company's developed an anti-competitive bias in the way it displays search results. after that we'll begin our live coverage of a forum focusing on the reintegration of war veteran into civilian life. and later the senate's in at 3:30 eastern for an hour of general speeches followed by debate on senate married -- majority leader reid's bill that funds all federal agencies through november 18th. members will hold a reed yurl vote at about 5:30 eastern. >> he founded several labor unions and represented the socialist party of america as candidate for president. running five times. the last time from prison. eugene debs lost, but he changed political history. he's one to have 14 men features in c-span's new weekly series, "the contenders." live from the debs' home friday, 8 p.m. eastern. get a preview and watch other

videos about him at our special web site for the series, c-span.org/thecontenders. >> which part of the u.s. constitution is important to you? that's our question in this year's student cam competition, open to middle and high school students. make a video documentary, 5-8 minutes long, and tell us the part of the constitution that's important to you and why. be sure to include more than one point of view and video of c-span programming. entries are due by january 20,2012. there's $50,000 in total prizes. for all the details go to studentcam.org. >> this week on "the communicators," a look inside google's business practices. this past week a senate subcommittee held a hearing on the topic including whether the google search engine is biased in this way it displays search results. our guests are scott cleland, publisher of google monitor.com, and david balto, an antitrust

attorney. >> host: well, this week the senate antitrust subcommittee of the judicial committee held a hearing on google business practices. that's our topic this week on "the communicators." we have two guests this week, coming up the former ftc commissioner for the competition bureau will be out here to talk about google's business practices and this week's hearing, but first we want to introduce you to scott cleland. mr. cleland is the publisher or the president of precursor, he's also the publisher of a publication called google monitor.com and author of the book "search and destroy: why you can't trust google inc.." mr. cleland, is google worthy of being investigated by the ftc and the senate antitrust subcommittee? >> guest: yes, it is. um, it has, um, more viles of antitrust law than any company in the last four years.

had four official ones. and they're being investigated on three different continents. and just in august they were, um, they pleaded guilty in a noncriminal, nonprosecution agreement of promoting illegal pharmacy sales. so, um, and they have a lot of other issues that have put them under the spotlight. so it's deed. >> host: -- deserved. >> host: do you think they're a victim of their own success because of their size? >> guest: no. they're a victim of some very radical views, and that is they don't believe the law applies to them. they don't respect other people's property rights, they don't respect privacy, they believe in radical transparency, and they, basically, believe that the rules don't apply to them. and so, um, most all of google's problems are self-inatlanticked because they don't play by the rules to have game, and they don't obey the law. >> host: what do you mean by radical transparency? >> guest: well, um, as you know julian as sang is for radical

transparency, and that's wikileaks. what was interesting is that once he came out, you know, responsible publications didn't release any of for confidential information, and amazon no longer, um, hosted them and paypal no longer took money for them. so people stepped back. well, google doubled down, and they backed julian assange completely. they actually indexed all of his stolen documents and made them available to everybody on the web, to al-qaeda, to any bad actor that could find them. and they said they made that decision at the highest levels. >> host: gautham nagesh writes the hill.com column. please, go ahead. >> host: thank you. i'm going to have to ask you to expand a little bit when you talk about radical transparency and indexing. can you be a little bit more specific in terms of what you think they're guilty of? is. >> guest: sure. in 2008 there was a, um, sherman

antitrust ii case threatened against them in order to drop the google/yahoo! agreement. basically, doj felt they broke up the microsoft merger and they created a collusive arrangement with yahoo! that they wanted to get approved that would have given them over 90% of the search advertising and search sipped candidated advertising business. just last year they were found to be colluding with five other companies on restricting the competition for highly-skilled workers. the department of justice also opposed them on the google book settlement, google illegally has copied 15 million books and still counting. the doj and federal judge object today that. and also the ftc forced google's ceo schmidt off of the apple board as an anti-competitive arrangement. >> host: now, turning specificically to the issue of yesterday's hearing which is google's search rankings, competitors have complained that google is integrating some of its outside services into its

search results, thereby giving them an advantage over firms that appear lower in the rankings. in your view s this an antitrust violation and why? >> guest: it is under deceptive and unfair practices are illegal. it probably also could be a sherman violation, but advertising is a perfectly legitimate business, but you need to represent who your customer is, and that is google gets about $30 billion a year from advertisers. however, they always represent, and they represented under oath yesterday, that they always focus on the user. and so they have led users to believe that they can trust them, they've led web sites to believe that they can trust them by representing publicly that they are, um, you know, don't have any ulterior motive but to serve the user. well, they have $30 billion of ulterior motive to take care of advertisers. so what they have done is a misrepresentation, a deceptive situation, and it's basically

the -- everybody knows the term bait and switch. they, basically, created a dominant search engine by telling everybody that it was unbiased, and you could trust it. and then they came along, and they created 500 products and services, and then they started ranking themselves first, and that was clearly a bias. and they still maintain that it's unbiased. so their main problem is they're being highly, highly deceptive, and that's illegal. >> host: now, stepping back, you say they're being deceptive when they market themselves. we know their unofficial slogan is don't be evil. how is that different than an insurance company representing itself acting in the interest of its customers when in actuality we know they're concerned with their bottom line? so that seems to be a marketing technique to me, and i don't understand why that would be differently applied in this case. >> guest: well, i think we'll see from what the ftc has already done with google in march. march 30th they had a settlement

with google, and it was actually a harsh settlement, probably the harshest ever because google was found with deceptive privacy practices and, essentially, saying that the private information to consumers they represented wouldn't be used in any ore way than they said. and then they came along, and they combined g mail's contact list with google buzz. so they, basically, violated it, and they had to admit that to the ftc. and they have 20 years of auditses and oversight because of that. that is exactly the problem we have here. and so i think it's going to be quite clear, google has promised that it would do one thing -- serve only users -- and the evidence is overwhelming that they have a financial conflict that they refuse to, um, to disclose. my point is, what's wrong with just being fair and open and disclosing honestly what your business is? and if you're putting your own, um, information top in a ranking, say that it's because it's the best, not because

you're unbiased. but it's clearly, everybody knows that they're biased. >> host: now, mr. cleland, i want to get your response to this. senator kohl, the chairman of the subcommittee asked eric schmidt this week about whether or not google exhibits bias in its rankings. here's mr. schmidt's answer. >> with respect to the question of ranking al grit ms and bias, it's ultimately a judgment what comes first or second, and in our case because we have so many things to rank, it would not be possible for me to explain to your senate session or to my own why one link about this testimony and then my testimony was one higher or lower. it's a complex formula involving influence and who points to whom and the way in which it's expressed and so forth using a propry today algorithm which google has developed. it's the best that we can do,

and i want to say right up front that we do occasionally make mistakes. >> host: scott cleland. >> guest: um, that was a very complicated answer when it could have been simple. they have admitted that they put, you know, certain things like google finance and google maps number one sp. so they've decided, and they've actually -- some of their executives have said it's only fair. we created it. but the problem is that 34% of the business goes to the first link. and so, um, they've already said that in some instances they have chosen to put google-owned content first because they think it's fair because they spent money on it, not because it's the best. and so their problem here from my standpoint, i think, is they have been very, very deceptive under the law, and they're going to have trouble there. now, they also have sherman antitrust problems because i think they've done a lot more than just be deceptive. but the reason i mention and

focus on deceptive is their defense is we would never do anything that would harm consumers. well, by law if you deceive consumers, it is harming them. and the reason we have that is we all know during the housing bubble there were conflicts of interest where people weren't telling people certain things. during the tech bubble, wall street wasn't disclosing their conflicts of interest. enron, they didn't disclose con atlantics of interest. so it's very important. if you take away honest disclosure and fair representation, you take away the first line of defense for a consumer which is they can say, hey, should my trust meter be low or high? can i trust these people? that's why we have an ftc that when people are deceptive that, ultimately, get busted, and i believe google will be busted on that. >> host: well, before we came down here to the studio, i went to google and typed in book online travel, and the first site that popped up was expedia,

and that's a microsoft-backed company, is it not? so does that just counter what you've told us about google putting its own companies up at the top? >> guest: i think that random case you might say so, but you need to look at it over time and not look ate from d.c. because there have been some past cases where they generated different results in different cities during different court cases. so the, um, where i think they will be most, in most trouble is when there is an obvious case where they have decided to place their content ahead of others, and then they're going to have to justify, well, why did they do that? and they continue to maintain we didn't do it for the profit motive, we did it because we believe that that's for the users. now, most people when they hear that know that doesn't pass the laugh test because most people know that businesses do have a profit motive, and there's nothing wrong with a profit motive. the whole point i'm making here

is in business parts of the rules of the game -- and i'm a free marketeer. as milton friedman said, follow the rules of the game, and that includes not being deceptive or fraudulent, and google's problem is they've been highly deceptive to consumers, advertisers and web designers. >> host: scott cleland is a blogger for "forbes," tech capitalist is the blog. he's chairman of net competition.org, he's president of precursor, and he is the publisher of googlemonitor.com. gautham nagesh is with "the hill" newspaper. he's a technology reporter. hilicon valley is where you can find his stuff. next question. >> host: now, chairman eric schmidt in response to some of your concerns, his answers yesterday, he indicated google believes providing the answers to questions such as the definition of a word is in the consumers' interest. he was also quick to point out that consumers are free to use one of the alternative surgery

services which in -- search services which in many cases offer similar augmented search features as you're describing. it sounds like you're arguing that search is a distinct market that's special and needs to be regulated. can you explain exactly what you would like to see take place? >> well, i certainly don't believe it should be regulated, and i certainly don't advocate that. search is a separate market because google argued it was. if you polled them, which i did, in how they represented themselves in their ipo, how they talked about themselves under sec regulations to investors, they said search advertising's different. they said it shouldn't be considered like radio or tv because it's interactive, and it's based on attentions. so in a court of law if they try and say that, um, the market is different, there are going to be literally reames and reames of videos and written places where they said themselves that search advertising was the market that they're describing. so this is once again where

they're highly deceptive, they're not, they're not being truthful. >> host: now, when you say that search advertising, what exactly do you mean in terms of they're being deceptive? are you saying the ads they're placing on the listings are deceptive or they're being deceptive in the fact that they're not clearly disclosing that the information that's being provided at the top of the answers is not coming from them? >> guest: first of all, they're saying that search advertising is just like every other advertising when they argued to their investors to make their stock go up that it was unique, and it should be given special consideration, and it was different for any other kind of advertising. that's deception one. deception number two, they say they work for users. they don't work for users. users don't pay them a dime. users are the product that they sell to advertisers who pay them $30 billion a year. and there's nothing wrong with advertising. it's a perfectly legitimate business. but you must disclose and make it clear what your interests are

so the consumers know that they've gotten fair disclosure and honest information. that's the deceptive. and then they also say deceptively that competition is one click away. what they don't tell you is that out of the top 100 sites, if you click away, 97 of those 100 sites you'll go right to google because google does the outsource search for them. there's always three in the top 100 that are competitors. so all through their defenses are strawmen argument. another deception is they should not be compared to microsoft. well, what they're really saying is, um, microsoft if we weren't like microsoft, we didn't break the law. well, any person knows that there is, there are many ways to break laws, not just the one that the way that the person that did it before you broke it. so when you ce construct their arguments -- deconstruct their arguments, it's almost always a strawman argument where they say

something they know is untrue, and then they defend it. >> host: finally, mr. cleland, just a follow up on gautham's question. what specifically would you like to see the ftc do and would you like to see the doj get involved? >> guest: well, what i think about google is that the problem is they don't obey the law. they don't respect people, property, privacy or the rule of law. and so i just think if we have law enforcement do their job and be if google also was ethical, if they would simply follow the golden rule and treat others the way they wanted to be treated, i don't think anybody would have a trouble with google. their problem is they treat people the way they would never want to be treated, and they don't obey the law. that's the main problem with google. >> host: but, again, where does the ftc fall? >> guest: the ftc is the one that, basically s the honesty police. they come in and say, are these people truthfully and forthrightly fairly representing

their business, and they'ral the ones that stay that if you break the law and do things that are illegal and it helps give you a monopoly power and you try to extend that to other markets like they did into mobile where now they have 98%of the mobile search market, then that's an antitrust violation. so i think, um, you know, let the chips fall where they may, let the law enforcement process play out. but i think the facts are overwhelming, and i think, um, google would be wise to settle. >> host: scott yes cland, publisher of qoog lmonitor.com. thank you for being on "the communicators." coming up this just a minute, former ftc bureau of competition policy director, david balto. but first, i want to show you this from the hearing this week. jeremy stop lman is the president or chair of yelp, an app, and he testified at the hearing as well not with eric schmidt, but after eric schmidt. and he talked about how google used its product and his

viewpoint on that, and then we'll hear from jeremy, and we'll hear eric schmidt, his view on yelp as well, and then we'll be back with david balto. >> google forces review web sites to provide their content for free to benefit google's own competing product be, not consumers. google then gives it own product preferential treatment in google's 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. questionable practices remain. web sites and google search results now take a backseat to google's own competing products.

this is typically accomplished by calling special attention to google-owned properties through larger text, great graphics, isolated placement and pushing objectively ranked web sites down the page. what we're most concerned about is that google is no longer satisfied with pointing users at the best content anywhere on the web it can be found. instead, it seems, they prefer to send users to the most profitable content on the web which is, naturally, their own. >> i felt that yelp would be very happy with us pointing to their site and then using a little bit of their reviews because they'd gotten those in the index and in sending traffic to them. they were not happy with that. they sent us a letter to that effect, and we took them out of the place pages. so if you look today, you'll see that they're not in there. you have the google reviews and a bunch of other stuff like that, and ultimately we bought a company to try to do something similar. >> host: and now joining us on

"the communicators" is antitrust attorney david balto. of he's also former policy director for the bureau of competition at the federal trade commission. mr. balto, you heard yelp's complaint against google. what's your response to that? >> guest: i think if this was a generalize bl problem, maybe there would be something worth looking at. but, you know, i think google has greatly enhanced the opportunities for yelp. yelp gets a tremendous amount of business by being on google, and i think there is not some kind of significant evidence that google is disadvantaging people in the way that yelp suggested. >> host: as a former policy director of the bureau of competition for the ftc during the clinton administration, do you think that google warrants an ftc/senate investigation? >> guest: i think it's always worthwhile when problematic conduct's been raised for enforcement agencies to take a look at what's going on, and that's what the ftc's decide

what to do. um, but when you look at google's conduct, um, overall, they have the consumer in mind because they recognize the alternatives consumers have are no further away than their hand in the mouth. and because of that they're constantly, you know, revising their products to try to protect the interests of consumers and provide consumers the best product possible. >> host: gautham nagesh of "the hill" newspaper. >> host: thank you. you say that consumers can choose another service with just a click, but google is synonymous with web search, their very name has become the verb that means surf something on the web. they have, i believe, in excess of 90% of mobile searches. in europe, for example, i believe they hold 95% of the general web search market, so there are concerns that they hold a monopoly in this market. do they hold a monopoly n your view? >> guest: in my almost two decades as an antitrust enforcer

i learned early on you shouldn't confuse size with power. and in this case i think the question about whether google is truly a monopolist is, you know, very ambiguous. there's lots of evidence that points in the other way. first of all, you can't really be a monopolist unless you can really force consumers to purchase your product, and you have the ability to raise prices significantly. i don't think that evidence exists here. second, when you look at how the market's structured, um, and you look at the success of bing which didn't exist two years ago and now has 29% of the market, you, you know, it suggests that there are not impediments to entry. and i think we need to rook at this market die name -- look at this market dynamically. one shouldn't just take a snapshot approach at how the market exists, but think about how the market's changing. finally, we always think in terms of just traditional search and just the google, bing, yahoo! type of search. but, actually, there are dozens and dozens of ways of finding out information, you know, if

you want to buy a product use amazon or ebay, other kinds of information go to facebook or wikipedia. and in that greater search market google's only one of numerous choices. is it a conflict for bag to toll position its own -- for google to position its own services at the top of its search rankings? >> guest: well, first, you know, if google really kid that, than instead of using facebook i'd be using the failed product or instead of wikipedia, i'd be using knoll. i don't think there's evidence that actually occurs. but i think we should pause for a second. although it may sound at least from mr. yes cland's -- cleland's perspective that that might be unfair, we want firms -- from a consumer's perspective, we want the strongest rivals to be able to come up with the best products and to hamper google's opportunity to come up with better products to say that they

couldn't go and have some type of preference, i think, might inhibit their ability to, you know, sort of develop new and better products. >> host: mr. balto, our last guest, scott cleland, says that google does not play by the rules? >> guest: i couldn't disagree more. i think, you know, just dealing with scott's point about deception, look, there are clear standards on deception. the ftc has an active, is an active internet policeman, and if google did something wrong on the deception point, long ago they would have acted. you know, in terms of the question of disclosure and transparency, the ftc said you've got to label ads in which you're receiving money, and that's what google does. and, you know, i think google has an admirable program of transparency both for consumers and for, um, and for advertisers. um, so, and remember, this is

different than sort of buying a product and dealing with that product for a long period of time and having significant costs to switch to another product. here if you're wondering who were you're getting an honest result from google, all you've got to do is move that mouse and go to bing or yahoo! or facebook, and you can figure out whether or not you're getting the fair results. >> host: in "the wall street journal" the day after the google operations hearing in the senate, this headline in "the wall street journal": google defends dominance. is that a fair headline? >> guest: um, i wish i could go and be the editor of "wall street journal" headlines. um, i would sort of say google defends popularity, but i don't think as many issues at "the wall street journal" would have been sold if that was the case. >> host: david balto, what can the ftc do? >> guest: well, i think that's a terribly difficult problem and one that the ftc and congress should really struggle with early on. it was interesting from the

hearing, peter, that you didn't hear anybody say we need an ftc enforcement action. and senator blumenthal made it clear. he said enforcement actions are cumbersome, untimely, it's very difficult to reach the right result through an antitrust case. and it was clear when you listened to senator lee or any of the other senators that none of them wanted regulation. all of them said, no, no, no, regulation is not the right way to go. even mr. cleland said it's not the right way to go. i think, you know, if there's a need for something, um, what basically the people, the witnesses said is that google should police itself. and i think google's doing an admirable job of policing itself, but if there's something more because of consumer demand, because of google's recognition that the consumer is king, i think google will find the way to going and correcting their system so consumers are best served. >> host: it sounds like you take mr. schmidt at his word when he says that google is run on a set

of principles such as solving the problems a consumer has. now, should federal regulators be willing to take a for-profit company at its word that it's acting benevolently, especially when you consider that google has been found to have violated consumers' privacy by the federal trade commission in packaging the buzz product with begun j mail or google has been involved in the pharmaceutical settlement that mr. cleland mentioned? google's record is not spotless. so i guess my question is when you say they are acting with consumer interests in mind, are you positioning them different than other companies at large? >> guest: no, and you make an important point. you know what can google's doing is precisely -- well, it's not precisely, but it's very similar to what other companies that facilitate search do. they sort of recognize certain principles that they all try to abide by. now, it's appropriate to go and examine what is going on with their decisions on search, and that's what the federal trade

commission's doing. but i think if they examined those tens of thousands of al grit mix changes that google considers every year and the 500 or so changes they actually make, i think they're going to find an awfully good record by google in trying to come up with the best results for consumers. >> host: and, mr. ball balto, we should make clear, are you employed at all by google? >> guest: no, i am not. >> host: what were some of the antitrust cases that you were involved in, and how did you rule or how did the commission rule? >> guest: sure. i was involve inside an important monopolization case against intel and a number of cases for anticompetitive conduct. let me just say one thing. i spend 90% of my time representing consumers' union, public interest groups like that. i carefully thought about google's conduct, and it struck me as being, you know, very pro-competitive.