Two Senators, Herb Kohl, the Chairman of Subcommittee on Antitrust, Competition Policy and Consumer Rights along with Mike Lee, the ranking member of Subcommittee on AntiTrust sent a letter to the Chairman of the Federal Trade Commission today asking the FTC to investigate Google as to whether they are violating Antitrust Laws and the FTC Act.
In their letter to the FTC they write in relevant part:
“””We are writing to you regarding our examination of competition concerns arising from the business practices of the world’s leading Internet search engine, Google Inc. (“Google”). On September 21, 2011, we held an Antitrust Subcommittee hearing to examine allegations that Google’s search engine is biased in favor of its own secondary products and services, undermining free and fair competition among e-commerce websites.”
“While we take no position on the ultimate legality of Google’s practices under the antitrust laws and the FTC Act, we believe these concerns warrant a thorough investigation by the FTC. We detail below a number of concerns raised at the hearing, in the course of our Subcommittee inquiry, and by a number of industry participants that we believe deserve careful review.””
“The Internet is a driving force of the American economy. Today, approximately 240 million people throughout the United States regularly use the Internet, and last year their activity generated nearly $170 billion in commerce. Recent studies show that 92% of adults online use search engines to access information on over one trillion websites.””
“The number of Internet websites will continue to grow, making the role of Internet search engines ever more important for those seeking information or engaging in commerce online. “”
“”In July 2011 alone, there were 17.1 billion search queries in the United States, up 3 percent from the previous month. Google is dominant in general Internet searches, with a 65 to 70 percent market share in computer-based Internet search, and a market share of at least 95 percent for Internet searches done on mobile devices.
“In response to Senator Kohl’s question at our Subcommittee hearing to Google’s Executive Chairman Eric Schmidt as to whether Google is a monopolist in online search, he responded, “I would agree, Senator, that we’re in that area.”
“Google faces competition from only one general search engine, Bing, a partnership of Microsoft and Yahoo!, which is a distant second in market share and is losing an estimated $2 billion annually.”
“Given the scope of Google’s market share in general Internet search, a key question is whether Google is using its market power to steer users to its own web products or secondary services and discriminating against other websites with which it competes.””
“Google began as a general Internet search engine, whose mission was simply to identify the web pages most relevant to user queries. Google’s stated goal was to transfer users from its search results page to the websites listed on that page as soon as possible. As Google co-founder and current CEO Larry Page said at the time of its Initial Public Offering in 2004, “We want you to come to Google and quickly find what you want. Then we’re happy to send you to the other sites. In fact, that’s the point.”
“”Google’s critics argue that given its acquisitions and development of these varied web products and services, Google has a strong incentive to bias its search results in favor of its own offerings.”
“Rather than act as an honest broker of unbiased search results, Google’s search results appear to favor the company’s own web products and services.”
Google has made over 100 acquisitions since 2001, including: Motorola Mobility (2011) (still under Justice Department review), Zagat’s (2011), Like.com (2010), ITA Software (2010), AdMob (2009), DoubleCJick (2007), YouTube (2006), and Android (2005).
“Given Google’s dominant market share in Internet search, any such bias or preferencing would raise serious questions as to whether Google is seeking to leverage its search dominance into adjacent markets, in a manner potentially contrary to antitrust law.”
“As consumer surveys show that.88 percent of consumers click on one of the first three links, these statements appear significant when analyzing Google’s potentially anti-competitive practices.””
“We are committed to ensuring that consumers benefit from robust competition in online search and that the Internet remains the source of much free-market innovation. We therefore urge the FTC to investigate the issues raised at our Subcommittee hearing to determine whether Google’s actions violate antitrust law or substantially harm consumers or competition in this vital industry.”
“Thank you for your attention to this matter.”