Google chairman Eric E. Schmidt is expected to testify in Washington Wednesday before the U.S. Senate Judiciary Committee's antitrust subcommittee to explain how his company produces its search results, and whether or not Google favors businesses or obstructs competition.
The Google chief will have an opportunity to respond to inquiries into the company's behavior from federal agencies, such as the Federal Trade Commission, and Google's rivals, including Nextag, Yelp, and Expedia.
Google has enormous influence on consumers and businesses in America-how they find information in the Internet, what they see and the commercial choices they are presented, said Sen. Herb Kohl (D.-Wis.), chairman of the Judiciary subcommittee on antitrust, competition policy, and consumer rights.
The search giant has been recently expanding its business into comparison shopping, travel search, business reviews, and most recently launched its mobile payment solution, Google Wallet. Competitors will have a chance to state their cases, as Yelp CEO Jeremy Stoppelman, Nextag CEO Jeffrey Katz, and Thomas Barnett, a lawyer for Expedia, are all expected to testify after Schmidt's initial testimony.
Prior to the hearing, Schmidt submitted written testimony to the Senate panel, explaining that his company faces competition on many fronts and is only trying to innovate in a dynamic industry.
Keeping up requires constant investment and innovation, and if Google fails in this effort users can and will switch, he wrote. The cost of going elsewhere is zero, and users can and do use other sources to find the information they want.
According to Schmidt, Google has generated $64 billion in economic activity for small businesses, which comes from the company enabling online sales, ad revenue sharing with Web site publishers, and non-profit grants.
Schmidt is expected to speak less about the ideas of his written testimony, and instead explain his personal history in Silicon Valley and the culture of tech companies dually cooperating and competing at the same time.
Google rivals in attendance, however, hope to make the case that the search company abuses its dominance.
Unfortunately for consumers, there are strong indications that Google is, in fact, foreclosing competition rather than simply competing on the merits of its own products, says Expedia's lawyer Barnett, who is a former head of the Justice Department's antitrust division.
It's true that Google has displaced a number of competitors. Google Maps supplanted incumbents like MapQuest, and recently Google took heat for using Yelp reviews in its Google Places product without permission, and has been accused of placing Places results over those from Yelp.
Schmidt will likely defend his company's behavior by emphasizing the open Internet, where consumers can easily switch to other competing services if they so choose. Google says people should remember the Internet is the ultimate level playing field, and argues that the company's success hasn't stopped the explosion of mobile apps as a new way for people to consume information.
We believe that the FTC's inquiry will reveal an enthusiastic company filled with people who believe we have only just scratched the surface of what's possible, Schmidt will reportedly say, according to Politico, which obtained an excerpt of Schmidt's prepared speech. That passion to do better will not only serve our users well, it will serve our nation well, by helping create the new jobs an economic growth that America needs.
Wednesday's Senate hearing will have no direct consequences for any of the investigations of Google currently underway. However, testimony from the hearing could affect policy makers and influence the public if Google seems like a potential threat to innovation, competition, and consumer welfare.
As antitrust efforts have intensified, Google has escalated its own marketing efforts to protect its reputation. The company has produced ads for some markets, including Senator Kohl's home state of Wisconsin, which emphasize Google's invaluable role in small business assistance and job creation.
The public hearing begins at 2 p.m. ET.