Google's Antitrust Hearing: Key Takeaways and Insights

Strategic Insights -

The Senate Judiciary Committee's Antitrust, Competition Policy, and Consumer Rights Subcommittee held a hearing on September 21, 2011, to discuss Google's role in the market and its potential impact on competition. The hearing featured Executive Chairman Eric Schmidt, who answered questions from senators on various topics, including Google's advertising practices, its Android operating system, and its approach to fostering competition.

Key Takeaways:

  • Eric Schmidt acknowledged that Google had entered into a non-prosecution agreement with the US Department of Justice in 2011, admitting to knowingly allowing Canadian online pharmacies to advertise prescription drugs to US consumers, resulting in a $500 million fine.
  • Schmidt stated that the conduct in question was a historical event and not related to current advertising practices or policies, but declined to comment further due to a non-disclosure agreement with the DOJ.
  • Senator John Cornyn (R-TX) raised concerns about Google's Android operating system, suggesting that it may be a form of "tying" that limits competition. Schmidt countered that Android is an open-source platform, and that developers can modify it freely.
  • Schmidt admitted that Google could design Android to favor its own apps, but stated that this would be reversible by modification.
  • Senator Amy Klobuchar (D-MN) inquired about Google's ranking algorithms, citing a Minneapolis Star Tribune article that mentioned the use of nearly 200 different factors and 500 changes to the formula in 2010.

Statistics:

  • Google's Android operating system has reached a market share of approximately 40%.
  • Eric Schmidt stated that Android has 550,000 activations.
  • Google admits to allowing Canadian online pharmacies to advertise prescription drugs to US consumers, resulting in a $500 million fine.

Sources:

  • "The Power of Google: Serving Consumers or Threatening Competition?" Panel I Hearing of the Antitrust, Competition Policy, and Consumer Rights Subcommittee of the Senate Judiciary Committee (September 21, 2011).
  • Federal News Service transcript of the hearing, Copyright 2011 by Federal News Service, Inc.