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Google's biggest competitor

Google's biggest competitor is not VC-backed. It's Brussels and Washington, D.C.

Forget Microsoft and Yahoo!. Google's biggest competitor, writes Joshua Green in the December edition of the The Atlantic [Subscription req'd], is Washington, D.C. The United States federal government, that is.

Why? Because, as Green writes, "You can control vast markets and terrify your competitors, but still be a Washington rookie." Washington likes to be in charge. As Microsoft found out (by going light on lobbying during its 1990s dominance), ignoring "the feds" is a bad idea. Green writes:

Just as Google has begun thinking creatively about Washington, the government has been thinking about Google. In his 2005 book, The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture, John Battelle notes that Microsoft's control of the PC's basic operating system in the 1990s made its system a virtual gateway to the Internet, and he posits that as the Internet continues to expand, the search function itself might become a similar gateway. The idea has found purchase among some government lawyers thinking about Google - and could suggest a Googley approach to antitrust law. As Google continues to grow, its greatest challenge may come not from Verizon, AT&T, or any of the other rivals plotting against it. As with Microsoft a decade ago, the challenge may come from the federal government.

So what should Google do? It needs to get more involved in Washington proactively unless it wants to have to deal with it reactively in the future. Google has a fantastically profitable and booming business. This is precisely why it needs to start nurturing relationships with the powers in Washington and Brussels that view anything bigger than themselves with suspicion.

Green notes:

Google has yet to hit upon a strategy that combines the innovation it is known for with an appeal to the self-interest that is the currency of the capital's power brokers. One reason AT&T and Microsoft have succeeded in stoking antitrust interest against Google - quite ironic, given that both companies have been subject to large government antitrust actions - is that they're better versed in the fine points of lobbying. Both companies, for example, hold sway over many lawmakers by frequently reminding them how many employees live in their districts ("jobs" is a metric lawmakers respond to).

Microsoft plays the "We're really big and big means money and jobs" card very well. Google, for its part, is running a massive and ever-growing advertising network that undoubtedly helps a wide range of small companies who employ people that live in the districts of legislators in the United States and Europe.

However Google chooses to spin it, however, it needs to stop pretending that it's different. No doubt [it] feel[s] that [it's] strong enough. But it's not. Microsoft used to think that, too, and found out that it wasn't. Google still has time while the charm of search holds sway over Brussels and Washington, D.C.

At some point this sway will feel a bit like a stranglehold. Google needs to have a good story and lots of legislative friends at that point. It should start now.