Schmidt Admits Google Monopoly in Senate Hearing

Google Chairman Eric Schmidt admitted to a US Senate antitrust panel yesterday that his company was a monopoly, even though he has publicly claimed otherwise. But he also defended Google's business practices and claimed that the online giant wasn't another Microsoft.

"We get the lessons of our corporate predecessors," he said, obviously referring to Microsoft, which is still dealing with the after-effects of antitrust issues from over a decade ago. "We also get that it’s natural for you to have questions about our business. [But] one company's past need not be another company's future."

Senator Herb Kohl asked Schmidt directly (if awkwardly) whether Google had obtained monopoly status, a situation that isn't inherently illegal but does require certain legal behavioral changes.

"Do you recognize that in the words that are used and antitrust kind of oversight, your market share constitutes monopoly, dominant ... special power dominant for a monopoly firm?" Kohl asked. "You recognize you're in that area?"

Given that Google controls about 65 percent of the worldwide search market and not 90 percent or more, Schmidt's reply was somewhat astonishing.

"I would agree, sir, that we're in that area," he said. But then, as if realizing the error of such an admission, he added, "I'm not a lawyer, but my understanding of monopoly findings is this is a judicial process."

Point being that this panel discussion can't legally establish Google's monopoly status and trigger new oversight rules. But let's not forget why Schmidt was there in the first place: Google is the subject of numerous legal complaints from competitors such as Yelp and Nextag, which led the FTC to launch an antitrust investigation. And though Schmidt might claim that Google is no Microsoft, its behavior thus far suggests otherwise. The online giant has used its dominant online search and advertising businesses to shut out competitors and enter new markets with products and services that could never have otherwise stood on their own. And it is dumping the Android OS into the market for free; not surprisingly, that system went from also-ran to dominant market leader in less than two years.

Schmidt even went so far as to use the current language in Washington in a bid to influence the panel. "What we ask is that you help us ensure that the Federal Trade Commission's inquiry remains a focused and fair process, so that we can continue creating jobs and building products that delight our users," he said.

Kohl wasn't impressed by this logic.

"Hundreds of thousands of businesses depend on Google to grow and prosper," he said. "We need to recognize that, as the dominant firm in Internet search, Google has special obligations under antitrust law to not deploy its market power to squelch competition."

Exactly.

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