Google's Senate Hammer-Fest (and Why It Won't Matter)
Google (GOOG) chairman Eric Schmidt is in the last throes of preparation for a Senate Judiciary Committee grilling over antitrust accusations. And who speaks after? Yelp CEO Jeremy Stoppelman, who has complained about some of Google's practices.
At the very least, it will be uncomfortable. At worst, a complete public relations disaster. But no matter what happens, the actual practical upshot for Google will likely be next to nothing. That's because this is a political show that will have no impact on how Google is treated or has to operate.
How do you march forward with your foot in your mouth?
Complaints about Google's business practices are nothing new. Not only has Yelp been vocal, but an EU probe uncovered 9 complaints from competitors. There are antitrust complaints in South Korea.
Competitors claim that Google gets into lines of business and then gives preference in search results to its own offerings over those of competitors -- much the way Microsoft (MSFT) famously promoted its own browser on Windows in the 1990s, which resulted in Congressional antitrust hearings. The assumption is that Google faces some difficult questions and pressure.
There's also the additional problem of Google often being its own worst enemy. Schmidt has made some egregious public gaffes in the past. Furthermore, he's supporting Barack Obama's stimulus plan at a time when Republicans are anything but a friendly crowd, and they will be asking many of the questions.
It takes more than Congress
However, the danger is overblown. When Microsoft -- often associated with Democratic politicians -- got its own Senatorial grilling and then a Department of Justice antitrust suit, the situation was far different:
- Republicans controlled the Senate.
- Microsoft had already entered a settlement with the DOJ in 1994.
- Although Microsoft said that it wouldn't use Windows to push its own products, the company argued that Internet Explorer was a feature, not a product, making the prosecutors see red.
- Microsoft's market share was overwhelming.
More importantly, real action has to come from the Department of Justice, as there is no way the Senate could push through anything on the antitrust front with Republicans holding the House in an election year.
DOJ has reviewed a number of Google doings and deals and the company settled a number of issues. Unlike Microsoft, at least so far, it hasn't left federal prosecutors feeling that the company reneged on any deal. DOJ scrutiny will continue, but it would have anyway. Congress will have no real bearing on it.
Maybe not so monopolistic, technically speaking
On the core issue of search and displaying services, although some like Phillip Elmer-Dewitt at Fortune argue that Google is well within the definition of a monopoly because it has 75 percent of the search ad revenue in the U.S., that's not necessarily true.
As I noted in interviews with two law professors who were expert in antitrust cases, there's a difference in search between revenue and market share, where the company has slowly but steadily lost to Microsoft. According to comScore, Google had under 65 percent search share in August.
Under traditional antitrust prosecution, the DOJ would also have to go beyond showing Google was a monopoly and demonstrate that it used a market advantage to promote its interests over its competitors, and then that it abused its market power. Even if Google gets a top position for its one of its own offerings, it could argue that, given the prominence of the company, that's not unreasonable. Also, it's not as though competitors don't also appear near the top.
I'm not arguing that Google is "good," just that the legal realities suggest that it's not about to undergo the harrowing antitrust experience that Microsoft endured a decade ago. Figure this as a lot of sound and fury, signifying next to nothing that will have no practical impact on Google.
Related:
- AT&T Is Desperate to Save Its T-Mobile Deal -- and Here's Why
- Google Buys Publisher Zagat to Kill Off Yelp
- Amazon and Baidu to Google: Fork You
- Schmidt's Moto-Mouth Puts Google in a Tricky Position
- Google Antitrust: Easy To Charge, Hard To Prove
- Google Gets an Antitrust Win -- and That's No Surprise
- Google Antitrust: Easy To Charge, Hard To Prove
Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
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