As Connecticut’s attorney general Richard Blumenthal took Google to task for gathering unprotected wireless information during its collection of data for “Street View.” As a member of a Senate antitrust subcommittee, Blumenthal Wednesday took the Internet giant to task again for its search policies—this time face to face.
Google’s Executive Chairman Eric Schmidt appeared before the subcommittee to defend the company against allegations it employs anti-competitive tactics in its searches or dealings with other Internet companies.
Halfway through the three-hour hearing, which was streamed over the Internet, Blumenthal compared Google to a racetrack owner.
“You run the race track. You own the race track. For a long time you had no horses. Now you have horses and have control over where those horses are placed and your horses seem to be winning,“ Blumenthal told Schmidt.
“What a lot of these questions raise is a potential conflict of interest to use a sort of pejorative, but not necessarily to be critical. You may have great products and you place them first and you may consider that a service to consumers, but inevitably that will stimulate the kind of criticism that has brought you here today,” Blumenthal said.
“It won’t surprise the Senator if I say I disagree with your analogy completely,” Schmidt replied.
“I prefer to think of the Internet as the platform and you can think of Google as a GPS, a way of getting there,” Schmidt said. “Google does nothing to block access to any of the competitors and other sources of information. We encourage it, and indeed in all the cases that have been used where we come to an answer we also show all the other possible answers.”
But U.S. Sen. Michael Lee, R-Utah, thought it was uncanny how in a search for a certain product it shows the company Google owns that sells the product always comes up third.
“You’ve cooked it so you’re always third,” Lee said.
“I can assure you we’ve not cooked anything,” Schmidt said.
He said Lee was using an apples to oranges comparison because a product search is different than a product comparison search, which is something offered by other Internet companies. He said Google is just trying to give the consumer the “right answer.”
But that answer doesn’t exclude all the other answers which pop up in a search. He said it’s up to the consumer to decide. He said if they don’t like the answers they get there are other search engines out there.
Lawmakers pressed Schmidt on why its vast array of products and services seem to be toward the top or middle of the first page of a search.
“We try to be as inclusive as possible,” Schmidt said. “We need to be able to be free to get to what we think algorithmically is the best answer to the query…and if we can do with no clicks, literally zero click, if we can compute it algorithmically that’s better for the consumer. I really genuinely believe that.”
But Blumenthal alleged that it’s something different when you own the place you’re pointing the consumer to, rather than some other place that appears objectively.
“The most important thing for us to do is come up with the quickest answer the best,” Schmidt told Blumenthal.
Pushed by Senators to be more publicly transparent with their ranking algorithm, which is changed every 12 hours or about 500 times a year, Schmidt said he’s concerned “they’ll be heavily gamed by sites that spam us.“
Sometimes people will manipulate an answer to get a really false answer which is the butt of jokes, Schmidt explained.
Sometimes call Google bombs, these tactics have been used in Connecticut to turn up the most unflattering stories about political opponents.
“There’s a limit to how transparent we wish to be to with respect to our actual ranking algorithm. I do agree we can do a better job of describing the change,“ Schmidt said.
And while Schmidt said Google has learned from the mistakes of its silicon valley predecessors, one attorney who testified said plainly “Google doesn’t get it.”
Thomas Barnett, a partner in of Covington & Burling and a former assistant attorney general in charge of the Justice Department’s Antitrust division, said Google has created barriers to entry with an 80 percent share of the search engine market.
He said no one is going to catch Google, even if they had access to Google’s algorithm today, “they have market power.”
He said Google has a financial interest to place their own links to their own products and services above the natural search results.
Which was not the case when the company started.
When it started Google was great for small companies looking to get into e-commerce, Jeff Katz, CEO of NexTag Inc., a comparison shopping site, said. He said Google became the search engine of choice because it didn’t discriminate and allowed for the natural search based on consumer popularity to be conducted. But things have changed.
“Google abandoned those core principles when they started interfering with profit growth,” Katz said. “Today Google doesn’t play fair. Google rigs its results biasing in favor of Google Shopping.”
He said he’s upset with the uncertainty they’ve created in its search algorithm because “we believed them when they said they’d treat all sites fairly and we built our business around that.”
He said he appreciates that Google helped them grow their business and was happy to help Google build its business. “Now, however, they are not innovating, they helped us grow our business, but they are copying our business after we invested hundreds of millions of dollars to perfect it. And they are very politely, deftly, and assuredly moving us aside.”
Jeremy Stoppelman, CEO of Yelp, agreed.
“Google is no longer in the business of sending people to the best sources of information on the web,” Stoppelman said.
Yelp is a site and an application that helps people find local businesses and restaurants within a certain radius.
Stoppelman said Google first started taking Yelp’s content to use in Google Places, a year ago. He Google threatened them by telling that in order to appear in a web search you must allow us to use your content to compete against you.
“Not being in Google is like not existing on the Internet,” Stoppelman said.
The Federal Trade Commission announced its anti-trust investigation, the state attorney general’s took notice, and the Senate hearing Wednesday caused the company to “soften” its stance, Stoppelman said.
Susan A. Creighton, a partner at Wilson Sonsini Goodrich & Rosati, PC who was acting as outside counsel for Google said, the search engine is looking for answers that consumers want.
She said consumers have options and if Google isn’t providing the best answer then there are other search engines out there.
“If Google thinks it has the best answer then it will be displaying that, but if consumers aren’t picking that site then it’s going to drift down over time,” Creighton said.
However, it becomes a chicken before the egg argument because most of the links that receive the most clicks appear at the top of the Google search page.
Barnett said if he was still at the Department of Justice he would open an antitrust investigation against Google. He said nobody outside Google has actually looked at the search algorithm to actually determine what’s going on with it.
“I’m not talking about posting the algorithm on the Internet. I’m talking about a confidential investigation, enabling a responsible antitrust enforcement agency to gather the facts,” Barnett said.
“I would certainly want to gather the facts and based on what I’ve seen I’d be very concerned that there is harmed consumers,” Barnett said.
Blumenthal asked for those who testified to submit comments on what they believe Google could voluntarily do to avoid any sort of enforcement action. He said far better would be voluntary action to avoid the appearance or complaints of antitrust violations.
Blumenthal said he’s formed no conclusions himself about everything he heard at the hearing.
Creighton alleged that regulating the algorithm would turn Google into a utility.
She said she doesn’t believe Google has monopoly power because it’s not the only general search engine.
The U.S. Federal Trade Commission has been examining whether Google is abusing market power and the European Commission is conducting their own probes. The Judiciary antitrust subcommittee has no role in the investigation.
