Google gave 'the ultimatum only a monopolist can give'

September 22, 2011: 7:00 AM ET

What Yelp CEO Jeremy Stoppelman told the Senate antitrust panel about Google

Yelp's Stoppelman, Nextag's Katz, and former Justice Department antitrust director Thomas Barnett. Photo: AP

As feared, the Senate hearings Wednesday on "The Power of Google: Serving Customers or Threatening Competition?" barely scratched the surface.

What Google (GOOG) did to Apple (AAPL) -- copying Apple's touchscreen operating system and offering it to Apple's competitors for free -- never came up. Amy Klobuchar (D-Minn.) and Chuck Schumer (D-NY) used much of their time to suck up to Google chairman Eric Schmidt, practically begging him to bring Google's fiber-to-the-home experiment to their states.

But for viewers who stuck around for the full three-hour hearing (available on C-Span here), one message was clear: As Google has grown to achieve monopoly-scale control of Internet search, its mission has changed. Yelp CEO Jeremy Stoppelman put it most succinctly:

"Let's be clear. Google is no longer in the business of sending users to the best sources of information on the Web. It now hopes to become a destination site itself for one vertical market after another, including news, shopping, travel, and now, local business reviews. It would be one thing if these efforts were conducted on a level playing field, but the reality is they're not."

For me, the testimony of Yelp's Stoppelman and Nextag CEO Jeff Katz was the most compelling, because it came from Web-based entrepreneurs who know all too well how the game is played.

Here's the crux of the story Stoppelman told the senators: 

"The experience in my industry is telling. Google forces review websites to provide their content for free to benefit Google's own competing product, not consumers. Google then gives its own product preferential treatment in Google search results.

"Google first began taking our content without permission a year ago. Despite public and private protests, Google gave the ultimatum that only a monopolist can give: In order to appear in Web search, you must allow us to use your content to compete against you. As everyone in this room knows, not being in Google is equivalent to not existing on the Internet. We had no choice."

Google softened its stance, according to Stoppelman, only after the FTC announced an antitrust investigation, the states' attorneys general took notice, and the Senate antitrust committee proposed this hearing.

The text of Stoppelman's written testimony is available here.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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