The search giant's online commerce venture is being challenged as a conflict of interest.
Good Google or bad Google?
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 favour 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 U.S. and Europe are investigating Google as it steadily expands its business beyond search.
At the start, Senator Herb Kohl, 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 maximise 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, 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. Senator Mike Lee 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 Google was “an outstanding partner to us for many years,” but the relationship has become strained as the search company expanded. Google's business interests, he said, conflict with its 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 favour 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 websites 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. — New York Times News Service