Google Executive Chairman Eric Schmidt testified today before the Senate Judiciary Committee’s antitrust subcommittee, making the case not only that Google is not evil, but also that it’s not Microsoft.
Thirteen years ago, Bill Gates testified before the same panel to defend Microsoft from allegations that it abused its market dominance. His performance has been described as elusive and defensive, and two months later the Justice Department filed its antitrust suit.
Schmidt, pundits have been saying, needed to avoid a similar performance, and the Google chairman seems to have taken the advice not just to heart, but literally. At every turn, Schmidt’s message seemed to be: We’re nothing like Microsoft.
In his opening statement, Schmidt brought up Microsoft right off the bat, saying, “Twenty years ago, a large technology firm was setting the world on fire. Its software was on nearly every computer. Its name was synonymous with innovation. But that company lost sight of what mattered. Then Washington stepped in.”
Schmidt said he and others in Silicon Valley had learned the lessons of the Microsoft antirust saga. “We get it. By that I mean that we get the lessons of our corporate predecessors,” Schmidt said.
He didn’t mention exactly what that lesson was, but we can be sure one aspect of it is that if “Washington steps in,” it can demolish a thriving business. So in several instances he sought to distinguish today’s Google from the Microsoft of the late ’90s, which was accused of using its market power in operating systems to force users to use its Internet Explorer web browser.
“I ask you to remember that not all companies are cut from the same cloth, and that one company’s past need not be another’s future,” he said. “We live in a different world today, and the open Internet is the ultimate level playing field.”
“Open” and “Internet” are the key words there.
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Sen. Al Franken (D-Minn.) asked Schmidt if Google didn’t use its market power in mobile operating systems to tie-in use of its services like Gmail and Maps. Absolutely not, Schmidt said, surprising Franken who apparently had not heard of the Bing-tied Android-powered Samsung Fascinate sold by Verizon, or the Yahoo-connected Motorola Backflip from AT&T.
“Android is freely open and so we couldn’t favor ourselves even if we wanted to,” Schmidt said.
Because its products are open source and it complies with open standards, Schmidt said several times, Google can’t lock in customers. And the fact that it has to operate on the Internet adds to that, he said.
“We live in constant fear that consumers will switch to other services,” Schmidt said. “One of the consequences of the open Internet is that consumers have choices they didn’t have two decades ago.” Again, implying that unlike the old Microsoft, Google’s customers can leave at any moment.
An exchange with Sen. Richard Blumenthal (D-Conn.), highlighted this point. The senator drew an analogy between Google and a racetrack owner who operated races but never had horses in them. Now the racetrack owner also owns horses (i.e. Google Maps, Google Books, Zagat reviews, etc.) and his horses all start winning.
(MORE: Google Gobbles Up Zagat)
“I prefer to think of the Internet as the platform,” Schmidt responded. That is, the Internet is the racetrack and no one owns it.
In the end, Schmidt seems to have faced the grilling as best as he could: Polite, deferential, but pushing back firmly when he had to. We’ll find out soon enough whether the FTC and DOJ agree.