Google’s Growth Markets Include Lobbying

Thu, May 13, 2010 at 6:19 pm

    No one can accuse Google of lacking ambition. So it should come as no surprise that as the No. 1 Internet search provider gets even bigger, it wants to widen its influence in the nation’s capital.

    To that end, Google spent $1.38 million on political lobbying during the first quarter, according to company documents. That’s up 57% from the year-earlier period.

    Those numbers might have gone unnoticed if not for a handful of critics who fear Google is becoming too dominant in its markets and is seeking to become too influential in Washington, D.C.

    Perhaps chief among those critics is John Simpson, a consumer advocate at the nonprofit Consumer Watchdog.

    Simpson says he would like to see the Justice Department launch a broad antitrust investigation of Google.

    He points to the company’s dominance in Internet search — it controls around two-thirds of the U.S. market — as well as its foray into areas such as e-books and mobile advertising, where he says it has “unfair” advantages over rivals.

    Meanwhile, Simpson has begun to cast a wary eye on what he sees as Google’s increasingly aggressive attitude in the political arena.

    “Google opened a Washington (D.C.) office a few years ago with a one-man shop. Now they are one of the biggest high rollers as far as lobbying goes,” he said. “They have decided to play that K Street lobbying game like any other corporate giant. It’s a high-stakes game for them.” D.C.’s K Street is home to many lobbyist and advocate groups.

    Google, which would comment only via e-mail, counters that its political spending is much ado about nothing. Executives say Google is simply following a natural progression of contributing more money as the company grows.

    Google is on track to spend around $5 million on lobbying this year. That would represent a 25% increase from 2009, when it spent $4.03 million. In 2008, it spent $2.84 million.

    That kind of money adds up to pocket change when compared with the really high rollers in Washington. ExxonMobil doled out $27.4 million on lobbying in 2009, according to data on Pfizer spent $24.6 million.

    Started In 2006

    Among companies with a tech connection, Verizon Communications was No. 1, at $17.8 million.

    But Google’s come a long way fast in D.C. It opened its Washington lobbying office in 2006, says spokeswoman Mistique Cano. That year the company spent $800,000 on lobbying, according to tracker

    Google is tight-lipped about what the company hopes to accomplish with its lobbying money. In an e-mail response to questions, Cano said most of Google’s policy focus is designed to “encourage innovation, keep the Internet open, and build bridges between creators and users.”

    The company’s strategy, she said, is built around helping Washington understand that Google’s business is “a worthy investment.”

    “The Internet is a big part of our lives,” Cano said. “It’s also a bigger part of the debate in Washington. From fighting censorship to keeping the Internet open, we’re glad to be part of the conversation and giving voice to our users and the broader Internet community.”

    Google backs the Federal Communication Commission’s proposed network neutrality rules, which would require that broadband providers give equal treatment to all Internet traffic flowing over their networks.

    Big phone and cable TV companies, such as Verizon, oppose the proposed rules. But Google and other Internet companies say they’re needed to prevent Internet access providers from favoring or discriminating against Web sites and services.

    Rising Power Worries Watchdog

    Google also supports the FCC’s national broadband plan, which seeks to bring affordable high-speed Internet access to all Americans.

    Meanwhile, the company’s problems with censorship in China have prompted it to lobby for legislation that would prevent U.S. tech firms from cooperating with nations that restrict free speech.

    As for the antitrust issues: Company executives would not comment about accusations that Google’s size, market dominance and business practices give it an unfair advantage over rivals.

    But Consumer Watchdog’s Simpson is not shy about sharing his concerns.

    “Because of its dominance in the search market, Google is essentially the gateway to the Internet for most consumers,” he said. “What Google decides to do really controls what consumers see and experience when they go to the Internet. That carries a tremendous amount of economic power.”

    One potential remedy, he says, is to break Google up in much the same way AT&T was broken up in the 1980s. Under this scenario, Google’s Gmail and YouTube units, for example, would become separate companies.

    If nothing else, Simpson says, Google’s market dominance “warrants a full-blown investigation from the antitrust division of the Justice Department. That’s what happened with Microsoft. And we’ll see a similar situation emerging with Google.”

    Gary Reback, a Silicon Valley antitrust lawyer, spearheaded the effort to go after Microsoft in the 1990s. He doesn’t know specifics about Google’s efforts to avoid an antitrust investigation. But he has an idea of how companies facing an investigation might proceed.

    “What you can do generally is you might go to a Congressman or Senator, and if necessary make a campaign contribution,” he said. “You can have them lean on Justice, or the administration. It’s the same thing pharmas try to do to avoid having drug prices put into the health care bill.”

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