Senate Calls on FTC to Investigate Google’s Business Practices

December 19th, 2011 | Bookmark and Share | SUBSCRIBE

The bipartisan leadership of the Senate Antitrust Subcommittee released a letter today expressing strong support for the FTC’s ongoing investigation into Google’s business practices. The letter from Chairman Herb Kohl (D-WI) and Ranking Member Mike Lee (R-UT) follows the subcommittee’s hearing on competition in online search in September for which Google Executive Chairman Eric Schmidt was called to testify. 

The letter details how “Google’s business model has changed dramatically in recent years,” shifting into vertical search, and raises some particular concerns about Google’s behavior in the mobile marketplace.

Some key passages outline their concerns (emphasis added):

Google is dominant in general Internet searches, with a 65 to 70 percent market share in computer-based Internet search, and a market share of at least 95 percent for Internet searches done on mobile devices. Indeed, in his response to Senator Kohl’s question at our Subcommittee hearing to Google’s Executive Chairman Eric Schmidt as to whether Google is a monopolist in online search, he responded, “I would agree, Senator, that we’re in that area.” (The fact that Schmidt later tried to back away from this statement isn’t lost on the subcommittee, and is noted in the footnotes.)

Google’s critics argue that given its acquisitions and development of these varied web products and services, Google has a strong incentive to bias its search results in favor of its own offerings. Rather than act as an honest broker of unbiased search results, Google’s search results appear to favor the company’s own web products and services. Given Google’s dominant market share in Internet search, any such bias or preferencing would raise serious questions as to whether Google is seeking to leverage its search dominance into adjacent markets, in a manner potentially contrary to antitrust law.

Indeed, both CEOs [Yelp CEO Jeremy Stoppelman and Nextag CEO Jeffrey Katz] testified that they would not attempt to launch their companies today given Google’s current practices, raising serious concerns about the impact of these practices on innovation.

Mr. Katz and others also allege that Google sometimes subjects websites to “search penalties” that drastically lower where links to those websites are found on Google searches… If these allegations are true, they raise serious questions as to whether Google is penalizing these competing websites simply in order to maintain its dominant market share in Internet search.

Industry observers have raised concerns that Google may, as a condition of access to the Android operating system, require phone manufacturers to install Google as the default search engine… Google denied that it presently makes this demand… Yet Google has been unwilling to provide any assurance that it will not adopt such a policy in the future. We urge that your investigation consider all avenues necessary to ensure robust competition in the mobile Internet search market.

The senators close by urging the FTC to investigate the issues raised at the hearing, reminding readers of the vital role antitrust scrutiny plays in protecting consumers and fostering free market innovation:

It is important to note that the concerns expressed in this letter are not an effort to protect any specific competitor. Rather, our interest is to ensure robust competition in this vital market… We are motivated by a strong desire to protect the Internet’s openness, competitiveness and capacity for innovation… We are committed to ensuring that consumers benefit from robust competition in online search and that the Internet remains the source of much free-market innovation. 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.

FairSearch.org applauds Senators Kohl and Lee for their leadership on this issue and echoes their call for the FTC, along with State Attorneys General and the European Commission, to conduct “a thorough investigation” of these concerns.