By Gautham Nagesh - 09/21/11 09:14 PM EDT
Google gets it. Washington doesn’t.
That was the prevailing message from Google executive chairman Eric Schmidt at Wednesday’s hearing in front of the Senate Judiciary Committee’s Antitrust subpanel.
Schmidt repeatedly pushed back against lawmakers’ suggestions that Google’s search rankings are biased in favor of its own services, arguing the firm relies on extensive testing and a complex algorithm to ensure its search results are the best possible for consumers.
He defended Google’s decision to place services such as Google Maps and Google Finance on top of its search ranking by arguing the firm was simply finding the answers desired by consumers instead of producing a list of links. The decision to boost its own service has drawn complaints and scrutiny from the Federal Trade Commission, which opened an antitrust probe into the firm’s search practices this summer.
In his opening remarks Schmidt referenced Bill Gates’s ill-fated appearance at an antitrust hearing in 1998 and said Google has learned from the mistakes of Microsoft.
“We get it,” Schmidt said. “By that I mean that we get the lessons of our corporate predecessors. We also get that it’s natural for you to have questions about our business.”
Lee, who called for the hearing, said Google had “worked hard to cultivate the public perception that its searches are comprehensive and unbiased.”
“But there is growing concern that Google employs different search ranking algorithms and more attractive visual displays to advantage its own secondary sites and products, to the detriment of competing specialized search sites and other disadvantaged businesses.”
When Chairman Herb Kohl (D-Wis.) attempted to point out the inherent advantage in Google’s services appearing on top of the rankings, Schmidt said Google is not a typical “rational business trying to maximize its profit.” He said the firm is run on a set of principles, such as solving consumers’ problems, and emphasized that customers are free to migrate to other services if they so choose.
Kohl asked Schmidt if he realized that Google’s market share (65 percent of Web searches and 95 percent of mobile share) would ordinarily constitute a monopoly and subject the firm to additional rules for concentrated markets. Schmidt said he understands Google is approaching the neighborhood of being a monopoly and tries to act accordingly. However, after the hearing he denied that Google is a monopoly.
Lee tried a different tack by producing a large chart and asking Schmidt to explain how Google’s product search service shows up consistently on top of alternative product comparison sites. Schmidt called Lee’s comparison “apples to oranges” and suggested Lee doesn’t quite understand the function of Google’s product search service.
“I don’t know whether you call it a separate algorithm … but either way, you’ve cooked it,” Lee said.
“Senator, let me assure you that we have not cooked anything,” responded Schmidt.
Franken prefaced his comments by stating that he loves Google, but then accused Schmidt of evading Lee’s question about whether all of Google’s search rankings reflect an unbiased algorithm. Franken noted Schmidt’s hesitation before replying that he believes the rankings are unbiased.
“We’re trying to hold a hearing here … if you don’t know, who does?” Franken said.
When asked whether Google has special responsibilities as the gatekeeper to much of the Web, Schmidt replied in the affirmative but noted that competition exists in the form of Microsoft’s Bing search engine, which holds almost 30 percent of the market. He also said consumers are increasingly turning to social media as a primary source for finding online content and suggested firms complaining about the algorithm are simply unsatisfied with their rankings.
“Google does nothing to block access to any of our competitors or other sources of information,” Schmidt said, adding that Google’s competitors mirror many of the practices and services under attack at the hearing.
Afterward Schmidt told reporters that he disagreed with the way some lawmakers tried to characterize the way Google produces search results and said their views reflected incorrect information fed by competitors. He repeated his view that there are many checks on Google’s behavior, most notably consumers but also the media.
Whether his performance will be enough to satisfy lawmakers remains in doubt. Lee expressed his dissatisfaction with Schmidt’s answers, while other lawmakers seemed less than convinced by Schmidt’s assertions that all the firm’s actions are with consumers, and not the bottom line, in mind. Schmidt said Google is not planning to take any action until the results of the FTC’s investigation are made public.
Aside from finding a resolution to that probe, the other potential risk for the firm would be the Justice Department deciding to take up the matter. DOJ filed its antitrust suit against Microsoft just two months after Gates’s appearance on Capitol Hill. Even with its deep bench of support, which manifested itself at the hearing in the form of supportive statements from Sens. Dianne Feinstein (D-Calif.) and Charles Schumer (D-N.Y.), the next few months are sure to be a tense period in Mountain View, Calif.