunity it has created for many thousands of American businesses all flow from that high-minded mission.

The rivals’ rebuttal: Google increasingly tilts search results in favor of its own online commerce offerings like travel and shopping as it bundles those services into its industry-dominant search engine, limiting choice and stifling competition.

The Senate hearing has been the most prominent one yet in the debate about Google’s business practices and their effect. Antitrust regulators in the United States and Europe are investigating Google as it steadily expands its business beyond search.

At the start, Senator Herb Kohl, Democrat of Wisconsin and chairman of the Judiciary’s antitrust subcommittee, pointed to the potential conflict of interest. “Is it possible,” he asked, “for Google to be both an unbiased search engine and at the same time own a vast portfolio of Web-based products and services?”

Later, he suggested that the profit motive would naturally tilt search results toward Google services. Not so, Mr. Schmidt replied. “I’m not sure Google is a rational business trying to maximize its own profits,” he said.

He never mentioned Microsoft by name, but his testimony was intended to draw a distinction between his company and the last technology powerhouse that was investigated, sued and found to have violated antitrust laws. That former innovator, Mr. Schmidt said, “lost sight of what matters and Washington stepped in.”

Google, he said, has studied that history. “We get it,” Mr. Schmidt said. “We get the lessons of our predecessors.” Later, circling back to that theme, he said, “One company’s past needn’t be another’s future.”

Mr. Schmidt described the online economy as highly competitive, with users “one click away” from other sources of information. The many rivals include search engines like Microsoft’s Bing, specialized review and listing sites like Yelp, comparison shopping sites like Nextag, online merchants like Amazon and social networks like Facebook. “The Internet is the ultimate level playing field,” he said.

There were a few testy moments. Mike Lee, Republican of Utah, showed a chart with the rankings for Google Product Search in hundreds of shopping searches, compared with the rankings of three comparison shopping sites, Nextag, Pricegrabber and Shopper. The rivals’ rankings varied widely, while Google’s service was consistently ranked third.

Mr. Schmidt first replied that the chart was an “apples to oranges” analogy, because the Google service steers users to specific products and is not a shopping comparison site.

Unconvinced, Mr. Lee said, “You cooked it so you are always No. 3.”

Mr. Schmidt replied, his voice tightening, “Senator, I can assure we haven’t cooked anything.”

Google’s competitors testified in a second panel, after Mr. Schmidt, an arrangement that Google requested and the subcommittee accepted. The competitors described a different world than Mr. Schmidt portrayed, saying Google has immense market power and uses it.

Jeffrey Katz, the chief executive of Nextag, said that Google was “an outstanding partner to us for many years,” but that the relationship has become strained as the search company expanded. Google’s business interests, he said, conflict with its engineering commitment to an open-for-all Internet.

“But what Google engineering giveth, Google marketing taketh away,” Mr. Katz said. “Today, Google doesn’t play fair. Google rigs its results, biasing in favor of Google Shopping and against competitors like us.”

The issue, he said in a separate interview, is subtle and does not affect all Google searches, mainly ones related to buying goods or services. “When you search for ‘running shoes’ or ‘digital camera,’ Google transforms itself from an independent search engine to a commerce site,” Mr. Katz said. “But that is not what happens when you type in a search for, say, ‘kidney dialysis.’” Jeremy Stoppelman, the chief of Yelp, said sites like his have to cooperate with Google because it is the gateway to so many users. About half of Yelp’s visitors come through Google search.

Google, Mr. Stoppelman said, folds the reviews of other sites into its own offerings. “Google forces review Web sites to provide their content for free to benefit Google’s own competing product — not consumers,” he said. “Google then gives its own product preferential treatment.”

Under questioning, both Internet entrepreneurs were asked, given Google’s evolution, would they start their businesses today. They would not, they said. “With Google taking so much of the real estate, I wouldn’t do it today,” Mr. Stoppelman replied.

Mr. Katz said Google should either give competitors in online commerce equal treatment in search results or clearly disclose its conflict of interest.

He punctuated his point by using the same phrasing Mr. Schmidt did when he testified. “Level playing field, level playing field, level playing field,” Mr. Katz said.

Article source: http://feeds.nytimes.com/click.phdo?i=ac5fe1531d394e5758a14ee73a582d61

Google to Face Congressional Antitrust Hearing

This week, those concerns — especially whether Google gives its own businesses preferred placement in search results, thwarting competition and harming consumers — will have their most public airing to date, when Google’s chairman, Eric E. Schmidt, testifies before a Senate antitrust panel. Some of Google’s competitors will also testify.

The Senate proceeding is just one of an array of inquiries into Google’s behavior by various federal and state authorities in this country, as well as by regulators in Europe and Asia. And though the company and the times are different, there are echoes of a hearing before the same Senate body, the Judiciary antitrust subcommittee, 13 years ago and the last sweeping antitrust investigation of an American technology powerhouse, Microsoft. Later, the federal government, joined by 20 states, filed suit against Microsoft.

“Google is a great American success story, but its size, position and power in the marketplace have raised concerns about its business practices, and raised the question of what responsibilities come with that power,” said Senator Richard Blumenthal, Democrat of Connecticut, who is a member of the antitrust subcommittee and who as the attorney general of Connecticut played a leading role among the states that sued Microsoft.

Today Google, like Microsoft then, is both admired and feared. Google has used the riches from its dominance in search and search advertising to expand into video distribution with YouTube, smartphone software with Android and Web browsers with Chrome. It has added online commerce offerings in local retail and restaurants, comparison shopping and travel, and folded them into its search engine, prompting complaints that Google is giving its businesses preferred placement in search results.

Google executives have consistently replied that its search results are the product of extensive user testing, and do not favor its own offerings. If users become dissatisfied with Google search results, the company argues, they will go elsewhere, to rival search engines like Microsoft’s Bing, sites that focus on specific products or services like Yelp, or social networks like Facebook.

“Using Google is a choice,” Amit Singhal, a senior engineering manager at Google, wrote on the company’s blog in June, after the Federal Trade Commission began its investigation. “And there are lots of other choices available to you for getting information.”

Competitors disagree. Yelp, the popular Web site for user reviews and recommendations for restaurants and other businesses, has noticed a difference in search rankings since Google established its own online businesses, said Jeremy Stoppelman, co-founder and chief executive of Yelp, which gets half its traffic from Google searches.

Two years ago, Google offered to buy Yelp, but the talks broke down. Last year, Google introduced Places, a Yelp-like service for listing businesses and collecting consumer reviews. A Google search for a restaurant often displays the Places entry — linked to a map, user reviews and other services — ahead of Yelp.

“Google develops its own in-house properties and it preferences those, so it’s leveraging its dominance in Web search,” he said.

Mr. Stoppelman, who is scheduled to testify at the Senate hearing on Wednesday, added, “When it comes to Web search, Google says you have great content, you rise to the top and that’s historically been true for us. But we do feel like that world is changing because Google has decided it’s not enough to own and dominate Web search.”

This month, Google acquired Zagat, the restaurant listing and review service, to strengthen its local commerce offering. Yelp is Zagat’s leading online rival.

Google, legal experts say, presents some challenges for the traditional doctrine of antitrust. The Microsoft case, too, required adapting antitrust principles to modern technology, and the complaint filed against the company was filled with technical computing terms like “cross-platform middleware” and “application programming interfaces.”

Yet Microsoft’s dominant product — the Windows personal computer operating system — was something consumers and companies paid for, as with any conventional good.

Article source: http://feeds.nytimes.com/click.phdo?i=59d121aec5b1142ad3b05fa22cf49aef

Google’s to Face Congressional Antitrust Hearing

This week, those concerns — especially whether Google gives its own businesses preferred placement in search results, thwarting competition and harming consumers — will have their most public airing to date, when Google’s chairman, Eric E. Schmidt, testifies before a Senate antitrust panel. Some of Google’s competitors will also testify.

The Senate proceeding is just one of an array of inquiries into Google’s behavior by various federal and state authorities in this country, as well as by regulators in Europe and Asia. And though the company and the times are different, there are echoes of a hearing before the same Senate body, the Judiciary antitrust subcommittee, 13 years ago and the last sweeping antitrust investigation of an American technology powerhouse, Microsoft. Later, the federal government, joined by 20 states, filed suit against Microsoft.

“Google is a great American success story, but its size, position and power in the marketplace have raised concerns about its business practices, and raised the question of what responsibilities come with that power,” said Senator Richard Blumenthal, Democrat of Connecticut, who is a member of the antitrust subcommittee and who as the attorney general of Connecticut played a leading role among the states that sued Microsoft.

Today Google, like Microsoft then, is both admired and feared. Google has used the riches from its dominance in search and search advertising to expand into video distribution with YouTube, smartphone software with Android and Web browsers with Chrome. It has added online commerce offerings in local retail and restaurants, comparison shopping and travel, and folded them into its search engine, prompting complaints that Google is giving its businesses preferred placement in search results.

Google executives have consistently replied that its search results are the product of extensive user testing, and do not favor its own offerings. If users become dissatisfied with Google search results, the company argues, they will go elsewhere, to rival search engines like Microsoft’s Bing, sites that focus on specific products or services like Yelp, or social networks like Facebook.

“Using Google is a choice,” Amit Singhal, a senior engineering manager at Google, wrote on the company’s blog in June, after the Federal Trade Commission began its investigation. “And there are lots of other choices available to you for getting information.”

Competitors disagree. Yelp, the popular Web site for user reviews and recommendations for restaurants and other businesses, has noticed a difference in search rankings since Google established its own online businesses, said Jeremy Stoppelman, co-founder and chief executive of Yelp, which gets half its traffic from Google searches.

Two years ago, Google offered to buy Yelp, but the talks broke down. Last year, Google introduced Places, a Yelp-like service for listing businesses and collecting consumer reviews. A Google search for a restaurant often displays the Places entry — linked to a map, user reviews and other services — ahead of Yelp.

“Google develops its own in-house properties and it preferences those, so it’s leveraging its dominance in Web search,” he said.

Mr. Stoppelman, who is scheduled to testify at the Senate hearing on Wednesday, added, “When it comes to Web search, Google says you have great content, you rise to the top and that’s historically been true for us. But we do feel like that world is changing because Google has decided it’s not enough to own and dominate Web search.”

This month, Google acquired Zagat, the restaurant listing and review service, to strengthen its local commerce offering. Yelp is Zagat’s leading online rival.

Google, legal experts say, presents some challenges for the traditional doctrine of antitrust. The Microsoft case, too, required adapting antitrust principles to modern technology, and the complaint filed against the company was filled with technical computing terms like “cross-platform middleware” and “application programming interfaces.”

Yet Microsoft’s dominant product — the Windows personal computer operating system — was something consumers and companies paid for, as with any conventional good.

Article source: http://feeds.nytimes.com/click.phdo?i=59d121aec5b1142ad3b05fa22cf49aef