news analysis Google's planned acquisiton of DoubleClick has led to US government antitrust committees and liberal consumer groups watching the search giant's moves, just like they did Microsoft's not too long ago.
An unlikely combination of one-time antitrust defendants, like Microsoft and AT&T, and liberal consumer groups that have been their traditional antagonists are taking aim at Google.
Microsoft and its occasional allies have met separately with key US congressional committees that deal with consumer protection and antitrust issues -- both of which announced last week that they will hold hearings on Google's plan to spend US$3.1 billion to buy DoubleClick.
The US Federal Trade Commission (FTC), which must review the merger on antitrust grounds, has also been meeting with Google, Microsoft and those non-profit consumer groups, according to sources familiar with the meetings. The EU, egged on by American consumer groups, like the Electronic Privacy Information Center (Epic) and the pro-regulation Center for Digital Democracy (CDD), is reviewing the merger too.
All this amounts to the first serious political threat to a company that has grown to a market capitalisation of US$162 billion by worrying more about serving customers than catering to the whims of bureaucrats and politicians. Long-time Washington observers believe that, even if the DoubleClick acquisition is eventually permitted, federal scrutiny will only increase.
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 realising 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 Schreck (including Makan Delrahim, a former top Justice Department antitrust official). Google's earlier hires include the now-renamed PodestaMattoon, which draws its name from long-time Democratic dealmaker Tony Podesta, and King & Spalding, home to former Republican senators 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 chief executive Eric Schmidt or 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 on 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."
Google ... more to do in Washington
By any measure, Google is seriously outgunned in Washington. Its spending on lobbyists in 2006 amounted to a mere US$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 US$27 million to buy political influence and Microsoft spent US$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 US$179 million, while Google spent a mere US$540,000.
It's no surprise that Google has paid little attention to Washington and hired a government relations director just over two years ago: it's not in a heavily regulated industry like AT&T. Microsoft, of course, began writing fat cheques to lobbyists -- including Rick Rule, a former top Justice Department antitrust official — only after its antitrust headaches began in 1997.
Another parallel is that the anti-Microsoft campaign also was led by rivals who found it relatively cheap to put the screws to their competitor in Washington. Oracle and Sun founded ProComp, which argued for a forcible break-up of the software giant, and Netscape lawyer Gary Reback pressured antitrust regulators to assail Redmond. Oracle even hired private detectives to snoop through the trash of Microsoft's allies in the nation's capital.
"People said Microsoft was the new AT&T," said Ari Schwartz of the Center for Democracy and Technology, which has received money from Microsoft, AT&T and Google. "There is certainly a lot more scrutiny of Google now that they are the number-one player in this space and are acquiring other companies. Part of competition means people targeting the biggest player out there."
To be sure, the sentiment that Google could become the new Microsoft is not universally shared. What got the software company into trouble in the 1990s "wasn't Microsoft pushing its products -- it was Microsoft making it harder for rival products to come onto the market," said Robert Lande, an antitrust law professor at the University of Baltimore. "Is Google doing anything to make it harder for rival products [to come to market]?"
