House Members Oppose Online Ad Regulation, for Now

Google didn’t testify at yesterday’s U.S. House Small Business Committee hearing on online advertising, but the company was the star of the discussion anyhow. Among other topics, some committee members expressed concern that the recent search ad deal between Google and Yahoo could prompt a need for government regulation. At this point, however, the committee appears to be hesitant to take a regulatory route.

Search engine advertising dominated the conversation as Representatives listened to Web entrepreneurs and Interactive Advertising Bureau Chief Randall Rothenberg praise the industry that provides them a paycheck. While witnesses touted online advertising, and search engine marketing in particular, Democratic Congressman Charlie Gonzalez suggested more industry regulation may be needed sometime down the road, and indicated Yahoo’s search ad agreement with Google could be an impetus.

“The issue is you may reach a point where there is a problem, but you just don’t have the competition or the players to do anything about remedying the problem,” said Gonzalez in regards to potential monopolies in the online ad industry. Calling competition a good thing, the Texas Representative said the Google-Yahoo deal needs to be explored further by Congress. It has already received some government inspection.

“Do we allow market forces to play out?” Gonzales wondered. “I’m a strong believer in that…up until the point that we feel that there is a disadvantage…and the consumer or the businessperson is no longer on a level playing field or treated fairly.” He also briefly expressed an interest in user tracking as it relates to ad targeting.

Still, Gonzales concluded, “I’m not for regulation at this point.”

Witnesses remained loyal to the online advertising industry. Tim Carter, founder of Askthebuilder.com, touted Google’s popularity. “Just like you want to get reelected,” said Carter to the officials, “[Web users are] electing each day right now that Google for the time being is the winner.” He continued, “I think the consumers are talking to you and speaking to you right now through those statistics.”

Askthebuilder.com is a charter member of the IAB’s newly-formed small publisher group. The IAB recently created a separate lower cost membership for small publishers to help build grassroots support against creeping state and federal government intervention in the online ad industry.

Noting 61 percent of the IAB’s members are small businesses making up to $8 million in advertising revenue each, IAB CEO Rothenberg stayed on track with the organization’s recently pronounced focus on deflecting government intervention. “We have a system that ain’t broke at all so I’d be very careful of going across that bridge from research, inspection, exploration, into regulation without very careful scrutiny,” he cautioned.

Gonzales voiced concern about small businesses and their ability to play along with bigger companies on the Web, despite the fact that the Web and online advertising are often lauded as great equalizers, putting small unknowns on the same level as behemoth brands. “Unfortunately not all small firms have been able to capitalize on [online marketing’s] power. Even today many small businesses face significant roadblocks to optimizing their online presence,” he said.

Later in the discussion, witness Rob Snell, co-owner of online retailer GunDogSupply.com dismissed the notion that it’s difficult for advertisers to get online. “That’s a copout,” he said.

Pennsylvania Congressman Jason Altmire, also a Democrat, asked hearing witnesses, “Do you have a fear of the dominance of Google moving forward with regard to search engines?”

Mirroring Carter’s contention, Snell used an analogy to get his point across about Google and its entrance into new business sectors. “It’s kind of like Elvis when he got into the record business; he did such a good job that everybody wanted to buy his records. And then Elvis said, “Hey, I think I’ll get into movies.”

Snell added he doesn’t mind government showing an interest in the industry’s activities. “I sleep well at night knowing that there are so many people watching Google right now,” he said.

Congressman Lynn Westmoreland made no bones about his reluctance to regulate. “If we go into the market right now and start regulating what we may ensure is that Google remains the largest search engine out there because we will…keep other people from getting in it.”

Added the Georgia Republican, with a hint of sarcasm, “I think it would be beneficial for us right now to leave the industry as it is and hope that they just continue to make more and more and more money so they continue to pay us more taxes and give us the ability to do what we do best, which is expand government.”