Is Google enforcing a monopoly?

Marketplace Staff Sep 21, 2011

Is Google enforcing a monopoly?

Marketplace Staff Sep 21, 2011

Kai Ryssdal: Don’t know if you know this, but when congressional committees hold hearings — especially for the higher-profile sessions — they sometimes give them a title. Gets printed out on the agenda and everything. So I’ll read the title of today’s Senate Judiciary Committee hearing — you try to tell me what was this next segment’s headed, all right?

So here goes: “The Power of Google: Serving Consumers or Threatening Competition?”

Former CEO Eric Schmidt — he’s the executive chairman now — spent his day trying to convince members of the committee that Google isn’t a monopoly, that it doesn’t use its muscle to squeeze out competitors. Or, put another way, that it’s not Microsoft circa 1995.

Marketplace’s Steve Henn is on the line.

Steve Henn: Hey.

Ryssdal: So give me the skinny: What’s this hearing really about?

Henn: Well the concern is that Google, which controls something like 65 percent of the search market in the U.S., has been biasing its search results in favor of its own businesses. So if you search for ‘hotels in Los Angeles’ or ‘restaurants in Palo Alto,’ Google’s going to point you to Google Places and not Yelp or a site like Trip Advisor.

Ryssdal: You know, you’re in Silicon Valley. What are the companies that compete against Google have to say about this?

Henn: So you hear lots of stories from startups up here that Google flirted with them, and then instead of buying them, went on to launch a totally new product that competed directly against them. So people are scared of Google, but you also talk to lots of folks who are really focused on trying to build whatever’s coming next.

I talked to Oren Etzioni, who founded a startup called Farecast and sold it to Microsoft and just founded a new company called Decide, which is a search engine for shopping decisions. And I kind of expected him to have a bone to pick with Google, but instead he said, you know, ‘search needs regulation like the Pacific Ocean needs global warming.’

Ryssdal: Let’s continue with the Microsoft analogy that I made up in the introduction of this thing. Is that what’s at risk for Google here, the prospect that they would be broken up by the government?

Henn: Clearly, executives at Google see a lot of parallels between the Microsoft investigation which began in the late ’90s and what’s going on now. Microsoft was a company that dominated the high-tech world more than a decade ago, and when it was sort of hauled into Washington, it got tripped up. So here’s what Schmidt had to say at the very beginning of the hearings:

Eric Schmidt: Not all companies are cut from the same cloth, and that one company’s past not be another’s future.

Yeah, clearly Schmidt doesn’t want to become this decade’s Bill Gates. So he tried to make the case that from the beginning, Google was different from Microsoft, and the Internet, he thinks, is really fundamentally different — more open and more inherently competitive than the environment Microsoft was competing in on the PC desktop a decade ago.

Ryssdal: Which is, of course, what you’d expect an Internet guy to say. But very quickly, what’s the possible solution, the remedy here for Google, if anything?

Henn: Well, it seems unlikely that they’re going to get broken up because of antitrust. But they’re going to face a lot of pressure to be a lot more upfront with consumers and investigators about when they are using search results or when they’re actually choosing just to point people to businesses they own.

Ryssdal: I was in a conference with Eric Schmidt once, he said, ‘listen, you’ve just got to trust us.’ Marketplace’s Steve Henn. Steve, thanks a lot.

Henn: Sure thing.

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