Bloomberg News

Google’s Page, Schmidt May Be Subpoenaed by Senate Committee

June 23, 2011

June 23 (Bloomberg) -- Google Inc.’s reluctance to provide a top executive for testimony to a Senate panel probing its market power has prompted threats of subpoenas for Chief Executive Officer Larry Page and Chairman Eric Schmidt.

In a letter dated June 10, the Democratic chairman and leading Republican on the antitrust subcommittee asked Google to provide one of the company’s two senior executives before Congress’s August recess. The letter urged a resolution “by agreement” to avoid “more formal procedures,” according to a copy of the letter obtained by Bloomberg News.

The threat of subpoenas is one of the ways the committee is pressuring Mountain View, California-based Google to send Page or Schmidt, according to two people familiar with negotiations between the panel and the company. The possibility of subpoenas was discussed with Google in connection with the letter, the people said. The letter asked Google to respond by June 15.

Subpoenas would require approval by the full Senate Judiciary Committee.

Google has offered to have Chief Legal Officer David Drummond appear at the hearing, according to the letter.

The subcommittee would “strongly prefer” Page or Schmidt at the proceeding, “which will address fundamental questions of business operations rather than merely legal issues,” U.S. senators Herb Kohl and Mike Lee wrote. Kohl, a Wisconsin Democrat, is chairman of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, and Lee, of Utah, is the panel’s ranking Republican.

Best for Questions

Mistique Cano, a Google spokeswoman in Washington, said in an e-mail that the company will “send them the executive who can best answer their questions,” and that’s Drummond. The company is still in talks with the subcommittee, she said.

Drummond, who is also the company’s senior vice president for corporate development, oversees Google’s legal affairs, government relations, corporate development and new business development teams.

He first worked for Google in 1998 as an outside lawyer with Wilson Sonsini Goodrich & Rosati, when he helped incorporate the company, before joining Google in 2002, according to his profile on Google’s website.

‘Very Disappointed’

“I’m very disappointed in Google’s response to the request to have Larry Page or Eric Schmidt testify at our subcommittee hearing,” Lee said in an e-mailed statement after discussions with the company yesterday. “I’m committed to work with Senator Kohl and others on the committee to ensure we have the opportunity to investigate these issues thoroughly and receive adequate responses from Google.”

Kohl’s spokeswoman, Lynn Becker, said the senator “feels it’s imperative that Mr. Schmidt or Mr. Page participate and is hopeful their attendance can be confirmed soon.”

Google is coming under increasing scrutiny by regulators in the U.S. and Europe for some of its business practices. The Federal Trade Commission is preparing a broad antitrust investigation of the company, two people familiar with the matter said in April, while the antitrust division of the U.S. Justice Department is reviewing its $400 million purchase of Internet advertising company Admeld Inc., two people familiar with the matter said last week.

The European Union and the state of Texas also have begun investigations of the company’s dominance in search and advertising practices.

List of Priorities

Kohl put an examination of Google’s Internet dominance on a list of priorities for the subcommittee March 10.

Senator Richard Blumenthal, a Democrat from Connecticut who is also on the committee, has expressed concerns about the owner of the Internet’s most popular search engine. In May, Google set aside $500 million related to the possible resolution of a Justice Department investigation of its advertising business, resulting in lower first-quarter profit.

“It does look as though there is some ganging up on Google going on,” said Stanley Brand, a Washington attorney who served as legal counsel to the House of Representatives from 1976 to 1983.

“There’s a reluctance on the part of companies to open up their executives to that kind of questioning when there are federal investigations under way,” said Brand, who added that there could also be “serious legal consequences” for the government if there is any indication that the probes aren’t the result of “good faith independent judgment.”

“Most companies don’t want to fight with Congress, but sometimes they don’t have a choice,” Brand said.

--Editors: Fred Strasser, Peter Blumberg

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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