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Eric Schmidt will represent Google before the Senate antitrust panel.  (Source: Sydney Morning Herald)

U.S. Senators like Herb Kohl (D-Wisc.) will likely have plenty of tough questions for Mr. Schmidt.  (Source: Mandel Ngan, Getty Images)
Is Google the victim or the bully? The company will try to sell Congress that the former is true

Google Inc. (GOOG), according to some critics, is the "new Microsoft".  Indeed, like Microsoft Corp. (MSFT) of the 1990s, Google is growing dominant positions in new markets (smartphones, in Google's case) even as it enjoys a monopoly in a lucrative international market (search/online advertising, in Google's case).  And despite it's "don't be evil" motto, there are growing reports that Google -- like Microsoft -- may be leveraging its dominant position to crush rival products, while growing its own offerings.

I. Bully?

The U.S. Federal Trade Commission is currently executing 
a broad antitrust probe with regards to Google's behavior in many markets, which brings to mind memories of the landmark DOJ case against Microsoft in the 1990s, which ultimately forced changes at the OS maker, though failing to break it up (an outcome some had hoped for).

On the other hand, Google's supporters -- and of course Google -- argue that its being singled out unfairly in an age of greater antitrust scrutiny, and that the analogy is not as strong as one might think.  That's the case former chief executive officer and current executive chairman Eric Schmidt will make this week when he goes to bat before the U.S. Senate.

Mr. Schmidt will this week have a lengthy chat with the Senate Judiciary Committee's antitrust panel.  

II. Victim?

Mr. Schmidt has long argued that Google's search results -- which some say favor Google and its allies over rivals -- are utilitarian, rather than authoritarian.  He argues that "Page Rank" Google's patented search algorithm, gives users the most relevant results -- which just so happens sometimes to come in the form of a Google or partner service.

In the eyes of Mr. Schmidt, the issue as not one of Google favoritism, but of companies hurting users by "gaming" Page Rank.  Page Rank works in part by tracking "hot" keywords.  Some sites have leveraged this by including blocks of hot keywords in their code to trick Page Rank into bumping them to the top of the search results pile.  The net result can be page views and advertising dollars.  Thus Mr. Schmidt is likely to steer the conversation to this practice, which is known as "scraping".

Google's goal in trying to steer the hearing towards scraping is two folding.  First, Google may test the waters to see if the Senate would be receptive to partially banning or limiting scraping -- a problem plaguing all search providers.  Second, even if the Senate isn't interested in that, Google will likely trying to make sure that it's not subject to antitrust punishments for retaliating against scrapers.  Google recently penalized Overstock.com Inc (
OSTK) and J.C. Penney Comp. Inc. (JCP) after it caught them scraping.

Many view the hearing as a high-risk proposition for Google.  Some fear that despite his years of defending Google's business model in Washington, D.C., Mr. Schmidt could slip under the spotlight and say something that upsets the Senate.  

States Colin Gillis, an analyst at BGC Financial in New York in a Reuters 
interview, "It's never a positive to have to testify on antitrust on the Hill. The best-case scenario is that things continue as they are. [Schmidt's] opening his mouth and he's speaking and there's always the possibility that something will come out of it that he thinks is logical and that the committee may not like. It's not likely to happen, but it's always possible."

III. Both Parties Are Concerned About Google's Dominance

Google faces bipartisan scrutiny.  
Senator Herb Kohl (D-Wisc.) has at times questioned Google's business tactics and is expected to be among those grilling Google.  

The same goes for 
Senator Richard Blumenthal (D-Conn.) who calls Google "a great Americans success story", but complains, "Concerns have been raised by both regulators and competitors over whether Google has used its dominance of the online and smartphone search markets to impose extra costs on consumers, unfairly preference its own products, or disadvantage competitors through a variety of means, including its search and advertising system"

And on the other side of the aisle 
Senator Mike Lee (R-Utah) has expressed concern about Google's purchase of travel software firm ITA, which rivals like Expedia, Inc. (EXPE) fear due to their belief that Google's dominant search position could allow it to monopolize travel business.  

Overstock.com (who was recently punished by Google for scraping) is headquartered in Cottonwood Heights, Utah, Sen. Lee's home state.  Overstock donated $7.7K USD of the $1.975M USD Sen. Lee raised, while Microsoft -- a search rival of Google -- 
gave Sen. Lee $10K USD.  Together these contributions total less than 1 percent of Sen. Lee's campaign costs, but nonetheless they may be relevant to his views towards Google.

In addition to Expedia's executives, representatives for Yelp! Inc. will testify after Mr. Schmidt, likely to complain about Google copying content from their reviews, without thoroughly identify the source of that content. 

Google faces similar probes and inquiries overseas 
in the European Union and in South Korea.



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RE: 100%
By Sazabi19 on 9/19/2011 4:04:47 PM , Rating: 3
I accidently rated you up, could you please knock yourself down a notch? Thanks.


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