Wednesday, December 21, 2011

Senators Concerned with Impact of Google’s Practices on Competition

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Allegations regarding Google's search engine practices raise important competition concerns, according to Senators Herb Kohl (D, Wisconsin) and Mike Lee (R, Utah).

In a December 19 letter to FTC Chairman Jon Liebowitz, the senators, who serve as Chairman and Ranking Member of the Senate Judiciary Committee’s antitrust subcommittee, pointed to Google's business practices that they believe “warrant a thorough investigation by the FTC.”

The antitrust subcommittee held a hearing in September to examine the effect of Google's conduct on competition and heard testimony from Google's Executive Chairman Eric Schmidt and others. The letter detailed a number of issues raised at the hearing.

Steering Users to Own Products, Services

The senators questioned whether Google is using its market power in general Internet search “to steer users to its own web products or secondary services and discriminating against other websites with which it competes.”

Google has changed its business model, according to the senators, and “now owns a large and growing array of search-dependant products and services.” With control of vertical search sites, such as Google Maps, Google Travel, and Google Flight Search, many question whether it is possible for the company to be “an unbiased general or ‘horizontal’ search engine.”

Impact on Other Websites

Another issue to be examined is the impact of Google’s practices on websites, such as Yelp! and Nextag and on innovation. At the subcommittee hearing, Yelp! CEO Jeremy Stoppelman and Nextag CEO Jeffrey Katz testified that Google’s practice of favoring its own content harms them directly by depriving their sites of user traffic and advertising revenues. Both CEOs testified that they would not attempt to launch their companies today given Google’s current practices.

The senators also encouraged the FTC to consider Google’s market share of Internet searches done on mobile devices. In light of Google’s ownership of the Android operating system and its proposed acquisition of mobile phone maker Motorola Mobility, some “have raised concerns that Google, as a condition of access to the Android operating system, require phone manufacturers to install Google as the default search engine,” according to the letter.

1 comment:

Rick Rakow said...

I think what you have here is a choice by consumers also. Many people have used google so many times they stay with what they are comfortable with. People do have the choice to use any search engine that they prefer.