Google goes to Washington as antitrust pressure builds

Google’s Eric Schmidt has testified before a Congressional panel in the US as competitors stepped up their criticism of the company. It’s just one front in the growing antitrust battle the search superpower faces around the globe, and the pressure will only grow as Google continues to gobble up other companies and move into new markets.

Google has been facing ever greater antitrust scrutiny in the past few years as it has grown into a global giant. The Federal Trade Commission in the US launched an antitrust investigation against Google in August. Google also faces anti-competition investigations in EU, and its offices were recently raided in South Korea as part of an antitrust investigation.

[caption id=“attachment_90059” align=“alignleft” width=“300” caption=“Google’s Eric Schmidt is sworn in before testifying before US Senate Committee - Reuters”]  [/caption]

In his Congressional testimony, Schmidt echoed Bill Gates a decade ago when the Microsoft co-founder expressed fears of the fast changing world of technology. Schmidt said that competition for Google was only a click away.

More from News & Analysis

What is the US HIRE Bill and why is India’s $250-billion IT sector worried? Is the internet dead? What's this theory that OpenAI's Sam Altman says might be true?

As Microsoft was facing down US government regulators in the late 90s, Gates said he was constantly dogged by fears that his empire would be toppled by the next entrepreneur in a garage.

Gates might have been right, and while it was a dorm room at Stanford where Google was created instead of a garage, the technology landscape has shifted dramatically in the last decade. Microsoft still dominates the desktop, but it’s Google’s Android that has risen from nowhere to dominate the smartphone market. Google dominates search, and it, not Microsoft, dominates the way that most people navigate the web.

If you want evidence of how much has changed is that Microsoft is one voice in the chorus of competitors accusing Google of anti-competitive behaviour.

However, while Schmidt might fear some other upstart - and the most likely of candidates is the surging social network Facebook - he was quick to tell Senators that Google is no Microsoft.

“Twenty years ago, a large technology firm was setting the world on fire. Its software was on nearly every computer. Its name was synonymous with innovation,” he said during his testimony, adding, “But that company lost sight of what mattered. Then Washington stepped in.”

The company has learned from other technology companies that have faced antitrust action in the past, Schmidt said.

Fear of Google’s power

In the US, the key question is whether Google has abused its dominance in search to favour its own products and undercut those of its competitors.

Jeremy Stoppelman, CEO and co-founder of online directory Yelp, spoke to Google’s power. “Not being on Google is the equivalent to not existing”, he said, adding, “I wonder if we would have been able to start Yelp today given Google’s recent actions.”

Google’s competitors were unequivocal. Google has abused its monopoly position, which isn’t entirely surprising. However, Google also took heat from senators on the panel.

Connecticutt Senator Richard Blumenthal was on the panel grilling Schmidt, and he must have had a sense of deja vu. Before winning a seat in the US Senate, Blumenthal was one of 19 state attorneys general that brought the antitrust suit against Microsoft. Referring to Google, he told Schmidt that not only did the search giant own the track and some of the horses, “you seem to be winning”.

Whether the antitrust investigations lead to action against the company is immaterial. Microsoft spent billions defending itself against suits and paying fines to regulators. It was an expensive distraction for the company especially as it faced a transition from Bill Gates’ leadership to that of lieutenant Steve Ballmer and the transition to the internet. It also damaged Microsoft’s reputation.

The cases haven’t reached that level for Google. At the moment, they will add to its legal bills and could feed public fears over the dominance of the company. However, the wheels of the justice system move very slowly, and Google will be facing years of antitrust hearings and possibly courtroom battles ahead.