Schmidt confident regulators will clear Google

Reuters News
Posted: Sep 21, 2011 11:59 AM
Schmidt confident regulators will clear Google

By Diane Bartz

WASHINGTON (Reuters) - Google Inc is confident that U.S. antitrust regulators will clear the search giant of any wrongdoing, Executive Chairman Eric Schmidt will tell a congressional panel on Wednesday.

Google has been broadly accused of using its clout in the search market to stomp rivals as it moves into adjacent businesses, like travel search. The Federal Trade Commission is looking into that charge, and others, including that Google manipulates its search result rankings to give preference to its own products.

"While no company would request such a government investigation, we are confident that our business practices will stand up to scrutiny," Schmidt said in written testimony submitted to the Senate Judiciary Committee's antitrust panel.

Representatives for rival companies, including Expedia Inc, Yelp Inc and Nextag Inc, will testify at the hearing after Schmidt.

Google controls more than two-thirds of the global search market. But Schmidt will argue web sites that specialize in particular areas -- like restaurant reviews and travel search -- are giving Google stiff competition.

Facebook is another competitor, Schmidt argues. "Consumers, particularly young ones, increasingly are turning to their online friends to find out what to wear, where to eat, and what to watch," he said in written testimony.

Schmidt was Google's chief executive officer from 2001, but vacated the post to company co-founder Larry Page in April.

Schmidt now serves as executive chairman and oversees government affairs -- a position of critical importance during the FTC probe.

Schmidt has been defending Google in Washington for years and well knows that many antitrust experts are skeptical that Google always plays fair.

Key questioners are expected to be Democratic Senator Herb Kohl, head of the Senate Judiciary Committee's antitrust panel, and Senator Richard Blumenthal, a Democrat who led investigations of Google when he was Connecticut's attorney general.

Republican Senator Mike Lee, also on the subcommittee, has expressed concern about Google's purchase of ITA travel search software.

Google could also be asked about a settlement with the Justice Department over Google accepting advertisements for prescription drugs that were illegally imported into the United States. Google paid $500 million in late August as part of a non-prosecution agreement.

Another witness at the hearing is Thomas Barnett, who was the head of the Justice Department's antitrust division in 2008 when it blocked Google's attempt to pursue a joint venture with Yahoo.

Barnett, now representing online travel site Expedia, argued in his written testimony that Google uses its dominance of search to extend its power into areas like maps, product or travel search.

"Google has been highly successful in many of these areas, often replacing the leading company (such as MapQuest) in an extraordinarily short period of time," Barnett said in his written testimony.

Other witnesses include Jeffrey Katz, CEO of shopping site Nextag, and Jeremy Stoppelman, co-founder and CEO of Yelp, a provider of user-generated reviews of restaurants, shops and other local businesses.

(Reporting by Diane Bartz; Editing by Tim Dobbyn)