4:40pm

Wed September 21, 2011
Business

Google Head Disputes That Company Thwarts Rivals

Google Inc. Executive Chairman Eric Schmidt told a Senate panel Wednesday that the company faces tough competition and isn't using its dominance in Internet search to stifle competitors.

Schmidt is testifying at a hearing examining whether Google is abusing its power to thwart competition by placing links to its own content and services at the top of search results to the disadvantage of its rivals' links.

Schmidt told lawmakers that the Internet search giant won't make the same mistakes as Microsoft Corp., which was curbed by the government several years ago when it was deemed to be exercising monopoly power.

Microsoft was charged in the late 1990s with bundling together its operating system with its browser. It was accused of leveraging its near-monopoly status to force people to use its Internet browser. Microsoft ultimately settled that case in the U.S. and paid hefty fines in Europe.

Consumers will correct mistakes the company makes, Schmidt said. He insisted that Google could easily be unseated by better technology because competition is only a "click away" on the Internet.

"Google's empire is so rapidly expanding, it's so powerful in so many ways — it's changed the way we interact with news, with social networking, smartphones — and when you have a growing grip on power like that it makes regulators nervous or at least very attentive," NPR's Yuki Noguchi told Melissa Block, host of All Things Considered.

Google's dominance of Internet search and advertising has put the company under regulatory scrutiny that is making it more difficult to expand its empire. A broad inquiry by the Federal Trade Commission into Google's business practices could turn into a lengthy legal ordeal that becomes a major distraction for the company.

"The tone today was more fact-finding than finger-pointing," Noguchi said.

Schmidt asked the members of the Senate Judiciary subcommittee on antitrust for their help to ensure the FTC's investigation is "focused and fair."

Google, based in Mountain View, Calif., processes about two of every three online search requests in the U.S. and an even larger percentage in some parts of Europe. Its search results already highlight some of its own specialized services, including online mapping, video and finance.

"It's also possible to not use Google search," Schmidt told the panel.

The company also has faced complaints that it sometimes tries to rig its results in a way that forces advertisers to pay higher prices to ensure their links are displayed.

Schmidt faced some skepticism from senators. Panel Chairman Sen. Herb Kohl (D-WI) said he approaches the issue with an open mind. But, Kohl stressed, "We also need to recognize that, as the dominant firm in Internet search, Google has special obligations under antitrust law to not deploy its market power to squelch competition."

Hundreds of thousands of businesses depend on Google "to grow and prosper," Kohl said.

Sen. Al Franken (D-MN) said he was concerned that Google's unrivaled growth and success could mean the next Internet entrepreneurs could be squeezed out of competing with the giant.

Schmidt also was challenged on Google's formula for ranking searches, which he said is changed every 12 hours or so.

Schmidt's appearance is being followed by a separate panel that's likely to skewer Google's behavior as unfair and, possibly, illegal.

The counterattacking speakers scheduled to appear include: Yelp CEO Jeremy Stoppelman, who says Google promotes its services by cribbing comments from his online review site.

"Not every website can come on top," Schmidt told the panel. "It's a ranking problem. And there are definitely complaints from businesses who want to be first in rankings even when they're not the best match as best as we can tell for user search."

Other speakers at the panel include Jeff Katz, who runs Nextag, a shopping search engine; and Thomas Barnett, who investigated Google's search dominance in 2008 while he was leading the Justice Department's antitrust division. Barnett is now aligned with a group of Google critics called FairSearch that includes Microsoft.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.