Eric Schmidt is gearing up for the first of what could be many Senate hearings on Google's alleged abuse of its dominance in the Internet search business. The immediate and obvious comparison for Schmidt's appearance is the now legendary 1998 Microsoft hearing starring Bill Gates, his sweaty brow and questions about the future of innovation in America. The hearings aren't expected to lead to new legislation but rather to inform the ongoing Federal Trade Commission investigation into Google, leaving many people to speculate about exactly what's at stake when Schmidt takes the stand this Wednesday. For Google, maintaining the status quo is the top priority.
Let's start with the consumer angle. Everyone expects Schmidt to face questions about Google ranking its own services higher than competitors in search results. The New York Times explains:
Today Google, like Microsoft then, is both admired and feared. Google has used the riches from its dominance in search and search advertising to expand into video distribution with YouTube, smartphone software with Android and Web browsers with Chrome. It has added online commerce offerings in local retail and restaurants, comparison shopping and travel, and folded them into its search engine, prompting complaints that Google is giving its businesses preferred placement in search results.
"If it is proven that Google discriminates in favor of its own online properties, you certainly have an antitrust issue," antitrust expert and law professor Herbert Hovenkamp told The Times. Google, however, strongly insists that this is not the case, that consumers can search wherever they want. "Using Google is a choice," reads the company's official blog. "And there are lots of other choices available to you for getting information."
Indeed, consumers are choosing. As things are, Google's share of the search market is slipping. Yahoo and Microsoft teamed up last year and have managed to put a dent in Google's dominance. Meanwhile, there's a solid amount of speculation over whether the age of a search-dominated Internet might be over. Schmidt himself has admitted that social is the future--and that he "screwed up" Google's social strategy when he was CEO. Increasing scrutiny from the various government organizations is inevitably bad for Google's image, but should the FTC decide to lodge an official complaint with the Department of Justice, the U.S. government could hamper Google's growth further.
If history is any guide, we can expect to wait a long time before the matter is completely resolved. In the end, the government did bring an antitrust suit against Microsoft, one that "weighed it down for years" to quote The Wall Street Journal. Indeed the DOJ only finally closed their case on Microsoft this May of this year. Analysts are mixed on the extent to which the suit actually affected Microsoft's behavior, but one analyst told PC World at the end of the Microsoft case that this kind of scrutiny has a "psychological" effect on companies, one that "changes their attitude and outlook and cramps their style."
The historical resemblance of Google's hearing to Microsoft's raises the question of whether Google's era of absolute control might be nearing an end. Regardless of what Eric Schmidt says at the hearing--and a few people think he'll probably end up making a legendary Eric Schmidt gaffe or two--this week's hearing is a bad thing. "It's never a positive to have to testify on antitrust on the Hill," analyst Colin Gillis told Reuters. "The best-case scenario is that things continue as they are."