US senators say Schmidt admitted preferencing, urge FTC probe of Google
The two ranking members of the Senate committee which conducted hearings on Google’s search practices took Google chairman Eric Schmidt to task and urged the US Federal Trade Commission to investigate antitrust issues raised.
Senators Herb Kohl and Mike Lee, chairman and ranking member, respectively, of the Subcommittee on Antitrust, Competition Policy and Consumer Rights, wrote a letter December 19 to FTC chairman Jonathan Leibowitz, saying: “We therefore urge the FTC to investigate the issues raised at our Subcommittee hearing to determine whether Google’s actions violate antitrust law or substantially harm consumers or competition in this vital industry.”
It has been widely reported that the FTC already is probing Google’s search engine practices, but the letter is noteworthy for its bipartisan support for such an investigation and its citing of suggested areas worth looking into.
Google can also take some solace, however, in that Kohl and Lee didn’t take an even harder line.
However, the two senators concluded that Schmidt, in a written answers to committee questions after the September hearing, made a “clear admission” that Google preferences its search results, favoring its own products in vertical search.
In a 2007 hearing of the subcommittee, Marissa Mayer, Google’s vice president of Local, Maps and Location Services, testified that Google placed its own link first in Google Finance results.
Some four years later, in his written responses to the subcommittee, Schmidt wrote: “It is my understanding that she was referring to the placement of links within a onebox … and her description was accurate.”
“While the basis for Mr. Schmidt’s ‘understanding’ is not clear, even if her statement was in fact limited to the ‘onebox’ result, this is a clear admission of preferencing Google results,” the senators wrote. “As consumer surveys show that 88 percent of consumers click on one of the first three links, these statements appear significant when analyzing Google’s potentially anti-competitive practices.”
Of course, Kohl and Lee didn’t mention it, but Bing, too, favors its own products, such as for Bing Shopping, in its own version of onebox results or instant answers.
Apart from Google’s onebox practices, take a look how Google currently preferences Google Flight Search, placing it higher than any organic results. The top three organic results (not even visible in the following screen grab) on a “New York to LAX flights” search just now were from Orbitz and Expedia, but they were pushed below and down the page by Google’s own Google Flight Search.
And, then there are the tests that Google is conducting in preferencing ads for its Google Hotel Finder above competing ads:
The two senators didn’t go into depth about search preferencing as it relates to Google Flight Search and Google Hotel Finder in their letter, although they did mention that Google has altered its original business model by launching its own vertical search products, including Google Places, Google Flight Search and Google Travel, among others.
Google’s practices in the mobile arena also were a concern.
The senatorial duo noted that Google states it is not requiring manufacturers of Android-based phones to install Google as the default search engine.
“Yet Google has been unwilling to provide any assurance that it will not adopt such a policy in the future,” the senators wrote. “We urge that your investigation consider all avenues necessary to ensure robust competition in the mobile Internet search market.”
In reaction to the senators’ letter, Google stated: “These letters are customary, and we appreciate that the committee reserved judgment as we continue to cooperate with the FTC. We are commited to competing fairly on the Internet’s level playing field.”
Dennis Schaal was North American editor for Tnooz.