Consumer Watchdog Targets Google

Sun, May 9, 2010 at 10:37 am

    Consumer Watchdog Targets Google

    By Cecilia Kang, THE WASHINGTON POST

    Too big to fail turned out to be wrong for banks and other corporations. But don’t tell that to Google, which has quickly expanded into making smartphones, mapping streets of the world, streaming videos, connecting friends and selling digital books.

    As Washington focuses more on Google’s explosive growth, one thorn in the company’s side is John Simpson, a 62-year-old veteran journalist with a deep suspicion of big business and a mission to break up the search giant.

    Federal regulators have launched a handful of investigations of the Internet behemoth — which dominates Web search — to ensure it doesn’t unfairly hurt competitors and consumers in its feeding frenzy of online businesses. So far, there hasn’t been a full antitrust review of the variety that hobbled Microsoft, AT&T and Standard Oil.

    But Simpson thinks that needs to happen.

    He’s no longer in the newspaper business, having lost two jobs during “restructurings,” he says, scooping the air with curled fingers. Now Simpson works for a nonprofit group called Consumer Watchdog, where his singular focus is turning up the regulatory heat on Google. With its brand appeal, he says, Google is an ideal target.

    He’s turned the tables, digging up data on the giant that tracks every move its users make and collects information without their knowledge. Also, he said, the company unfairly uses its size to barrel into new businesses.

    Google says that just because it’s big doesn’t mean it’s bad. In other words, it hasn’t used its dominance in search to edge out competitors unfairly in other businesses it enters. An example of that would be forcing cellphone makers who use Android software to use only Google’s search engine and YouTube on those phones.

    Nonetheless, the company has responded to antitrust finger-pointing by beefing up its staff in Washington. It also hired a lawyer focused on competition. He and others have given more than 100 talks to Hill staff members, regulators and journalists, saying that Google is just one click away from losing its 65 percent dominance in search.

    “We’re always happy to engage with groups that are interested in constructive solutions, but they seem more interested in grabbing headlines,” said Adam Kovacevich, a spokesman for Google.

    Simpson doesn’t deny that this is a battle he takes personally.

    “You become convinced something is wrong with corporate America if someone who has loyally worked for 30 years can be thrown out on his ass,” Simpson said last week over a ham sandwich lunch at Jimmy T’s diner on Capitol Hill.

    From foes to friends

    Yet true to Washington’s playbook, he’s found unexpected allies. That meant making friends with likely opponents: corporate giants such as Microsoft.

    Last month, Simpson organized a news conference with lawyers representing Microsoft, Yahoo and Amazon and other Google competitors after he petitioned the Justice Department for a broad antitrust investigation. He found he was in good company.

    Joseph Bial, an attorney for the search start-up MyTriggers, talked about his client’s lawsuit against Google in Ohio for allegedly putting the competitor out of business by raising minimum bids for keyword ads by 1,000 percent. Bial also works for Microsoft but said his role in the MyTriggers case is separate.

    Gary Reback said his Open Book Alliance, whose members include Microsoft, Yahoo and Amazon, think Google has unfairly precluded competition in the digital book market through a settlement that gives it first dibs on millions of titles.

    “Look, we have all found similar concerns with Google and are coming together to show this is not a small problem,” said Reback, an antitrust lawyer who a decade ago was on the other side, trying to break up Microsoft.

    Simpson’s crusade against Google comes amid growing public frustration that big corporations are largely responsible for a stubborn recession that has kept people out of jobs and forced them to foreclose on homes.

    Although still relatively unknown, he’s become an aggressive player in a growing party of companies and privacy and consumer groups who have called Google’s business practices and influence into question.

    Every month, Simpson, who lives in Santa Monica, Calif., comes to Washington to meet with staff on the Hill and regulatory agencies, journalists and corporate lobbyists. Simpson said he met last week with Jim Tierney, chief of the networks and technology section of the antitrust division of the Justice Department, and staffers about his petition for a broad investigation. Last year, he testified before Congress about privacy and competition concerns in Google’s book settlement.

    Simpson’s work is funded by the Rose Foundation, which provides grants for projects like privacy advocacy, and other charitable organizations that have no corporate ties, he said. He has a budget of about $200,000 that covers his salary and travel and was recently given a grant from a charitable foundation he won’t name because he is afraid Google will press that foundation to pull its funding.

    According to Consumer Watchdog President Jamie Court, there was a precedent. He said Google called the Rose Foundation to yank Simpson’s project last year. Google declined to comment on the claim.

    Hired as a ‘hell-raiser’

    White-haired with black-rimmed glasses, Simpson smiles frugally, a trained skeptic after decades of editing foreign news for USA Today and the Los Angeles Times. Before joining Consumer Watchdog, he spent a few years soul searching, teaching in Ireland and going to graduate school. He found a calling when his wife saw a Consumer Watchdog want ad looking for “hell-raisers.” He speaks as plainly as his brown L.L. Bean boat shoes.

    “I’m a hell-raiser. That was what I was hired to be,” Simpson said. “The more I looked, the more I saw that this company was abusing its market power to dominate book search and now the mobile marketplace.”

    Those and other practices by Google don’t sit comfortably with regulators, either. The Justice Department said Google’s digital book settlement could give it an unfair advantage in the burgeoning market for e-books.

    Chief executive Eric Schmidt’s seat on Apple‘s board, as both companies compete on mobile phones, was scrutinized by the Federal Trade Commission and led Schmidt to give up his board position. Now, the FTC appears skeptical of a merger with AdMobs, which competitors argue will extend Google’s search dominance onto mobile phones, according to Bloomberg News.

    “It is entirely appropriate to investigate not only Google but the entire developing space because it is incredibly important and changing so quickly with affects that will be felt in every household not only in the U.S., but in the world,” said Bert Foer, head of the American Antitrust Institute.

    Google isn’t the only high-tech giant under a microscope. The FTC is suing Intel for anticompetitive practices and investigating IBM on antitrust allegations. Simpson isn’t out to only bash Google: He’s praised the company’s decision to withdraw from China because of censorship practices there.

    Yet his pursuit doesn’t necessarily come from grass roots. Consumer Watchdog doesn’t have the populist structure of Consumers Union, the nonprofit organization that publishes Consumer Reports, for example, with hundreds of thousand of members who are regularly surveyed on their views.

    And Simpson acknowledges that Consumer Watchdog’s strategy is to grab attention on a complex topic that is often overlooked in Washington.

    Drawing from his journalism background, he said, he knows he’s got a better story when focusing on the biggest Silicon Valley brand around. Talking to lawmakers about privacy concerns in digital book search can have a eye-glazing effect. Saying Google isn’t living up to its motto to “don’t be evil” resonates with people, he said.

    “If you can focus your attention on them, it shines a light on the whole industry,” Simpson said. “I don’t see any problem with publicity in good things. I’d say, ‘just spell our name right.’ ”

    As for Simpson’s alliances with other corporate giants, he says they are necessary and approached with a healthy dose of skepticism.

    “This is purely professional,” he said.

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