Inside Google

In-your-face watchdog gets advice from Microsoft ‘people,’ interest from Verizon

SAN FRANCISCO, CA — Google Inc. has attracted a number of
critics over the years, but the Internet search giant hasn’t yet had to
deal with any as jarringly adversarial as Consumer Watchdog.

"Their tactics tend to be more confrontational than others’," said Tim
Little, executive director of the Rose Foundation, an Oakland,
Calif.-based organization that funds Consumer Watchdog. "But sometimes
there’s a place for folks being confrontational."

Since winning a $100,000 grant last year specifically to target Google,
Consumer Watchdog has publicly skewered the company for everything from
its privacy policies to its Capitol Hill lobbying. The attacks come at
a particularly sensitive time, as Google is striving to downplay its
market dominance in the face of what promises to be stricter antitrust
and Internet privacy regulation regime under the Obama administration.

Consumer
Watchdog has also had ample opportunity to gather input both indirectly
and directly from traditional Google rivals, such as Microsoft Corp., and companies often on the opposing side of regulatory issues, such as Verizon Communications Inc.

"I’ve talked to people who are associated with Microsoft," including
who have worked with the software giant, said John Simpson, an advocate
with Consumer Watchdog.

In addition, Simpson said that Link Hoewing, a Washington, D.C.-based
assistant vice president at Verizon, contacted him after having taken
note of his pointed exchange with Google Chief Executive Eric Schmidt
at a public event in November.

Hoewing wanted to discuss "behavioral advertising," Simpson said.
So-called behavioral targeting, which Google began testing earlier this
year, is a method of tracking an Internet user’s browsing history to
tailor marketing messages. It’s also a particular area of interest for
regulators at the Federal Trade Commission.

"We don’t take any kind of funding from these guys or anything, but
when you’re in a situation where there are people that can pass on
useful information, you certainly listen," Simpson said.

A Microsoft spokesman said he is not aware of any support or contact
between the company and Consumer Watchdog. Hoewing said Verizon is not
involved with Consumer Watchdog, and that he called Simpson "to find
out where he was coming from… because I was surprised about his
comments" to Schmidt.

A Google spokesman declined to comment for this story.

‘Boorstin went ballistic’

Consumer Watchdog’s benefactor, the Rose Foundation, relies financially
on settlements won through privacy litigation with banks and
credit-card companies. As a "neutral trustee" working with the court,
the Rose Foundation then channels that settlement money to a number of
groups working on privacy issues.

In addition to Consumer Watchdog, the Rose Foundation funds organizations including the Electronic Privacy Information Center. 

While an application for a grant to focus on a specific company like
Google is rare, it’s not unheard of. "It’s maybe not the predominant
theme in our funding," the Rose Foundation’s Little said, "but it’s a
strategy that can be effective."

Since it was founded in 1985, Consumer Watchdog, formerly known as the
Foundation for Taxpayer and Consumer Rights, has sharpened its
adversarial tactics.

The organization’s founder, Harvey Rosenfield, previously worked for
corporate crusader and five-time U.S. presidential candidate Ralph
Nader, and his organization has gained a reputation for an
aggressiveness similar that used by Nader in confronting the automobile
industry.

"It’s a Nader-esque, in-your-face approach, [and] that’s refreshing,"
said Jeff Chester, executive director at the Center for Digital
Democracy, a group that has also used Rose Foundation funding to
criticize Google.

In January, Consumer Watchdog circulated a press release alleging a
"rumored" lobbying effort by Google to enable it to sell personal
medical data stored on its Google Health service. Simpson said the
organization merely wanted to examine whether Google was trying to
avoid new regulation under the Health Insurance Portability and
Accountability Act, or HIPAA, which guards the confidentiality of
patient data.

But Google was incensed. "That’s when Bob Boorstin went ballistic,"
Simpson said, referring to Google’s director of corporate and policy
communications in Washington.

Simpson defended the use of hearsay to make public allegations, arguing
that it was appropriate for an advocate. "I don’t see any obligation in
particular to call up the other guy and get his side of the story," he
said, adding, "We don’t lie, but we put out the facts we think are
interesting."

Google, however, was prompted to take the unusual step of asking the
Rose Foundation to reassess its funding for Consumer Watchdog.

"In 17 years as a grant maker, that’s never happened to me before," the
Rose Foundation’s Little said. "Nothing Google has done has discouraged
us from follow-up funding" for Consumer Watchdog, Little said, though
no decisions have yet been made. He added, "Google would be much better
off engaging with them."

Since briefing Consumer Watchdog on its privacy policies last fall,
however, Google has limited its contact with the group to occasional
written correspondence.

‘Very encouraged’

Meanwhile Consumer Watchdog has continued to broaden its campaign. More
recently, the group intervened in Google’s prized legal settlement with
authors and book publishers.

The proposed settlement, announced in October, would validate Google’s
years of work on its book-scanning project, and enable it to harness a
vast new trove of online content without fearing legal repercussions.
But Consumer Watchdog began examining the proposed settlement, and sent
a letter last month to the Justice Department expressing concern that
it could grant Google "an effective monopoly over digitized books."

Consumer Watchdog is only one of a number of organizations that have
criticized the proposed settlement, though Simpson said his group found
a receptive audience. Roughly a week after sending its letter to the
Justice Department, he said, "We spent an hour or so on the phone with
them, and it seemed there was definite interest."

A Justice Department spokeswoman declined to comment. A hearing on
Google’s proposed book settlement has been postponed to October.

More broadly, Simpson said he’s encouraged that Christine Varney, the
new head of the Justice Department’s antitrust division, earlier this
month discarded a Bush administration report that advocated a hands-off
approach to regulating market-dominating companies. Simpson called the
report "outdated."

In addition, FTC Chairman Jon Leibowitz has said publicly that the
current ability of Internet companies such as Google to police their
own privacy standards for using behavioral targeting for advertising
may come to an end.

"I think we could probably avoid regulation, but I am very encouraged
by the fact that the FTC chairman is talking about this," Simpson said.

Ultimately, Simpson said, by focusing on a company as influential as
Google, Consumer Watchdog hopes to affect the entire Internet industry.
"If we can get them to make advances on privacy concerns, the rest of
the industry could fall in line," he said.

So far, however, Google seems intent on avoiding the organization.
Simpson said he sent yet another letter to the company last Friday,
asking it to answer some "simple questions."

"We’ve not heard back from them on that," he said.