Jeremy Stoppelman, CEO of Yelp Inc., testified; listening were Nextag Inc. CEO Jeff Katz, center, and former Justice Department antitrust chief Thomas Barnett.

J. Scott Applewhite, Associated Press

Senators grill Google over competition issues

  • Article by: JIM SPENCER
  • Star Tribune
  • September 21, 2011 - 10:24 PM

WASHINGTON - Google Chairman Eric Schmidt took a hot seat in front of a U.S. Senate antitrust subcommittee Wednesday and struggled to convince its members that his company is not an anticompetitive monopoly.

Schmidt's inquisitors, including Sens. Amy Klobuchar and Al Franken of Minnesota, bored in on accusations that the world's dominant Internet search engine unfairly favors its own products and advertisers in its rankings and in doing so misleads consumers who think they are getting unbiased results.

Franken, a Democrat, expressed frustration when Schmidt refused to say under oath that Google's supposedly merit-based rankings never give preferential placement to Google's products and services.

Schmidt said he thought that was the case.

"That seemed like a fuzzy answer," Franken said. "If you don't know, who does?"

The exchange in a packed hearing room was one of several tart give-and-takes between members of the Senate Judiciary Committee and one of the world's wealthiest, most powerful executives.

Sen. Mike Lee, R-Utah, a self-described free-market advocate, displayed a chart that showed where Google Shopping, a Google website, ranked against three other shopping websites in a test of 650 Google searches. While the three competitors ranged in rank from first to 50th, Lee said, Google Shopping ranked third in "virtually every single instance."

"When I see you magically coming up third every time ... you've cooked it," Lee said, his voice rising as he pointed at Schmidt.

"Senator, I can assure you we have not cooked it," Schmidt responded.

"You have an uncanny attraction to the number three then," Lee fired back.

Klobuchar's approach was less strident. The Democrat cited a Star Tribune story about a pair of online businessmen from Minnesota who see their sales bounce up and down as a result of Google's constant tweaks of its ranking formula.

With Google's top-ranked businesses getting 35 percent of the hits and second-ranked businesses getting 11 percent, Klobuchar said a decline in the rankings has immediate impact. She cited the Star Tribune report that some online businesses feel they must buy ads on Google to make sure their names stay on the first page of search results.

"Businesses want certainty," Klobuchar told Schmidt. "Do you think companies should have a right to expect more certainty in how they are being ranked?"

"It's important to know that when company A gets pushed down, another company goes to the top," Schmidt answered. "We are in the business of ranking. By definition, those ranking decisions are not perfect."

Schmidt called Google's constantly changing ranking formula an attempt to better serve users who could easily migrate to another search engine.

"We really run the website for the benefit of consumers," he said.

He declined to call his company a monopoly. But with Google controlling 65 to 70 percent of all U.S. computer searches and 97 percent of American mobile phone searches, the M word kept coming up.

Lee said some of his fears that Google was misleading consumers had been confirmed.

"I am admittedly skeptical of big companies that simultaneously control both information and the distribution channels for that information," Franken said. "When you completely dominate how people search for information and you own separate products and services that you want to succeed, your incentives shift ... and people have reason to worry."

Beyond products and services, Sen. Herb Kohl, D-Wis., said that Google rankings of news stories make the company "a gatekeeper with enormous power" that demands more competition.

With the Federal Trade Commission investigating Google for allegedly misleading consumers, Schmidt's written testimony asked for a "focused and fair process."

Outside the hearing room after his grilling, he was a little less politic.

Schmidt said his competitors had "fed a couple of biases" to the senators that "weren't correct."

Asked whether he thought Congress should get more involved in the area of Internet searches, Schmidt replied, "I think Congress should focus primarily on the issues facing the country."

Jim Spencer • 202-408-2752

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