* Senator Lee: Google decides who wins, fails on Internet
* Senator Franken says irked by Schmidt’s “fuzzy” answers
* Executive Chairman Schmidt: “We get it” (Rewrites with Schmidt comment, Google critics)
By Diane Bartz and Malathi Nayak
WASHINGTON, Sept 21 (Reuters) - Google Inc has not cooked its search results to favor its own products and listings, Executive Chairman Eric Schmidt told a U.S. Senate hearing looking into whether the search giant abuses its power.
Members of the Senate Judiciary Committee’s antitrust panel said on Wednesday that Google had grown into a dominant and potentially anti-competitive force on the Internet.
“Google is in a position to determine who will succeed and who will fail on the Internet,” said Republican Senator Mike Lee. “In the words of the head of the Google’s search ranking team, Google is the biggest kingmaker on Earth.”
Google has been broadly accused of using its clout in the search market to stomp rivals as it moves into related businesses, like travel search.
The Federal Trade Commission is looking into that charge and others, including whether Google manipulates its search result rankings to favor its own products.
Google is trying to convince regulators and lawmakers that it does not need restrictions placed on its growing portfolio of businesses, and that its business practices are legal and good for consumers.
Lee aggressively quizzed Schmidt over whether Google deviates from its search algorithm to boost its own listings.
He brought a chart that showed a study comparing the success rate for shopping-related key word searches. Lee said that search rankings for price comparison sites — Nextag, PriceGrabber and Shopper — varied while Google’s shopping site consistently ranked third.
“I see you magically coming up third every time,” Lee said. “I don’t know whether you call this a separate algorithm or whether you’ve reverse engineered one algorithm, but either way you’ve cooked it, so that you’re always third.”
Schmidt replied: “Senator, may I simply say that I can assure you we’ve not cooked anything.”
Google controls more than two-thirds of the global search market. But Schmidt argued that specialty web sites — like those with restaurant reviews and travel search — give Google stiff competition.
In an oblique reference to Microsoft (MSFT.O), which faced nearly two decades of legal scrutiny for antitrust violations, Schmidt told lawmakers: “We get it. By that I mean, we get the lessons of our corporate predecessors.”
Colin Gillis, an analyst at BGC Partners, said some of the senators were “gunning hard” for Google but Schmidt handled himself professionally. “He appeared well-coached to me,” Gillis said.
The senators were at times frustrated by what Democratic Senator Al Franken characterized as “fuzzy” answers from Schmidt about how Google prioritizes its search results and whether it unfairly uses rivals’ content.
Franken questioned Schmidt about complaints from Yelp — which provides user-generated reviews of restaurants, shops and other local businesses — that Google unfairly rips reviews from Yelp to build Google’s competing site, Google Places.
Franken asked if Google still used Yelp’s content to drive business to Google Places.
“As far as I know, not,” Schmidt answered.
Franken skeptically asked, “As far as you know?”
“Again I’ll have to look, but I’m not aware of any,” Schmidt said.
Schmidt was Google’s chief executive officer from 2001, but vacated the post to company co-founder Larry Page in April.
Schmidt now serves as executive chairman and oversees government affairs — a position of critical importance during the FTC probe and lawmakers’ reviews.
Some of Google’s rivals made their case at the hearing for why Google needs to be reined in.
Jeffrey Katz, the CEO of Nextag, an Internet comparison shopping company, said Google was initially a huge help in building innovation.
“But what Google engineering giveth, Google marketing taketh away,” he said in written testimony.
He argued that Google is now the Internet neighborhood bully. “Google doesn’t play fair. Google rigs its results, biasing in favor of Google Shopping and against competitors like us,” Katz said in written testimony. “As a result, Nextag’s access is more and more discriminated against ... because we compete with Google where it matters most, for very lucrative shopping users.”
Katz and Yelp CEO Jeremy Stoppelman both said they would not start new businesses in the current environment.
“I personally wouldn’t. I’d find something else to do,” said Stoppelman at the hearing.
Reporting by Diane Bartz and Malathi Nayak in Washington; Additional reporting by Alexei Oreskovic in San Francisco; Editing by Tim Dobbyn, Phil Berlowitz