At the company's antitrust hearing, CEO Eric Schmidt defends himself to a subcommittee that seems very confused
Google chairman Eric Schmidt had an easy time of it during his much anticipated congressional testimony before the Senate Judiciary Committee’s antitrust subcommittee yesterday afternoon, in large part because senators on both sides of the aisle clearly have little grasp of the nuances of how Google works. Schmidt is likely counting that as a victory. But ignorance is not a guaranteed long-term strategy for Google.
Schmidt spent much of his time before the subcommittee trying to dispel the belief that Google’s search dominance makes it, as Utah Republican Sen. Mike Lee said with some hostility, “the biggest kingmaker on Earth.” This was Google’s come-to-Congress moment, and the Senate wasn’t going to waste it. Five years ago, Google was just introducing to Washington its first full-time lobbying staffer. But Google is now a major player in Washington, and, as Lee put it, antitrust violations or no, it warranted attention. Initially Google Inc. offered to send the company’s chief legal office David Drummond to answer its questions. The senators demanded either Schmidt or CEO Larry Page.
Making the best of his time in the hot seat, Schmidt tried to portray yesterday’s session as a rite of passage. Another tech giant memorably went through it (read Microsoft’s ’90s antitrust battle), said Schmidt as he opened his testimony, “today it’s Google’s turn in the spotlight.” That approach is a gamble, and it might prove to be an unwise one. Washington dislikes power that it doesn’t understand. It doesn’t understand much about technology. And, judging from yesterday’s questioning, Google’s vaunted search-result algorithms are little understood on the Hill, and the source of much annoyance.
“I don’t know whether you call this a separate algorithm, or whether you’ve reversed engineered an algorithm,” said Lee, displaying charts showing Google results on shopping-related searches. “But either way, you’ve cooked it, so that you’re always third.”
“Senator, may I simply say,” said a visibly annoyed Schmidt, “I can assure you that we’ve not cooked anything.”
Still, Schmidt had little clarity on how Google works to share with the befuddled senators. Sen. Richard Blumenthal, Democrat from Connecticut, got some ribbing from hearing-watchers on Twitter for an analogy attempting to make sense of Google’s power and standing in the digital space, but it actually wasn’t a bad attempt. “The racetrack,” said Blumenthal, grasping. “You run the racetrack, you own the racetrack. And for a long time you had no horses. Now, you have horses, and you have control over where the horses are placed.” The kicker: “And your horses seem to be winning.”
Schmidt quickly assured the senator that he completely disagreed with that metaphor. He offered another.
“I prefer to think of the Internet as the platform. And you can think of Google as GPS. It’s a way of getting there.” It’s a free Internet, argued Schmidt. Google is just one — or a few — of its component parts.
Blumenthal’s horse track analogy might have been clumsy, but Schmidt’s GPS one is laughable. Google isn’t like any old thing on the Internet. In part, that’s because it has done what it does very well over the years, turning itself into a verb along the way. But it’s also because, unlike other stops on the Internet, Google is a networked creature that depends on a web of content and services to make it worthwhile. Google is worth literally nothing if it’s not networked to the rest of the Internet. Its value comes from its links, and how it engineers those linkages is what has captured Washington’s unwanted attention.
Schmidt argued before the subcommittee that Google’s core mission is to serve up the best results for its customers, not to keep other websites and website owners happy. And when it comes to producing the ideal online experience for that audience, what it offers up is often, today, its own products, whether that’s Google Shopping, Google Maps, Google Places, Google Books, Google AdSense ads, Google AdWords ads, Gmail and, now, Google Plus. (Opening up Google+ to the public on Monday, Google rolled out an animated blue arrow that stretches from the Google.com search box to the social-networking platform’s tab on the site’s menu bar. Subtle it is not.)
Even Android, its mobile operating system, was purchased in 2005 because the company desperately wanted a way to serve up Google tools on cellphones in the same way it has on computers where, according to Larry Page as quoted in Ken Auletta’s 2010 book, “Googled: The End of the World as We Know It,” “we’ve been able to make software that basically is able to run everything and works for people pretty well.” And the whole thing is powered by Google’s massive, global hardware infrastructure. It’s a triumph not only of engineering, but of will. And Schmidt it trying to dismiss this history-making enterprise as something any ol’ Web engineer or two could pull off.
The context for yesterday’s hearing is the antitrust investigation that the U.S. Federal Trade Commission launched, in June, and following up on a similar inquiry launched by the European Commission last November. The parameters of the domestic case aren’t fully known, but Google has pushed back against what it assumes the complaints to be, on the company’s blog.
“Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow,” writes Amit Singhal, head of Google’s search ranking team, “No matter what you’re looking for—buying a movie ticket, finding the best burger nearby, or watching a royal wedding—we want to get you the information you want as quickly as possible. Sometimes the best result is a link to another website. Other times it’s a news article, sports score, stock quote, a video or a map. Instant answers. New sources of knowledge. Powerful tools—all for free.”
After Schmidt spoke at Wednesday’s hearing, several competitors offered their complaints with that best-results-at-all-costs approach. Yelp argued in its written testimony that Google is poaching its reviews and details on restaurants, stores and more to power their own search results. And the product comparison site Nextag complained that Google was giving preference to Google Shopping.
During his hour-plus testimony, Schmidt made several tiny stumbles. He argued, contrary to the evidence, that Google Places isn’t an Android app. But the one that drew the most ire was his maintaining of the position that the chairman and longtime CEO of Google Inc. really knew very little about how Google comes to the decisions it makes over how it ranks search results or where it places Web content on its pages, sites and phone platforms.
“That really bothers me,” said Minnesota Democrat Al Franken, “because that’s the crux of it, isn’t it? And you don’t really know. We’re trying to have a hearing here, about whether you favor your own stuff, and you’re asked that question, and you admittedly don’t know the answer.”
At the same time, members of Congress like Google. They like that they can find things online without the benefit of an assistant. They like funny cat videos on YouTube. They like the money the company has to spend, and, come election time, they like Google ads a great deal. They like that someone in Silicon Valley — and a reasonably sexy giant of a company at that — is starting to pay them a little bit of attention. New York Sen. Chuck Schumer spent the bulk of his opening statement discussing his informal survey of just how many New York tech companies love them some Google (four-fifths of them, as it turns out). Then he dropped the hint that perhaps Google Inc. would like to bestow upon the Empire State some of that community broadband fiber they’ve seen fit to build out elsewhere in the country.
Monopoly is a legal distinction, said Schmidt under questioning from subcommittee Chairman Herb Kohl, Democrat of Wisconsin, though he allowed that when it comes to search, “we’re within that area.” That sort of talk incensed Washington anti-trust lawyer Thomas Barnett, who testified after Schmidt. “Google won’t event admit to reality,” said Barnett, referencing the company’s official public positions. “Undoubtedly, Google has monopoly power in search and paid advertising. You don’t have to take my word for it. You all heard it.”
“Monopolistic” is indeed a legal determination, and the FTC has just begun the process of determining whether, in its judgment, Google has abused its overwhelming market share enough to deserve it. But when it comes to convincing Congress, Schmidt passed on an opportunity to explain that as much as Google was a disruptive force when it came to the evolution of the Internet, it’s a disruptive force when it comes to how we understand dominance in a networked world. Google’s success inside the Beltway — avoiding an antitrust lawsuit, as well as escaping Congress’ glare — may depend upon the company developing a convincing case about how power works in the Internet age, and then selling Washington on the result.
Nancy Scola is a New York City-based political writer whose work has appeared in the American Prospect, the Atlantic, Columbia Journalism Review, New York Magazine and Salon. On Twitter, she's @nancyscola. More Nancy Scola.
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