Eric Schmidt concedes Google is near-monopoly

Schmidt admits to antitrust panel that search company is 'in the area' of a monopoly
Emma Woollacott

September 22, 2011
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Google chairman Eric Schmidt yesterday got his chance to defend the company against anti-trust complaints - but admitted that it was ‘in the area’ of a monopoly.

Speaking to a US Senate antitrust panel, Schmidt said the company had learned from the mistakes of its predecessors - referring, presumably, to the similar investigation into Microsoft which kicked off in 1998.

But when Senator Herb Kohl, chairman of the panel, asked Schmidt whether he felt that Google constituted a monopoly, with a special dominant power, Schmidt replied: “I would agree, sir, that we’re in that area”.

But - as Schmidt pointed out - no company is subject to anti-trust laws until there’s a legal ruling saying it’s a monopoly. And while the US Federal Trade Commission and several European agencies are investigating the company, none has yet come to a decision.

In his opening statement, Senator Kohl highlighted Google’s ‘acquisition binge’, in which it’s snapped up dozens of internet-related businesses.

“These acquisitions raise a very fundamental question - is it possible for Google to be both an unbiased search engine and at the same time own a vast portfolio of web-based products and services?” he said. “Does Google’s transformation create an inherent conflict of interest which threatens to stifle competition?”

Its rivals certainly appear to think so. Addressing the committee yesterday, Yelp CEO Jeremy Stoppelman claimed that Google’s been misusing Yelp review content in its competing Places product, and favouring Places in search results.

“Google forces review websites to provide their content for free to benefit Google’s own competing product – not consumers,” he said. “Google then gives its own product preferential treatment in Google search results.”

Jeffrey Katz, CEO of Nextag, said his company was being discriminated against by being blocked from bidding on the best ads, and Tom Barnett, spokesman for FairSearch.org and counsel to Expedia, claimed Expedia was being shunted down the rankings in search results.

‘Do-no-evil’ Google, naturally, argues that all this is just sour grapes, and that the companies simply don’t like the fact that they’re not appearing at the top. “We’ve not cooked anything,” asserted Schmidt yesterday.

And in a weak economy, Google has one card up its sleeve, and Schmidt’s playing it for all it’s worth - that its success underpins that of hundreds of thousands of smaller US businesses.

Like the anti-trust case against Microsoft - which dragged on for years, only closing this May - this and other investigations could take quite some time. Whatever the outcome, knowing it’s under such long-term scrutiny in the meantime is likely to act as a brake on any particularly ‘evil’ plans.






 

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