Wisconsin’s Kohl at center of gathering storm over Google search practices
He may be nearing the end of his career on Capitol Hill, but U.S. Sen. Herb Kohl is playing a key role in the Federal Trade Commission’s inquiry into the Internet search practices of technology giant Google.
Kohl, the Wisconsin Democrat who announced he won’t seek re-election in 2012, is the chairman of the Senate subcommittee that may hold hearings on allegations that Google is stifling Internet search competition. Kohl asked Google’s top executives, Larry Page and Eric Schmidt, to testify at an anti-trust hearing but was turned down – an answer that may compel Kohl to ask for a subpoena or accept Google’s offer of testimony from its chief legal counsel.
The FTC recently served notice to Google that it has become the target of an anti-trust case, which is based on allegations it is using strategic acquisitions and subtle, mathematical changes in its search engines to control online searches by consumers and others.
At stake is a battle over online search advertising, which is worth billions of dollars to Google and its competitors – and which affects prices paid by companies that want online customers to find them and their products.
A coalition of business interests called “Fair Search” contends Google has unfairly captured significant shares of the online video, map, and book markets, and is poised to do the same in travel, shopping, and other commercial sectors.
Others believe Google shouldn’t be penalized for being bigger or smarter than its competitors, and that shrewd acquisitions and business practices can be a far cry from anti-competitive behavior.
In fact, Google has already taken to reminding consumers of its value to the economy through newspaper ads and other forums. One such ad in the Milwaukee Journal Sentinel depicted a slice of Swiss cheese, an estimate of $643 million in economic activity provided by Google, and the headline “That’s a lot of cheese!” An online version of Google’s economic impact estimate references 22,400 Wisconsin businesses, website publishers, and nonprofit groups.
The FTC inquiry alone could prove troubling for Google, which prides itself on its overall image and reputation for innovation. That may explain why Page and Schmidt declined Kohl’s invitation to testify, even though there is precedent for the CEOs and COOs of other major corporations appearing before the anti-trust subcommittee of the Senate Judiciary Committee.
Among other things, the FTC is looking into whether Google unfairly puts its own results at the top of the search list – where they’re most likely to be followed by users. For example, if a user searched via Google for “map of Milwaukee,” the Google map might come up above MapQuest. Google says it doesn’t rig the results of such searches, and that there are plenty of alternatives through other search engines and social media.
“Search helps you go anywhere and discover anything, on an open Internet,” said Amit Singhal, a global fellow with Google. “Using Google is a choice – and there are lots of other choices available to you for getting information: other general-interest search engines, specialized search engines, direct navigation to websites, mobile applications, social networks, and more.”
Among the companies that disagree with Google’s position are online travel firms.
“We believe there’s a very compelling case that Google is abusing its dominant position in search to stifle competition and to extend its control over how information and commerce flows over the Internet,” said Robert Birge, chief marketing officer of Kayak.com, in a recent National Public Radio interview.
Some observers doubt the FTC inquiry will result in findings of anti-competitive behavior, given the FTC has approved key acquisitions by Google in the past. Still, the company now confronts three formal antitrust inquiries on two continents, the other two being one by the Texas Attorney General’s office and the European Commission.
“The broader aspect of interest in Wisconsin and beyond is Internet search and the difficulties of being found, especially if you’re a smaller business,” said Pat Lynch, former attorney general of Rhode Island and an adviser to Fair Search. “That can directly damage a small business.”
It remains to be seen how Kohl’s subcommittee proceeds with hearings and who speaks for Google, but the controversy over Internet search competition doesn’t appear to be going away anytime soon.
Sign up for the free IB Update – your weekly resource for local business news, analysis, voices, and the names you need to know. Click here.