Mr Schmidt goes to Washington

Google's executive chairman is expected to offer surefooted answers on regulation and competition

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The Independent Online

He may not have the star quality of Jimmy Stewart in the 1939 classic Mr Smith Goes to Washington, but Mr Schmidt's own visit for a Senate committee hearing today has had the city "buzzing for months", according to industry experts.

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Eric Schmidt, Google's executive chairman, has travelled from Mountain View to defend the search engine giant against questioning that it has become too powerful. Where Mr Smith came armed with nothing but optimism, Mr Schmidt is bringing a phalanx of lobbyists and PR people. His responses, however, are expected to be just as scripted.

Google has found itself increasingly in the regulatory line of fire over the past two years. It faces ongoing investigations by the European Commission and the Federal Trade Commission in the US. Today's hearing is unrelated but, according to one analyst, marks yet further evidence it is in the legislators' sights.

Whit Andrews, an analyst at Gartner, said: "Any company as large and powerful as Google merits, deserves and requires scrutiny. It is important and inevitable." A Google spokesman said: "We understand that a company that's been as successful as Google will attract a lot of attention. We think that's fair."

The Senate Judiciary Committee's antitrust panel has called Mr Schmidt as part of a hearing dubbed: "The Power of Google: Serving Consumers or Threatening Competition?" The committee, whose members include former Saturday Night Live performer and Senator for Minnesota Al Franken, is expected to ask questions that will go right to the heart of Google's business.

Senator Richard Blumenthal, who led investigation into Google as Connecticut attorney-general, has said: "Concerns have been raised by both regulators and competitors over whether Google has used its dominance of the online and smartphone search markets to impose extra costs on consumers, unfairly preference its own products, or disadvantage competitors through a variety of means, including its search and advertising systems."

The committee will also hear evidence from Jeremy Stoppelman, the chief executive of Yelp, who believes his company's results have been unfairly relegated, and representatives of Expedia, who expressed concerns in the wake of Google's deal to buy fare search company ITA.

Today's hearing will provide a chance for Eric Schmidt to lay out the company's response, and give an indication of how it expects to respond to the official investigations down the line. Part of Mr Schmidt's role is to engage regularly with the US Government, and his appearance was described as the company "sending the grown up". According to recent reports, the group also hired 13 lobbying and communications firms in the run up to the hearing.

The Google spokesman said: "Eric is happy to answer questions from regulators and try to put to rest some overly simplified comparisons between Google and other companies who have drawn similar scrutiny. Our hope is that we have a fair, focused and fast investigation." The group has been keen to emphasise its positive effect on small businesses and the number of jobs it has created.

David Wood, legal council for Icomp, an industry body backed by Microsoft, said: "The responses will be carefully scripted. It will almost be more interesting what isn't said than what is." He added: "Google is unlikely to make mistakes, but anything unscripted or arrogant will be carefully scrutinised."

Analysts said the hearing would not necessarily be damaging. Mr Andrews of Gartner said: "An exercise like this is to educate the legislators, it is how they gather information. It's also a chance to show constituents they care about current issues." Yet he warned there was still a "risk. A poor performance in front of the committee or a gaffe could land them in a position of unwanted subordinacy to US regulators. Things like this can turn in an instant."

Mr Andrews added: "This is just another cycle for Google. It has faced scrutiny before and artfully deflected it through real action and continuing to provide an excellent product."

The bigger battles are yet to come with the ongoing investigations from the FTC and the European Commission, although Mr Schmidt said this week that the regulators "haven't really complained about anything yet".

Fred Huet, managing partner at Greenwich Consulting, said the scrutiny was "part of Google's evolution, especially as they are branching into so many diverse products. The search business is a massive part of people's lives". He believes that in Google's defence Mr Schmidt will point out that a 65 per cent share of the market suggests there is room for competitors including Bing and Yahoo!. He could also suggest advertisers unhappy with Google could go to another powerful site: Facebook.

Mr Andrews believes these events underline Google's position as a major corporation: "Google hasn't been a scrappy start-up for eight years. It is big business, but unlike other big businesses, it is admired by the public fro the services it provides.

"Customers do not love the brand because they think it's cute – this is not Hello Kitty – it's because Google does what they want it to do."

Mr Schmidt said this week: "I think at the moment this is more of an awareness issue," before adding: "I'm pretty comfortable that we're in good shape."

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