Google's Eric Schmidt Disputes Anti-Trust Accusations Before U.S. Senate
Google's Eric Schmidt Disputes Anti-Trust Accusations Before U.S. Senate

Google Inc.'s Executive Chairman Eric Schmidt sparred with senators Wednesday during a hearing that repeatedly cast the Internet search leader as a greedy monopolist more driven to expand its empire than to steer Web surfers to the most helpful information.

Schmidt, Google's chief emissary to the government, was put uncomfortably on the defensive as he trumpeted the company as a font of knowledge, innovation and economic opportunity during a 90-minute appearance before a Senate antitrust panel.

"Google does nothing to block access to any of the competitors and other sources of information" in Web searches, Schmidt testified. He acknowledged that Google is "in that area" of being a monopoly company but said it's up to the courts to determine the question. The company recognizes that it has a special responsibility because of its market power, Schmidt said.

The political theater unfolded against the backdrop of a Federal Trade Commission investigation that threatens to handcuff Google as it tries to diversify beyond Internet search. Just last month, Mountain View, Calif.-based Google announced by far the biggest acquisition in its 13-year history - a proposed $12.5 billion deal to buy cellphone maker Motorola Mobility.

The FTC's probe, triggered by rising complaints about perceived bias in the way Google ranks other websites, also is forcing the company to defend its pledge to make the world a better place. Google underscored that commitment by embracing "don't be evil" as its corporate motto.

The biggest concern about Google is whether the company has been manipulating its results to prominently display its own services instead of rival websites. Those rankings can make or break websites because most people rely on Google to get around the Internet. Google processes about two-thirds of U.S. search requests and handles an even larger percentage in some parts of Europe.

The hearing by the Senate Judiciary subcommittee on antitrust turned up the heat on Google. It could further embolden the FTC as it investigates the company, with several members of the panel having publicly posed serious questions about Google's practices.

Sen. Michael Lee of Utah, the panel's senior Republican, said "some of my fears have been confirmed" by Schmidt's testimony and answers to senators' questions.

Google appears to exploit its Web search dominance to reap an "unnatural and extraordinary advantage," Lee said, adding that the company has a "clear and inherent conflict of interest" in its search results.

Sen. Richard Blumenthal, D-Conn., used a metaphor. "You run the racetrack, you own the racetrack," he told Schmidt. Google now also owns some of the horses and "you seem to be winning," Blumenthal said.

That prompted Sen. Al Franken, D-Minn., to wonder whether Google might also be "doping the horses."

But Schmidt said he prefers to think of the Internet as a platform with Google the GPS system. "This is the best we know how to do," he said.

Another focus is the way Google sets the rates in the Internet's largest advertising networks. Critics contend Google sometimes rigs the system to drive up the prices that its rivals have to pay to ensure their commercial message is seen.

"Not being on Google is the equivalent to not existing," Jeremy Stoppelman, co-founder and CEO of search engine Yelp Inc., told the panel in later testimony.

"I wonder if we would have been able to start Yelp today given Google's recent actions."

Stoppelman also said Google started bullying Yelp, a 7-year-old service, after it refused to sell itself to Google in 2009.

Google maintains its prices are largely set through an open auction tied to words appearing in search requests and other Web content. The system has proven highly effective: The ads will generate most of Google's projected revenue of more than $37 billion this year.

The assertion that Google places a higher priority on boosting its profits than providing unbiased results came on the same day that Schmidt and Google's co-founders - Larry Page and Sergey Brin - were listed among the 50 richest Americans in the latest rankings released by Forbes magazine. Collectively, the trio is worth about $40 billion, with most of the wealth tied up in Google stock that usually increases in value when the company's earnings rise.

In his testimony, Schmidt stuck to a familiar script. As he and other Google executives have said in the past, Schmidt said the company always strives to provide the information that its users want so they don't become disgruntled and defect to other websites such as Microsoft Corp.'s Bing.

Schmidt's appearance before the antitrust committee was tinged in irony.

While working as a top executive at other technology companies in the 1990s, Schmidt was among the Microsoft critics who helped gather evidence that spurred the U.S. Justice Department to open an antitrust investigation that became a huge distraction for Microsoft.

While Microsoft was sparring with the Justice Department, former Stanford University graduate students Page and Brin founded Google in a rented Silicon Valley garage. Within a few years, Microsoft found itself scrambling to catch up in the increasingly lucrative Internet search market - a largely fruitless quest that has cost the world's largest software maker billions of dollars.

On Wednesday, Schmidt found himself being grilled about whether Google's behavior is reducing the likelihood that other entrepreneurs will be able to invent something as revolutionary as Google.

Schmidt urged committee members not to draw parallels between Microsoft and Google, insisting his company isn't "cut from the same cloth."

After spending a decade as Google's CEO, Schmidt was replaced by Page in April. Schmidt remains Google's chief liaison with the government, enabling the aloof Page to focus on running the company.

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