Res earc her Published by CQ Press, an Imprint of SAGE Publications, Inc. CQ www.cqresearcher.com Google’s Dominance Is the online-search giant too powerful? he meteoric rise of Google in just 13 years has revolutionized the Internet. But competitors are growing wary as the Silicon Valley icon, known for T its “Don’t Be Evil” motto, strengthens its dominance over online searching and advertising and rapidly expands into new areas. Up to 70 percent of online searches in the United States are conducted on Google, whose vast portfolio includes air - line ticketing, comparison shopping, social networking and mobile- phone software. In addition, Google has proposed a $12.5 billion acquisition of Motorola Mobility, a major manufacturer of wireless A Google employee walks across the campus at the company’s Mountain View, Calif., headquarters. phones and other electronic devices. Critics portray Google as a Some 70 percent of Internet searches in the United States are conducted on Google, whose vast portfolio also includes airline ticketing, comparison shopping, monopoly that leverages its power in order to bully rivals. Google social networking and mobile-phone software. strongly denies the accusations and counters that alternatives are I one click away. Now, regulators in the United States and abroad N THIS REPORT are examining whether Google has run afoul of antitrust laws and S THE ISSUES ....................955 should be reined in. I BACKGROUND ................962 D CHRONOLOGY ................963 E CURRENT SITUATION ........968 CQ Researcher • Nov. 11, 2011 • www.cqresearcher.com AT ISSUE ........................969 Volume 21, Number 40 • Pages 953-976 OUTLOOK ......................971 RECIPIENT OF SOCIETY OF PROFESSIONAL JOURNALISTS AWARD FOR BIBLIOGRAPHY ................974 EXCELLENCE N AMERICAN BAR ASSOCIATION SILVER GAVEL AWARD THE NEXT STEP ..............975 GOOGLE ’S DOMINANCE CQ Re search er Nov. 11, 2011 THE ISSUES OUTLOOK Volume 21, Number 40 • Does Google wield too What Next for Google? MANAGING EDITOR: Thomas J. Billitteri 955 much control over the 971 Ongoing investigations, legal [email protected] Internet? action and competition could ASSISTANT MANAGING EDITOR: Kathy Koch • Does Google violate reduce Google’s size. [email protected] antitrust law through anti - CONTRIBUTING EDITOR: Thomas J. Colin competitive behavior? SIDEBARS AND GRAPHICS [email protected] • Should the federal ASSOCIATE EDITOR: Kenneth Jost government break Google Google Umbrella STAFF WRITERS: Marcia Clemmitt, Peter Katel into separate companies? 956 Continues to Expand The company offers a CONTRIBUTING WRITERS: Sarah Glazer, BACKGROUND Alan Greenblatt, Barbara Mantel, vast array of services and Jennifer Weeks products. Breaking Standard Oil DESIGN /P RODUCTION EDITOR: Olu B. Davis 962 Google Rides Growth In 1911 the U.S. Supreme ASSISTANT EDITOR: Darrell Dela Rosa Court split the giant firm 960 Wave into 34 companies. Revenue nearly tripled be - FACT CHECKER: Michelle Harris tween 2006 and 2010. Gobbling Up Competition 962 Foreign Markets Boost Google snaps up promising 961 Google’s Growth Internet ventures. Half of Google’s $29 billion in revenue came from 965 Antitrust Action abroad in 2010. An Imprint of SAGE Publications, Inc. Washington has had VICE PRESIDENT AND EDITORIAL DIRECTOR, mixed success over the Chronology HIGHER EDUCATION GROUP: years in efforts to corral 963 Key events since 1890. Michele Sordi major communications DIRECTOR, ONLINE PUBLISHING: companies. Great Wall of Censorship 964 Surrounds Google in China Todd Baldwin “No one in China ever sees Testing Antitrust an uncensored version of 967 Boundaries Copyright © 2011 CQ Press, an Imprint of SAGE Pub - Google search results.” lications, Inc. SAGE reserves all copyright and other Google’s critics see parallels rights herein, unless pre vi ous ly spec i fied in writing. with the most recent probe 966 Google’s Privacy Policies No part of this publication may be reproduced of Microsoft. Spark Intense Criticism electronically or otherwise, without prior written “What you do on the Internet permission. Un au tho rized re pro duc tion or trans mis - should be under your control.” sion of SAGE copy right ed material is a violation of CURRENT SITUATION federal law car ry ing civil fines of up to $100,000. 969 At Issue Growing Concern in Is Google too dominant? CQ Press is a registered trademark of Congressional 968 Washington Quarterly Inc. Concern about Google’s FOR FURTHER RESEARCH CQ Researcher (ISSN 1056-2036) is printed on acid- size is bipartisan. free paper. Pub lished weekly, except: (May wk. 4) For More Information (July wks. 1, 2) (Aug. wks. 2, 3) (Nov. wk. 4) and Ongoing Investigations 973 Organizations to contact. (Dec. wks. 4, 5). Published by SAGE Publications, Inc., 970 Several nations and states 2455 Teller Rd., Thousand Oaks, CA 91320. Annual are investigating Google’s Bibliography full-service subscriptions start at $803. For pricing, call business practices. 974 Selected sources used. 1-800-834-9020. To purchase a CQ Researcher report in print or electronic format (PDF), visit www.cqpress. Voluntary Options The Next Step com or call 866-427-7737. Single reports start at $15. 970 Some senators are open to 975 Additional articles . Bulk purchase discounts and electronic-rights li - unilateral action by Google to censing are also available. Periodicals postage paid at resolve concerns about its Citing CQ Researcher Thousand Oaks, California, and at additional mailing market dominance. 975 Sample bibliography formats. offices . POST MAST ER: Send ad dress chang es to CQ Re search er , 2300 N St., N.W., Suite 800, Wash ing ton, Cover: Getty Images/Justin Sullivan DC 20037. 954 CQ Researcher Google’s Dominance BY DAVID HATCH the federal pressure, Google THE ISSUES has hired a dozen lobbying firms to make its case in Wash - he meeting between ington. ( See Current Situation, Yelp and Google had p. 968. ) T the makings of a touch - Critics say Google has em - ing romance — a modern- ployed uncompetitive behav - day Internet version of Holly - ior to achieve its explosive wood’s “When Harry Met Sally.” growth. ( See graph, p. 960. ) A Cute, popular restaurant -review rising chorus of companies — site meets fabulously success - from industry stalwarts such as ful, but laid-back, Web goliath. Microsoft to newer ventures But, alas, not all Internet such as Nextag, a comparison- relationships work out. shopping site — is demand - After debuting in 2004, ing that the federal govern - Yelp quickly caught the eye ment take action. They want of Google, the world’s lead - regulators to protect them ing search engine. Google from an Internet juggernaut saw the company as a way that they contend has become to build revenue from local too powerful and has ample merchants, and in 2005 it t motivation to favor its own o g agreed to have Yelp reviews r products in Google searches. a M appear in Google pages high - But Eric Schmidt, Google’s n lighting local businesses. e executive chairman, insists that B / o The trouble started two t his company plays fair with o years later, when Google h competitors and risks losing P began compiling its own P its customer base if it misbe - A restaurant reviews, prompt - Since Google’s founding 13 years ago in a Menlo Park, haves. “We live in great fear ing Yelp to sever the arrange - Calif., garage by Stanford University computer science every day that consumers will ment. They clashed again in graduate students Sergey Brin, left, and Larry Page, switch in extraordinary num - 2009, after Yelp rebuffed the company has mushroomed into a global powerhouse available in bers to other services,” he told Google’s offer to buy the com - 181 countries and 146 languages. the Senate subcommittee where pany. 1 Yelp claimed Google the Yelp episode was aired. 3 took its reviews without permission hensive probe into allegations of anti - In Nov. 4 written responses to ques - and then, when Yelp protested, laid competitive conduct by Google and tions posed by six members of the down an ultimatum: Google would Yelp aired its grievances at a legal con - subcommittee, Schmidt said Google’s cease the practice only by removing ference. Even so, Yelp’s troubles weren’t size does not impede competition. Yelp’s content from its search results. over. In September, Google purchased “Google does not believe that scale is That threat was the kiss of death, Zagat, the prestigious restaurant guide, a barrier to entry,” he wrote. “The In - Yelp feared. “As everyone in this room arming itself with content that directly ternet provides a level playing field knows, not being on Google is the competes with Yelp. for competition; Google’s size has not equivalent of not being on the Inter - The dustup over Yelp is part of a changed that fact. We believe we are net,” Yelp co-founder and CEO Jere - much bigger controversy over whether better not because we are bigger but my Stoppelman told a Sept. 21 Sen - Google, famous for its “Don’t Be Evil” because our technology is better.” ate hearing on Google’s business motto, leverages its size and scale to Schmidt acknowledged that Google practices. “When one company con - bully rivals, dictate unfair business terms used “snippets” of reviews from Yelp trols the market, it ultimately controls and give preferential treatment to its and other sites, but wrote that was consumer choice.” 2 own brands. In addition to the FTC permissible under the “fair use” doc - Google had already relented this probe, the European Union (EU), South trine, which permits the unauthorized summer, after the Federal Trade Com - Korea and at least five states are con - reproduction of copyrighted works mission (FTC) announced a compre - ducting similar inquiries. In response to under limited circumstances. “Although www.cqresearcher.com Nov. 11, 2011 955 GOOGLE ’S DOMINANCE Google tries to act responsibly in re - Google Umbrella Continues to Expand sponse to website concerns,” he wrote, Google offers a vast array of services and products, including online “ultimately Google builds our search advertising, social media, email, mapping and video sharing.