On antitrust, is Google the next Microsoft?

Google is facing opposition to its DoubleClick deal in what could be a repeat of the way Washington punished Microsoft a decade ago.

Not too long ago, nearly every move that Microsoft made seemed to draw complaints that the company was abusing its market dominance.

Now another market-leading technology company is under fire in Washington as well. An unlikely combination of onetime antitrust defendants like Microsoft and AT&T and liberal consumer groups that have been their traditional antagonists are taking aim at Google.

Interviews by CNET News.com last week show that Microsoft and its occasional allies have met separately with key congressional committees that deal with consumer protection and antitrust issues--both of which that they will hold hearings on Google's plan to spend $3.1 billion to buy DoubleClick .

The Federal Trade Commission, which must review the merger on antitrust grounds, has also been meeting with Google, Microsoft and those nonprofit consumer groups, according to sources familiar with the meetings. The European Union, egged on by American consumer groups like the Electronic Privacy Information Center and the pro-regulation Center for Digital Democracy, is reviewing the merger too.

All this amounts to the first serious political threat to a company that has grown to a market capitalization of $162 billion by worrying more about serving customers than catering to the whims of bureaucrats and politicians. Longtime Washington observers believe that even if the DoubleClick acquisition is eventually permitted, federal scrutiny will only increase.

"There is certainly a lot more scrutiny of Google now that they are the No. 1 player in this space and are acquiring other companies."
--Ari Schwartz,
Center for Democracy and Technology

For its part, Google says it's confident that the threat to its business can be contained. "We're finding that the more we meet with policymakers, the more they are realizing that Google and DoubleClick are different types of companies, that we take significant steps to protect users' privacy, and that this acquisition will benefit both consumers and advertisers," said spokesman Adam Kovacevich.

In addition to its full-time staff lobbyists, also involved in Google's efforts to fend off antitrust bureaucrats are four newly hired lobbyists in the Washington office of the law firm Brownstein Hyatt & Farber (including Makan Delrahim, a former top Justice Department antitrust official). Google's earlier hires include the now-renamed PodestaMattoon, which draws its name from longtime Democratic dealmaker Tony Podesta, and King and Spalding, home to former Republican Sens. Connie Mack and Dan Coats.

A Google representative said there had not, however, been any personal visits to Washington in support of the DoubleClick deal by top executives like CEO Eric Schmidt and co-founders Larry Page and Sergey Brin, who famously showed up in blue jeans and sneakers when he arrived on Capitol Hill for meetings with politicians last summer.

Citing confidentiality concerns, an FTC representative declined to comment on anything beyond the fact that the investigation is continuing. AT&T, which has made public statements in opposition to the merger before, would not comment. Time Warner, which reportedly has voiced concerns about the deal, also would not comment.

Microsoft spokesman Jack Evans declined to offer details about his employer's attempts to sink the DoubleClick deal. "As a general rule, we don't comment on specific lobbying efforts," he said Friday. "Microsoft continues to believe the Google-DoubleClick acquisition raises a number of serious questions about the effects it will have on advertisers, publishers and consumers, and we believe it warrants closer scrutiny."

By any measure, Google is seriously outgunned in Washington. Its spending on lobbyists in 2006 amounted to a mere $720,000--a fraction of what the Google co-founders spent on their personal jet. By comparison, last year AT&T wrote checks for at least $27 million to buy political influence and Microsoft spent $8.9 million.

The disparity is even greater over a longer period. Starting in the late 1990s, when Google was moving into its first office, AT&T and Microsoft spent a combined $179 million while Google spent a mere $540,000. (That's counting lobbying and political contributions through 2005, as calculated in News.com's special report last year.)

It's no surprise that Google has paid little attention to Washington and hired a just over two years ago: it's not in a heavily regulated industry like AT&T. Microsoft, of course, began writing fat checks to lobbyists--including Rick Rule, a former top Justice Department antitrust official--only after its antitrust headaches began in 1997.

 

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