Little more than a decade ago, Microsoft was public enemy number one. After the United States Justice Department filed suit, a judge ruled that the world’s largest software maker was a monopoly and must be broken up.
That ruling was overturned, and in 2001, the company settled with the Department of Justice.
Today, Microsoft is still one of the world’s largest software makers, and Internet Explorer, the product that was the focus of so much of the government’s action against the company, is still the world’s most widely-used internet browser.
The company, however, has been humbled in markets like search and mobile, which were nascent in 2001. The implication: try as hard as they might, big technology companies can’t use their size to guarantee success.
But that fact is lost on members of the United States Senate, who took time yesterday to grill Google about is practices.
Setting the stage for potential antitrust action against the world’s largest search engine, members of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights all essentially asked former CEO Eric Schmidt the same question: is Google using its dominance in search to crush competitors?
Perhaps doing his best to imitate a younger Bill Gates, whose testimony in the Microsoft antitrust case left many unsatisfied, Schmidt didn’t always seem to provide the type of answers his interrogators wanted. For whatever reason,
Adding fuel to the fire were executives from companies like Yelp. A blog post by Yelp CEO Jeremy Stoppelman summarized his testimony:
…we believe Google has acted anti-competitively in at least two key ways: by misusing Yelp review content in their competing Places product and by favoring their own competing Places product in search results.
Schmidt’s less-than-impressive performance coupled with the testimony from apparent Google competitors probably doesn’t bode well for the Mountain View-based company, although it remains to be seen whether the United States government is really ready to try to take out of the most successful companies in one of the few industries actually producing jobs in the country today.
But regardless of the economic situation, there are plenty of reasons the government should tread carefully. As TechDirt’s Mike Masnick notes, some of the arguments put forth by the ‘Google-is-too-big‘ camp are inherently flawed:
…the most ridiculous testimony came from Thomas Barnett, a lawyer for Covington & Burling, who was representing a bunch of Google competitors who put together an operation called FairSearch. When asked about whether or not Google was a monopoly player, Barnett flat out lied, claiming that Google is dominant and can’t be unseated “because it got there first.”
Masnick goes on:
Markets that look locked up in the tech/internet world very rarely stay locked up for long. Five years ago, MySpace absolutely dominated the social networking space. Where are they today? Ten years ago, Yahoo was the dominant destination site. Fifteen years ago AOL was how people got on the internet. Fifteen years ago, Netscape was how you surfed the web.
All of these players were dominant with huge market share. How are they all doing today? Which one needed government regulation to break their hold on the market? Things change. Markets change. Rewriting history and bitching about Google because it’s big misses the point. If Google does bad things, there are hundreds of entrepreneurs out there just waiting to take parts of the market away from the company.
At GigaOm, Stacey Higginbotham observes that Google’s success has enabled it to do things that some of the Senators who are investigating Google asked for:
Both Senators Klobuchar and Chuck Schumer (D-NY) requested Google’s fiber to the home experiment in their states. I don’t blame them, but it was odd to hear Google be castigated for abusing its search advantage (and hearing Senators tie that advantage to its infrastructure and scale earlier in the hearing) while other members of the committee requested services that would enhance Google’s ability to create higher barriers to entry. In the binary world of Silicon Valley that may not make sense, but in D.C. it apparently does.
All of this said, there’s no doubt that Google is today competing head on with some of the companies whose websites appear in its search results. But that doesn’t guarantee that Google will be successful, even if it does favor its own properties.
Not everything Google touches turns to gold, and in trying to compete in new markets, Google may fail miserably, wasting money and overextending itself in the process. That, of course, could leave it vulnerable to competition.
But that notwithstanding, at the end of the day, the companies asking the government to protect them from Google should ponder a simple question: are we better with Google, or would we be better without it?
Companies like Yelp receive a significant amount of traffic from Google search, and indeed continue to build their businesses (in part) on search traffic. Google might try to compete with them, but if Google goes away, or the market becomes more fragmented, they’d probably be a lot less successful.
From this perspective, Yelp and those who would like to see Google become the next Microsoft should be careful. They might just get what they wish for.