Schmidt avoids a Gates-like disaster in D.C.

Google Chairman Eric Schmidt spent a part of the afternoon fending off tough questioning from Senate lawmakers who fear that the company is squashing competition.

Google Chairman Eric Schmidt just prior to telling lawmakers that his company hasn't cooked anything. Greg Sandoval/CNET

WASHINGTON--Eric Schmidt cut a confident figure today prior to his testimony before U.S. lawmakers, who later appeared determined to find out if Google abuses its supremacy on the Web.

The Google chairman glided into court smiling, sat at the witness table, and began staring into his laptop while photographers snapped away. One asked him if he was checking out Google. "Of course," he said laughing and batted back. "And I accessed it through (Google's Web browser) Chrome."

We saw the smooth, smart, unflappable Schmidt during the hearing before the Senate Judiciary Committee's Subcommittee on Antitrust, not the one who sometimes comes off as smug or makes off-the-cuff comments that have gotten him into trouble in the past. He held his own against what appeared to be several skeptical lawmakers.

Senators such as Al Franken (D-Minn.), Mike Lee (R-Utah), and the subcommittee's Chairman Herb Kohl (D-Wis.) dug into whether Google shows preference in listing search results to the company's own products and services. They asked whether Google uses its 40-percent market share in mobile phones to undercut competition in mobile apps. They queried Schmidt about the criminal investigation and $500 million settlement reached between Google and the Justice Department that involved allegations that Google had for years assisted illegal Web pharmacies to acquire ads on Google's search engine.

To be sure, even with a persuasive Schmidt at the forefront, it is unclear how many of the senators left the hearing satisfied that Google's business practices aren't a threat to competition.

In one exchange, Lee tried hard to pin down Schmidt on why results from searches on 650 different products seemed to look fishy. He noted that very often, Google's services or products ranked third. Lee made it clear he was skeptical of such "magical" results.

It was tense at the hearing after Lee told Schmidt that he could only conclude: "You've cooked it so that you're always third."

Lee was prepared to move on after that but Schmidt didn't let him. "Senator, let me say that I can assure you we haven't cooked anything." That's likely what lawmakers wanted to hear or at least the minimum they wanted to hear. They wanted Schmidt to make it clear that Google is not gaming its system for its own benefit.

Schmidt jokes with photographers prior to giving testimony during a Senate hearing today. Greg Sandoval/CNET

Not everybody was satisfied, however. Franken later remarked that he thought Schmidt's response to Lee was "fuzzy." He asked Schmidt whether his company was still lifting content produced by Yelp, a service that provides reviews of businesses, and post it to Google's rival service without permission.

Schmidt said that to his knowledge the company had ended the practice.

Schmidt also seemed reluctant to answer Kohl's question about whether Google was a monopoly. Schmidt said he wasn't a lawyer but understood that his company had a responsibility to debate the issues.

For those that have followed tech for a while, you might remember when in 1998 Sen. Orin Hatch asked Bill Gates whether Microsoft held a monopoly and Gates, then the company's CEO, offered an answer that was equally as noncommittal. He spoke about competition in the marketplace that could unseat the software maker's dominant position.

Gates and Microsoft's own antitrust troubles were very present in the Dirksen Senate office building today. Without naming them, Schmidt outlined the government's past investigation into Microsoft's alleged anticompetitive practices and then did his best to put as much space between Google and the software maker.

Nonetheless, Schmidt's argument that there is plenty of choice for consumers and enough competition that it is unnecessary to regulate Google sounded very much like the arguments Microsoft made 13 years ago. Back then Microsoft's business practices were accused of unfairly undermining rivals in the Web browsing and software sectors.

"Microsoft does not have monopoly power in the business of developing and licensing computer operating software," Gates said then. "As you know, a monopolist by definition is a company that has the ability to restrict entry by new firms and unilaterally control price. Microsoft can do neither."

Schmidt is a better public speaker than Gates and likely was less grating than Gates was back then. Whether that's enough for Google to avoid Microsoft's fate, remains to be seen. Two months after Gates appeared before the Senate subcommittee, his company was sued by the government under the Sherman Act and accused of abusing monopoly power.

 

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