Google Isn’t ‘Dominant’ in Internet Search, Schmidt Says

Google Inc., owner of the world’s most popular search engine, isn’t “dominant” in Internet search and competes against companies such as Facebook Inc., Apple Inc. (AAPL) and Microsoft Corp. (MSFT), Chairman Eric Schmidt said in a written response to lawmakers’ questions.

“Google has many strong competitors,” Schmidt said in answers released today by the Senate antitrust subcommittee. “Google has none of the characteristics that I associate with market power.”

Schmidt submitted his comments to address follow-up questions from lawmakers after a Sept. 21 hearing where he conceded that Google fits one of the legal criteria used to determine whether a company has enough market share, or monopoly power, to quash competition. In Internet search, Schmidt said at the time, Google is “in that area.”

Later in the hearing, Susan Creighton, a partner with Wilson Sonsini Goodrich & Rosati PC who represents Google, said in prepared comments that “Google’s apparent ‘bigness’ obscures the fact that it lacks anything resembling monopoly power.”

The Federal Trade Commission is conducting an antitrust investigation into whether Google is harming competition. The government is seeking to determine whether Google is dominant enough to control prices and exclude competitors, which would put it in violation of antitrust laws.

‘Obfuscate the Relevant’

Google, based in Mountain View, California, is seeking “to obfuscate the relevant market issues and just say that everything in the world competes with Google,” said Robert Lande, a University of Baltimore law professor. “I think they’re going to lose on that issue, but of course they’re going to try.”

Google Inc. (GOOG) increased its U.S. market share to 65.3 percent in September, up from 64.8 percent in August, as Yahoo! Inc. dropped to less than 16 percent, according to ComScore Inc. (SCOR), a Reston, Virginia market research firm.

In his responses released today, Schmidt said the Internet search market extends beyond traditional competitors such as Microsoft’s Bing and Yahoo! Inc. to Facebook and Siri, the voice-activated software introduced last month by Apple.

“We sometimes fail to anticipate the competitive threat posed by new methods of accessing information,” he said.

FairSearch.org, a group of companies including Microsoft that has accused Google of violating antitrust laws, said Schmidt’s didn’t respond to senators’ questions.

‘Thumb His Nose’

“Schmidt continued today to thumb his nose at senators’ concerns about how Google exploits its monopoly power,” the group said in a statement.

Schmidt also defended Google against criticism that the search engine gives preference to its own services when ranking search results.

A Google service isn’t “placed higher because it is on a site owned by Google than an identical page would be if it were owned by another business,” Schmidt.

Yelp Inc., a San Francisco-based website that features reviews of local businesses, and Foundem, a U.K.-based price- comparison website, have accused Google of pushing down their rankings in search results because they compete with Google services.

Separate Services

Schmidt said Google’s shopping and review features aren’t separate services and were added to the company’s search engine in response to users wanting more immediate answers than links to other websites.

“They are not some separate ‘Google product’ that can be ‘favored,’” he said.

Schmidt responded to lawmakers’ concerns that Google, which owns the Android mobile operating system, may be excluding rivals’ services from smartphones by claiming they’re technologically incompatible with Android.

Google doesn’t make smartphone manufacturers ship their products only with software Google has approved or require them to preload phones with Google applications, Schmidt said. The company has developed technical specifications to allow Android applications to run better on different models, he said.

“Google respects the freedom of manufacturers to choose which applications should be pre-loaded on Android devices,” Schmidt said. The company doesn’t pressure mobile-phone makers to make Google the default search engine on their devices, he said.

Google didn’t force Motorola Inc. or Samsung Electronics Co. Ltd. to remove Skyhook Wireless Inc. software from their cell phones, he said. Skyhook has a service that pinpoints a cell-phone’s location, which competes with a Google application.

“Google merely requested that these manufacturers use a version of the Skyhook software that” was compatible with Android, Schmidt said.

To contact the reporter on this story: Jeff Bliss in Washington at jbliss@bloomberg.net; Sara Forden in Washington at sforden@bloomberg.net

To contact the editor responsible for this story: Mark Silva in Washington at msilva34@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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