Bloomberg News

Google’s Schmidt Said to Be Set for Questioning by FTC

May 30, 2012

Eric Schmidt, chairman of Google Inc. Photographer: Brendan Smialowski/Bloomberg

Eric Schmidt, chairman of Google Inc. Photographer: Brendan Smialowski/Bloomberg

Google Inc. (GOOG:US) Chairman Eric Schmidt is set for questioning by the Federal Trade Commission as the agency speeds up its antitrust probe of the world’s most popular search engine, according to three people familiar with the situation.

Schmidt’s deposition is slated to take place as soon as next week, one of the people said. FTC investigators are also interviewing two lower level Google officials this week, another of the people said. The three people declined to be identified because they weren’t authorized to speak publicly about the matter.

Plans for the question-and-answer session with Schmidt are the latest move in the increasingly active probe, which is examining whether Google uses its dominance to hamper competition among Internet companies. Google was used in 66.5 percent of U.S. searches last month, according to ComScore Inc., a Reston, Virginia-based market researcher.

Earlier this month, the agency, which started the probe a year ago, sent out about a dozen civil investigative demands, which are similar to subpoenas, to companies including EBay Inc. (EBAY:US) and Yelp Inc. (YELP:US) seeking information on Google, people familiar with the matter said May 22.

Adam Kovacevich, a spokesman for Mountain View, California- based Google, declined to comment on the planned deposition.

“Naturally, we worry that governments dictating search results could make it harder for us to give people the answers they’re looking for,” he said.

Peter Kaplan, an FTC spokesman, declined to comment.

Public Defender

Schmidt, 57, oversaw Google’s growth in the past decade and is the company’s most public defender against antitrust allegations. FTC lawyers will be listening for inconsistent statements from Schmidt, said Robert Lande, a University of Baltimore law professor.

“A skilled cross examiner will catch people off guard,” said Lande, who isn’t involved in the case. “They’re hoping to pick up some gems from Schmidt.”

A similar deposition of Microsoft Corp. co-founder Bill Gates helped prosecutors build their argument more than a decade ago that the company had suppressed competition in the Internet software market, he said.

“Bill Gates’s ego took over,” Lande said. “There were a number of times when Gates pretty much forgot the bigger picture and made statements damaging to his antitrust case.”

By interviewing Schmidt, the FTC also is making it harder for Google to blame any antitrust violations on rogue underlings, Lande said.

‘Demented Middle-Management’

The questioning “is going to prevent them from using the demented middle-management defense,” Lande said.

Last month the agency hired Beth Wilkinson, a top Washington litigator, to run the antitrust investigation, signaling that the agency may be preparing to sue Google.

The FTC is looking at changes Google made in February 2011 to the mathematical formulas that rank its search results, among other things, two people told Bloomberg News last month. Some websites reported losing almost half of their user traffic following the changes.

Google disclosed a year ago it received a demand for information from the FTC. Microsoft Corp. (MSFT:US) also said it got a formal request from the agency.

Joaquin Almunia, the European Commission’s antitrust chief, told reporters May 21 that Google has a “matter of weeks” to resolve a probe and avoid possible fines over allegations of discriminating against competitors.

To contact the reporters on this story: Sara Forden in Washington at sforden@bloomberg.net; Jeff Bliss in Washington at jbliss@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net.


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