conference is are underway in the u.k. watch the keynote from the liberal democrats conference this sunday at 9:00 on c-span. in the weeks ahead, ed miliband and conservative prime minister david camera. -- david cameron. this week on "the communicators ," a look inside googles business practices. a senate subcommittee held a hearing on the topic, including whether the google search engine is biased in the way it displays search results. our guests are scott cleland, and david balto, an antitrust attorney. >> this week, the senate antitrust subcommittee held a hearing on google business practices. that is our topic this week on "the communicators." coming up, the former ftc commissioner for the competition

bureau will be out here to talk about google's business practices in this week's hearing. we wanted to did you to scott cleland, the president of precursor. he is the editor of a publication called googlemonitor.com. >> is google worthy of being investigated by the ftc and the senate antitrust subcommittee? >> yes it is. it has more violations of antitrust law that any company in the last four years. i have had four official once, and they are being investigated on three different continents. just in august, but pleaded guilty in a criminal non prosecution of promoting illegal pharmacy sales. they have a lot of other issues that have put them under the spotlight, so it is desert.

>> do you think there are a victim of their own success because of their size? >> no, they are a victim of some very radical views. they don't believe 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 do not apply to them. most all of google's problems are self-inflicted because they don't play by the rules of the game and they do not obey the law. >> what do you mean by radical transparency? >> as you know, julian assange as for radical transparency, and that is wikileaks. once he came out, responsible publications did not release any of the confidential information, and amazon no longer hosted them, and pay pell no longer took money for them, so people stepped back, but

google double down, and they backed julian assange completely. they actually indexed all of his stolen documents and made them available on the web. they said they made that decision at the highest levels. >> i will have to ask you to expand a little bit when you talk about radical transparency and indexing. he said that google is guilty of war antitrust violations. can you be more specific on what they are guilty of? cracks in 2008, there was a -- a case threat against them in order to drop the google-yahoo! agreement. they felt that broke up the microsoft merger and then created a collusive arrangements with yahoo! that the wanted to get approved that would have given them over 90% of the search advertising business.

just last year, they were found to be colluding with five of the companies on restricting the competition for highly skilled workers. the department of justice also opposed them on google illegally copying 50 million books and still counting. the doj and federal judge objected to that, and also the fcc forced google cto schmidt of the apple board as a competitive arrangement. >> turning specifically to the issue of yesterday's hearing, 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, is this an antitrust violation, and why? >> it is. deceptive and unfair practices are illegal. it could also probably be a sherman violation.

advertising is a perfectly legitimate business, but you need to represent who your customer is. but it's about $30 billion a year from advertisers, but they represented under earth -- under oath yesterday that they always focus on the user. so they have let users to believe they can trust them. they have let web sites to believe they can trust them, by representing publicly that they don't have any ulterior motive but to serve the user. they have a $30 billion worth of ulterior motives, to take care of advertisers. they have created a misrepresentation, a deceptive situation, and it is basically that everybody knows the term 8 and switch. they basically created a dominant search engine a telling everybody that it was unbiased and you could trusted, and then they came along and created 500 products and services and started ranking themselves first. that was clearly a bias, and

they still maintain its unbiased. their main problem is, they are being highly deceptive, and that is illegal. >> he said they are being deceptive when the market themselves. their unofficial slogan is don't be evil. we know that insurance companies, like every other business, are concerned with their bottom line. that seems to be a marketing technique and i do not understand why that would be differently applied in this case. >> from what the ftc has already done with google, on march 30 they had a settlement with google, one of the harshest ever. google was found with deceptive privacy practices, saying the private information to consumers state represented would not be used in any other way than they said. then they came along and combined their e-mail list.

with 20 years of audits and over sides because of that, that is exactly the problem we have here. i think it is going to be quite clear, google has promised it would do one thing, serve only users, and the evidence is overwhelming that they have a financial conflict that they refused to disclose. my point is, what is wrong with just being fair and open and disclosing honestly what your business is? if you are putting your own information top in a ranking, say it is because it is the best, not because you are unbiased. clearly, everybody knows they are biased. >> the chairman of the subcommittee asked eric schmidt yesterday about whether or not who will exhibits bias in its rankings.

here is mr. schmitz answer. >> with respect to the question of rankings, it is ultimately a judgment what comes first or second. in our case, because we have so many things to rank, it would not be possible for me to explain to your satisfaction or to my own 11 link about this testimony and in my testimony was one higher or lower. it is a complex formula involving influence and who points to whom and the way it is expressed and so forth, using a proprietary algorithm google has developed which you are very proud of. it is the best we can do, and i want to say right up front that we do occasionally make mistakes. >> that was a very complicated answer when it could have been simple. that have admitted that they put certain things like global finance and google maps number one. so they have decided, and some

of their executives have said, it is only fair, we created it. the problem is that 34% of the business goes to the first links. they have already said that in some instances, they have chosen to put google on content first, because they think it is fair because they spend money on it, not because it is the best. so the problem here from my standpoint is that they have been very deceptive under the law and they are going to have trouble there. they also have sherman antitrust problems, because i think they have done a lot more than just be deceptive. the reason i focus on deceptive, their defense is, we would never do anything that would harm consumers. by law, if you deceive consumers, it is hiring them. the reason we have that is, we all know during the housing bubble, there were conflicts of interest for people were not telling people certain things. during the tech bauble, wall

street was not disclosing their conflicts of interest. it is very important, if you take away a honest disclosure and fair representation, you take away the first line of defense for the consumer, which is they can say should my trust meter be low or high? can i trust these people? that is what we have an ftc that when people are deceptive, they will ultimately get busted. >> before a came down to the studio, i went on google and i just try "then book online travel." what came up was expedient, which is a microsoft owned company. >> i think that random case, but you need to look at it over time and not mainly from the sea -- not may leave from d.c.

where i think they will be most troubled is when there is an obvious case where they have decided to place their content ahead of others, and then they will have to justify why they would do that. they continue to maintain, we did not do it for the profit motive, we did it because we believe that is best for the users. most people, when they hear that, no that is not passed the test, because most people know that businesses do have a profit motive. the whole point i am making here is that -- in a free-market, you have to follow the rules of the game, and that includes not being deceptive or fraudulent. googles problem here is they are highly deceptive to consumers, web sites, and to advertisers.

>> scott cleland is the author of "search and destroy, why you cannot trust google." scott alto is the -- our guest is with the hill newspaper. >> chairman eric schmidt, in response to some of your concerns, he indicated that you will believe providing the answers is in the consumer's interest. he was quick to point out that customers are free to use one of the alternative search services, which in many cases of similar augmented search features as you are describing. it sounds like you are arguing that search is a distinct market that is special and needs to be regulated. can you explain exactly what you would like to see take place crest or >> i don't believe it should be regulated.

surge is not a separate market, because google argued it was. if you follow them in how they represented themselves in their ipo, how they talk about themselves under sec regulations to investors, they said search advertising is different. it is interactive and based on intention. in a court of law, if they try and said the markets are different, there will be literally reams and reams of videos and written places where they themselves said that search advertising was the market they are describing. this is where they are highly deceptive. they are not being truthful. >> when you said that search advertising -- what exactly do you mean in terms that they are being deceptive? are you saying that adds they are placing on the listings or deceptive, or they are not clearly disclosing that the

information is coming from them? >> in multiple ways. they are saying that search advertising is just like every other advertising, when they argue to their investors to make the stock go up that it was unique and should be given special consideration. the session number two, they say they work for users. they don't work for users. users don't pay them a dime. users or the product that they sell to advertisers to pay them $30 billion a year. there is nothing wrong with advertising. it is a perfectly legitimate business, but you must make clear what your interests are so the consumers know and they have fair disclosure an honest information. they also say deceptively that competition is one click away. what they don't tell you is that out of the top 100 sites, 97 of those 100 sites will go right to google because they outsourced

-- outsource search for them. there are only three out of 100 that our competitors. another deception is they say this should not be compared to microsoft. they are really saying that if we were not like microsoft, we did not break the law. in person knows that there are many ways to break laws, not just the way that the person that did before you broke it. we needed to construct their argument, it is almost always a straw man argument. they take something that everyone knows is untrue and then they defended. >> what specifically would you like to see the ftc do and where reggie like to see the doj get involved? >> what i think about global is that the problem is, they don't obey with the law.

they don't respect people, property, privacy, or the rule of law. i think if we have law enforcement do their job, and of googled also was ethical, if that would simply follow the goat -- the golden rule and treat others the way they want to be treated, i don't think anyone would have any trouble with google. their problem is, they treat people the way they would never want to be treated, and they do not obey the law. that is the main problem with google. the ftc is the one that basically is the honesty police. they are the ones that come in and say, are these people barely representing their business? they are also the ones that say if you break a lot and you do things that are illegal and helps give you a monopoly power, and you try to extend that monopoly to other markets like they did moving into mobile, where they have 98% of the mobile search market, that is an antitrust violation.

let the chips fall where they may let the process payout, but i think the facts are overwhelming, and google would be wise to settle. >> scott cleland, thanks for being on "the communicators." coming up, david balto. but first, i want to show you this from the hearing this week. jeremy stoppelman is the chairman of yelp, and he testified at this hearing after eric schmidt. he talked about how google used this product and his viewpoint on that, and then we will hear from eric schmidt, his view on yelp as well. >> google forces review web sites to provide their content for free to benefit googles on competing products, not consumers. google then gives its own

product or grindle 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 monopoly 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. websites it in google search results now take a back seat to google's on competing products. this is accomplished by calling special attention to google properties through larger text like graphics, isolated placement, and pushing other websites down the page. we are concerned that google is no longer satisfied with pointing users to the best content anywhere on the web it can be found.

instead, they prefer to send users to the most profitable content, 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 we had gotten those in the index, and then 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. if you look today, you see that they are not in there. you have the google reviews and a bunch of other stuff like that. >> joining us is antitrust attorney david balto. he is former policy director for the bureau of competition at the federal trade commission. you heard yobbos the complaint against google --yelp's complaint against google.

what is your response to that? >> i think google has greatly enhanced the opportunity for your help. yelp it's a tremendous amount business by being on google. there is not some kind of evidence that google is disadvantaging people in the way that yelp suggested. >> the think that google wanted an ftc senate investigation? >> it is always worthwhile when problematic conduct has been raised for enforcement agencies to take a look at what is going on, and that is what the ftc decided to do. when you look at google's conduct overall, that have the consumer in mind. they recognize the alternative consumers have are no further away than their hand on the mouse. because of that, they are constantly revising their products to try to protect the

interest of consumers and provide consumers the best product possible. >> you say that the surge marked -- search market is largely self regulating and consumers can choose another search with just a click. but google is synonymous with web search. they have in excess of 90% of mobile searches. in europe they hold 29% of the general web search market. there are concerns that the hold a monopoly in this market. >> in my almost two decades, i learned early on that you should not confuse size with power. in this case, i think the question about whether google is truly a monopolist is very ambiguous. you cannot 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. when you look at how the market is structured and you look at the success of bing which now has 29% of the market, it suggests there are not impediments to entry. we need to and look at this market dynamically. we should not just take a snapshot approach but think about how the market is changing. we always think in terms of just traditional search. actually there are dozens and dozens of ways of finding out information. if you want to buy a product, used amazon or ebay. other types of information, go to facebook. in the search market, google is only one of numerous choices. >> is it a conflict for good will to position its own services or information sources such as google finance our

google maps at the top of their search engine? >> if google really did that, instead of viewing facebook or with the pdf, i would use other sites. i don't think there is evidence that actually occurs. i think we should pause for a second. although it may sound like that might be unfair, we want from a consumer perspective as many alternatives as possible. we want the strongest rival to be able to come up with the best product and to hempel -- hamburg googles opportunity to come up with a better product and say they could not go and have some type of preference might inhibit their ability to develop new and better products. >> our last best, scott cleland, said that google does not play by the rules. >> i could not disagree more.

>> just dealing with his point about deception, there are clear standards on deception. the ftc is an active internet policeman. if awarded something wrong, -- in terms of disclosure and transparency, back in 2003 the ftc said you have to label areas where you are receiving money. that is what google does. google has an admirable program of transparency both for consumers and for advertisers. remember, this is different than buying a product and dealing with that product for a long time and having a significant cost to switch to another product. if you wonder if you are getting an honest result, just move that towson 02 yahoo! or facebook or bing.

>> in the wall street journal the day after the google operations hearing in the senate, this headline in the wall street journal, google defense dominoes. is that a fair headline? all would say google has popularity, but i don't is many issues of the wall street journal would have been sold. >> what can the ftc do? >> it is a very different problem. it was interesting from the hearings that he did not hear anybody say we need an ftc enforcement action. center blumenauer bol made it clear. he said enforcement actions are commerce and --, some --

enforcement actions are cumbersome. all of them said regulation is on the right way to go. even scott cleland set it is not the right way to go. there is a need for something -- witnesses said google should police themselves. i think google is doing an admirable job of policing itself, but there is something more, because of consumer demand. i think you will will find a way to police themselves. >> he says google's run on a set of principles such as auburn the problems the consumer has. should federal regulators be willing to take a for-profit company at its word that it is acting benevolent -- benevolently?

mobil has been involved in the pharmaceutical settlement that scott cleland mentioned. their record is not spotless. when you said that google is acting with consumer interest in mind, repositioning them as different than other representative companies at large? >> you make an important point. what google is doing is very similar to what any other search engine does or what other companies that facilitate the search do. they recognize certain principles that they all try to abide by. it is appropriate to go and examine what is going on with their decisions on serve, and that is what the federal trade commission is doing. there are 500 or so changes that actually make. i think they will find an opposite record in google in trying to come up with the best results for consumers.

>> are you employed at all by google? >> no, i am not. >> york antitrust lawyer. what were some of the antitrust case is you were involved in, and how did the commission ruled? >> i was involved and an important monopoly case against intel and cases against pharmaceutical manufacturers. i spent 90% of my time representing consumer unions and public interest groups like that. i carefully thought about google's conduct, and it struck me as being very pro competitive. i think that is the reason why. you don't see any significant consumer groups that are not funded by some of googles rivals coming out and raising concerns about this. you did not hear consumers raising questions about consumers' privacy. that silence is very important.

>> google has expanded into many new areas, raising a lot of the complaint bridgette complaints we are hearing. we have seen concerns brought with regard to google books. would it be fair to say that google pushes the boundaries of existing laws in terms of what they view as private, or what should be in the public domain? that seems to be one of the concerns, that we are in uncharted waters. companies like google and facebook at what they believe -- do you think google is forward- looking in the way they treat these areas? >> when you take the example of google books, that have scanned in millions and millions of books. a young girl living on an indian reservation or a young boy in the inner city of los angeles, the google books project