Google reveals divide with lawmakers on state of search industry

Google executive chairman Eric Schmidt's answers to questions from the Senate Judiciary Committee's Antitrust subpanel reveal a stark split with committee members on the nature of the search industry, with Schmidt presenting a marketplace where Google cannot favor their own products in search results and must contend with a new wave of competitors.

On Friday, the committee released Schmidt’s answers to additional questions from his testimony before the panel in September. That hearing was requested by ranking member Mike LeeMichael (Mike) Shumway LeeWhatever you think the Alabama special election means, you’re probably wrong How the effort to replace ObamaCare failed Overnight Regulation: Trump temporarily lifts Jones Act for Puerto Rico | Bill would exempt some banks from Dodd-Frank | Senators unveil driverless car bill MORE (R-Utah) and probed Google’s influence in the industry amid concerns from competitors that the search giant favors its own product offerings in search rankings.

Schmidt's responses to the committee emphasized that Google views itself not as a provider of links but as a means for consumers to find information online, regardless of what form it takes, and flatly rejected limits placed on the search giant's role as an arbiter of digital information.

In his written answers, Schmidt dismissed any differentiation between the firm's conventional and "thematic" search results, which pop up when users search for stock quotes, sports scores, products and other categories.

"What is crucial to understand is that thematic search results are not separate 'products and services' from Google. Rather, the incorporation of thematic and conventional results in universal search reflects Google’s effort to connect users to the information that is most responsive to their queries," Schmidt wrote to Lee.

"Because of this, the question of whether we 'favor' our 'products and services' is based on an inaccurate premise. These universal search results are our search service — they are not some separate 'Google content' that can be 'favored.' ”

Schmidt also repeatedly argued that if at any point consumers were unhappy with Google's presentation of information in its search results, they were free to switch to a competitor like Bing with one click.

He also said social networking sites like Facebook and Twitter have emerged as serious competition for Google in recent years.

"Social networks have become a significant, potentially game-changing competitor. When consumers search for information online, they are looking for answers to their questions. Google seeks to provide answers to users’ queries, and social networking sites like Facebook and Twitter also allow users to leverage their social networks to find answers to their questions," Schmidt said in response to Chairman Herb Kohl (D-Wis.).

"The source of Facebook's competition with Google is not only through using Bing to search the Internet but, also, by offering users a fundamentally different way to discover and connect with information on the Internet."

Schmidt agreed that paid advertisers shouldn't be preferenced in the conventional search results in response to a question from Kohl that quoted a 1998 Stanford thesis on search engine bias by Google co-founders Larry Page and Sergey Brin.

He said Google's belief was that all advertisements should be clearly labeled and distinct from natural search results, "similar to a well-run newspaper." But he argued the same distinction didn't apply between conventional and thematic search results.

That assertion formed the core of Schmidt's response to the committee's central concern and the substance of most of the complaints aired at the hearing.

If accepted, the argument would leave the door open for Google to become a central repository of information on the Web, a sort of one-stop shop where a search query directs users to the appropriate section of the company's offerings.

Microsoft presented a similar argument when it incorporated Internet Explorer into Windows, arguing the operating system and Web browser were no longer distinct. But the government rejected that assertion during a protracted antitrust suit that ultimately resulted in a settlement.

Schmidt argued at the hearing that the key difference between the software market of the 1990s and today is that users do not pay to use Google and the barrier to leave for competitors is much lower, so consumers are free to choose whether they prefer Google's approach.

Schmidt also argued that scale is no longer a barrier to entry for Web firms, pointing to Facebook, Twitter and LinkedIn as proof otherwise.

—This story was updated at 9:57 a.m. on Monday, Nov. 7