Shaw Capital Working Management Tips & Articles: Google’s Eric Schmidt Set For Sept. 21 Senate Antitrust Hearing

http://shaw-capitalworkingmanagement.com/2011/07/29/shaw-capital-working-management-tips-articles-google%E2%80%99s-eric-schmidt-set-for-sept-21-senate-antitrust-hearing/

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http://paidcontent.org/article/419-googles-eric-schmidt-set-for-sept.-21-senate-antitrust-hearing/

By Sam Gustin
Jul 28, 2011 7:03 PM ET

Google Executive Chairman Eric Schmidt will testify before lawmakers probing the company’s market power on Sept. 21, the search giant confirmed on Thursday. After initially declining to appear, the former CEO received a not-so-subtle subpoena threat from the committee and rethought his position. The hearing, which will focus on charges that Google (NSDQ: GOOG) uses its market power to favor its own services and hinder rivals, comes as the Federal Trade Commission ramps up its investigation into the company’s dominance of the web search business.

Last month, Sen. Herb Kohl, the Wisconsin Democrat who chairs the antitrust subcommittee, and Sen. Mike Lee, the Utah Republican and ranking member, requested that either Schmidt or current Google CEO Larry Page testify. For its part, the company offered to send its chief legal officer, David Drummond, but Kohl and Lee insisted, warnings that lawmakers “would very much prefer to work this out by agreement rather than needing to resort to more formal procedures.”

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The hearing title: The Power of Google: Serving Consumers or Threatening Competition?

Google’s competitors have long been pushing for greater government scrutiny of the search giant’s market power. A group of them have created an organization called FairSearch.org, which seeks to highlight Google’s abuses. Among the group’s members: Google’s search rival Microsoft (NSDQ: MSFT), as well as travel sites Expedia, Travelocity, and Hotwire, which had opposed the search giant’s purchase of ITA Software, a provider of back-end services for travel search engines.

When that deal was approved, representatives of the travel companies predicted greater scrutiny for Google.

Not surprisingly, FairSearch.org praised Kohl and Lee for this effort.

Proponents of greater regulation of Google’s search engine tend to argue that because the service is so ubiquitous, it has become something like a public utility. Or they claim that Google must be totally “objective” in its search results, so as not to violate so-called “search neutrality.”

Google’s supporters call such arguments nonsense and say that “search neutrality” is a fantasy. Google may be publicly traded but it is still a private company, they argue. It can place any information it wishes on its website. It is under no obligation whatsoever to even include its competitors on its web page. Furthermore, web search is inherently subjective. Google’s search rankings are judgements produced by its proprietary algorithm, which the company tweaks constantly.

At the hearing, Schmidt likely will point out that web users are free to choose any search engine they wish—the alternatives are just a click away.