Google's government woes

Faith Merino · January 21, 2011 · Short URL:

Schmidt comments on Google's government outreach efforts at Thursday's earnings call

Thursday was a big news day for Google.  Not only is Eric Schmidt stepping down as CEO to make way for Larry Page, but the company also reported closing out Q4 2010 with $8.44 billion in revenue, marking a 26% increase over the fourth quarter of 2009, when the company ended the year with $6.67 billion in revenue.  Overall, the company ended the quarter with a clean $35 billion in cash.  Not too bad, Google. 

During the call, one analyst asked about Google’s government outreach efforts, bringing up Google’s ongoing struggles with governments both in the U.S. and abroad.

“The simple answer is that we’re talking to them,” said Schmidt.  “One big problem is that lots of people don’t know what we do and what we don’t do, and some of our competitors are assisting in that misinformation.  Regulators have a job to do and we’re all for that, but a lot of stuff we do is actually pro-competitive.”

Google has faced a seemingly never-ending battle with a number of governments around the world over everything from privacy to competition.  Rumors abound that the U.S. Justice Department is considering opening an antitrust investigation following Google’s $700 million acquisition of ITA Software Inc., according to sources familiar with the matter.  Bloomberg broke the story last Friday.  ITA provides online airline flight and ticket information, and Google has been under the federal microscope since it announced plans to acquire the company back in July.

Competitors, including Microsoft, Expedia, and Travelocity challenged the acquisition, arguing that Google may prevent others from using ITA’s technology.  Google denied the charges, insisting that the acquisition will increase competition.

Additionally, in November, the European Commission opened an antitrust investigation into Google on allegations of “unfavorable treatment of their services in Google’s unpaid and sponsored search results.”  Specifically, the allegations came from competing search providers who claimed that Google deliberately manipulated its algorithm to quash the competition and place their services lower in the result rankings. 

Google denied the charges in a phone interview with VatorNews in November, claiming that since the company's inception, Web businesses have complained about low-ranking positions on Google's search results, but the cases always amount to the websites' own deficiencies.

It seems to me that all of this concern about Google’s ultimate motives really highlights how truly innovative and disruptive Google is—and always will be.  As the ever-evolving company continues to reinvent itself, it will create tension and fear among competitors. 

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