Three Internet companies—Nextag Inc., Yelp Inc. and Expedia Inc.—are gearing up to attack Google Inc. on Capitol Hill, claiming the company is taking new profits for itself by unfairly punishing them on its search engine.
Online travel agent Expedia alleges Google steers users to its own websites and products at the expense of other sites.
Product-search site Nextag says Google prevents it from bidding on prominent ads next to search results.
Business-reviews site Yelp says Google unfairly promotes its own local-listings business, Google Places, above rivals.
In a preview of Wednesday's Senate antitrust hearing on whether Google abuses its dominance on the Web, representatives of the sites—which help people search for information on consumer goods, local businesses and airline flights—said in interviews this week that Google has increasingly sought to drive people who use its search engine to its own specialized sites that compete with theirs.
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One of the companies, Nextag, is going even further. Chief Executive Jeff Katz said Google also prevents his company's site from bidding on the prominent ads that show up next to search results for products such as running shoes. Instead, he said, because Google sees his company as a threat, Nextag can only bid to appear in text ads lower down on the results page, limiting its exposure to consumers.
Mr. Katz, whose site helps consumers comparison shop for electronics, home goods and other products said.
"Google is the dominant digital advertising resource in the world, and Nextag is restricted from marketing itself to shoppers about the services we can provide."
Google has long denied that it profits by punishing other sites on its search engine.
A Google spokesman said in a statement that the "Product Listing Ads" Mr. Katz's site uses can't be used, because they "are a unique ad format that allows websites to advertise their products with pictures and prices, and we have found that when users click on these ads they expect to be able to purchase the product."
Nextag, by contrast, largely points visitors to other sites where they can purchase items.
Regarding Wednesday's hearing, Google said in a statement:
"We understand with success comes scrutiny, and we're looking forward to the hearing and answering any questions senators may have about our business."
Nextag, Yelp and Expedia, which will all testify Wednesday, said they believe they are being targeted by Google because their websites have become places where some people search for specific information, sometimes without searching first on Google.
Google has said repeatedly that its search engine is built to serve people and not other websites. According to the Mountain View, Calif., company, people are increasingly looking for direct answers to search queries and not just links to other sites. So when people search on Google for a specific local business, such as a restaurant, they will see information about the restaurant's location and contact information. In addition, they will get a link to Google Places, the company's business listings, which provides more detailed information and reviews.
In talks with policymakers in Washington, Google officials such as Matt Cutts, a chief search engineer, have cited a federal court ruling in 2003 that said its rankings are "opinions" and are "entitled to full constitutional protection," a person familiar with the matter has said.
In the interview, Mr. Katz said that about a year ago Google began barring Nextag from bidding to appear in the ads that show up in the top right corner of the search-results page when people search for consumer goods. The ads include photographs of the items people searched for.
Mr. Katz declined to say what Google told Nextag at the time about why it couldn't participate in the auction for the photographic ads.
The Google spokesman said in a statement:
"We require that a click from one of these ads goes to a page where the product can be sold. As of Sept. 7, NexTag was in the process of setting up Product Listing Ads for the products they sell directly on their site, and, of course, NexTag continues to use our traditional text ads."
Mr. Katz said San Mateo, Calif.-based Nextag, which was founded in 1999 and has around 450 employees, is among the top 25 or so advertisers on Google's search engine and has spent hundreds of millions of dollars to buy ads on Google's AdWords ad system over the years. Katz said.
"There's no more recourse other than to speak up, so I'm speaking up."
Mr. Katz added that the Federal Trade Commission, which is conducting a broad antitrust probe of Google, has subpoenaed "troves of data" from Nextag that show the company is performing "less well" since the alleged Google ad practice went into effect.
The FTC is also looking into complaints by Yelp and Expedia that Google puts links to Google Places at the top of the results page when people search for information on local businesses, pushing down the links to competing sites.
Tom Barnett, a lawyer for the travel site Expedia who will appear with Mr. Katz at Wednesday's hearing, said Monday,
"Google has both the incentive and ability to use its dominance to steer users to its own products and foreclose the ability of other sites to compete effectively."
Yelp CEO Jeremy Stoppelman has said in interviews in the past that Google unfairly promotes its Places service above Yelp and others. Google is trying to leverage its search engine "to take an inferior product and put it in front of the user," he has said. Mr. Stoppelman, who couldn't be reached for comment Tuesday, had also complained that Google used excerpts of Yelp's user-generated reviews in Google Places without his site's permission, a practice Google discontinued earlier this year.
Some Google rivals have suggested to FTC lawyers that Google should do more to help consumers distinguish between links to its specialized sites— including Google Places and Google Product Search—and links in the "natural" search results, whose order is determined by a special algorithm.
Still, Google has plenty of defenders. Richard Skrenta, CEO of Blekko Inc., a Web-search engine that competes with Google's, said in a blog post Tuesday that "we don't need federal intervention to level the playing field with Google." And he added: "Let's let entrepreneurs, technology and good old-fashioned innovation deal with Google. Consumers will always be the winners in that scenario."
COMMENTARY: Here's how this whole FTC antitrust investigation, anti-competitive claims by Expedia, yelp and Nextgag and U.S. Senate Judiciary Committee probe all came about.
In June 23, 2011, The Wall Street Journal reported that sources told them that the FTC was ’investigating Google’s advertising business and whether Google has been directing search users to its own services over the competition. As is typical with investigations like this, the FTC will eventually begin requesting information from other companies that deal with Google as well in order to get further information on how Google conducts its business.
Google has overstepped their boundaries way too often and too much, or at least this is what the FTC believes. According to a Wall Street Journal report, the US Federal Trade Commission is preparing to launch a major antitrust investigation against the search engine, that could be the most serious legal threat yet to the 12-year-old company.
The FTC is targeting Google’s practices in the search-advertising business, their biggest money maker. The FTC probe could include whether Google searches unfairly steer users to the company’s own growing network of services at the expense of rival providers. According U.S. antitrust law, it isn’t illegal to have a monopoly, but it is illegal to abuse it. For many SEO and marketing experts, it is already evident that Google is abusing its position in search.
Recently, Expedia, Kayak, Sabre Holdings and Farelogix Inc. aligned to try and block Google’s acquisition of ITA technology. They failed, and Fairsearch documented the problem, in a desperate attempt to attract the attention of the legislators to stop Google’s unfair use of its Web supremacy:
“Google is abusing its dominant position in search to stifle competition and capture more control over the flow of information and commerce online. Officials charged with protecting innovation, economic growth, and consumers must step up and enforce existing laws that will prevent Google from further stifling competition on the Internet.”
They are not alone. Even smaller players are affected by Google’s game, especially since the Panda update that theoretically had the purpose to improve Google search results, by de-indexing content scrappers and spammers, but also had undesired side effects for other entities that produced original content.
The FTC will now try to evaluate whether Google’s search engine favors its own products. The answer is already known: Google does serve first its own services for a given search, promoting all its services in search results above all competition.
The issue is deeper, and requires an broader understanding of the system. Recently, Google has hurt many publishers, by excluding, penalizing, or promoting certain sites against others. Below, an overview of what Fairsearch.org considers Google abuses:
On June 10, 2011, Antitrust Chairman Herb Kohl, D-Wis., and ranking member Mike Lee, R-Utah, sent a letter to Google, asking the company to send either CEO Larry Page or Schmidt to testify at an upcoming hearing on competitiveness issues.
Letter of June 10, 2011 from U.S. Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights addressed to Google
Google had initially resisted the U.S. Senate invitation, instead offering to send Chief Legal Officer David Drummond. Without specifically threatening to use its subpoena power, the subcommittee warned that it would prefer to work out its request by agreement "rather than needing to resort to more formal procedures."
Google CEO Larry Page (left) speaks with former Google CEO Eric Schmidt (right)
On July 8, 2011, almost one month and one pending federal antitrust probe later, Google Chairman Eric Schmidt agreed to appear before the Senate Judiciary Antitrust Subcommittee. The U.S. Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights meeting is titled, “The Power of Google: Serving Consumers or Threatening Competition?”, and is being held today, September 21 at 2:00 PM (EST). That's what I call a haunting title for a subcommittee, wouldn't you agree?
In preparation for the Senate antitrust hearings, Google Inc. has hired a dozen lobbying firms as it looks to defend itself amid a broad federal antitrust investigation of its activities.
A Google spokeswoman said Friday it hired firms including:
- Holland & Knight LLP
- Akin Gump Strauss Hauer & Feld LLP
- Bingham McCutchen LLP
- The Normandy Group.
A Google spokeswoman said.
"We have a strong story to tell about our business and we've sought out the best talent we can find to help tell it."
I don't know if the U.S. Senate Judiciary Committee meeting with Google will be public or closed. Google will present its testimony, claiming that the complaints filed against it are all bullshit. In any event, it will be very interesting to see how this all pans out.
Courtesy of an article dated September 21, 2011 appearing in The Wall Street Journal Technolgy, an article dated July 1, 2011 appearing in The Wall Street Journal and an article dated July 8, 2011 appearing in the National Journal
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