Google Boosts Lobbying, Media Outreach to Combat Antitrust Concerns

Google is determined not to relive what happened to it last year. The company battled fierce criticism of its proposed search ad deal with Yahoo from advertisers, publishers — and most significant — the U.S. Department of Justice. Since then, the firm’s own public affairs team, along with at least 25 hired lobbyists, have been up and down Capitol Hill meeting with congressional staffers in the hopes of convincing them Google is no threat to industry competition.

Rather, its message is that it’s helping other businesses compete, embracing open source technologies, and constantly improving its offerings. And, despite the fact that the firm’s search market share is over four times that of its closest search competitor, Google believes it is up against the same user disloyalty that other search engines are.

“Competition is one click away,” states a company presentation viewed recently by Senate and House legislative assistants, and even media outlets including this one.

The focus of many of Google’s discussions with legislative staff was competition in the online ad market. Lobbyist reports list conversation subjects such as “Openness and competition in the online services market,” “Promoting innovation and growth online,” “General online consumer privacy and protection issues,” and “Issues regarding benefits of online advertising for small business.”

In the first quarter of 2009, Google spent $880,000 on federal lobbying expenses, $370,000 of which was paid to seven outside lobbying firms, according to the Center for Responsive Politics. Google public policy execs and the other lobbyists met with staffers representing several Congress Members and committees, including aides to Sen. Maria Cantwell, who sits on the Communications, Technology and the Internet subcommittee; Sen. Jeff Sessions, who works on the Judiciary Committee; and Senators Mark Pryor and Mike Enzi, who both sit on the Small Business and Entrepreneurship Committee.

The company also lobbied counsels to the Senate Commerce Committee, and the House Committee on Science, Space and Technology, which encompasses a Technology and Innovation subcommittee. The information was gathered from publicly-available reports filed by lobbying firms and required by the government.

In November, the Department of Justice put the kibosh on a search advertising partnership Yahoo and Google had been planning for months. At the time, the DOJ’s Antitrust Division stated, “The arrangement likely would have denied consumers the benefits of competition…lower prices, better service and greater innovation.”

Some Google public policy people believe the company could have done a better job of communicating the deal, particularly to the advertiser community. The Association of National Advertisers panned the proposed deal, predicting it could “diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising.” Such criticism helped propel the DOJ to investigate, and probably contributed to its decision to threaten the two companies with an antitrust lawsuit. Google killed the deal before the DOJ filed suit.

Today Google faces fresh antitrust concerns; reportedly, the Federal Trade Commission is looking into whether the fact that Google and Apple share two board members (including Google CEO Eric Schmidt) violates competition laws. Google is also dealing with library organizations worried that its Book Search project could lead to a monopoly on access to digital books.

An earlier competition-related battle won by Google helped establish it in the eyes of legislators as a firm to watch for possible antitrust infractions. Google came up against privacy advocates and competitors like Microsoft in its fight to acquire ad management technology firm DoubleClick in 2007. The FTC approved the purchase, but concerns over Google’s market dominance haven’t died down since.

The company hopes reaching out to legislators and media outlets will assuage those concerns. In a presentation Google has shown to such parties, the firm insisted the online ad industry is dynamic and competitive, alluding to recent ad network launches and acquisitions. The presentation also includes quotes from news articles and industry analysts suggesting Google itself must compete in order to maintain its dominance of the search market. For instance, the presentation culminated with a quote from a search engine analyst who stated, “Google’s competition will come from the same place Google did. It will sneak out of nowhere.”

Although much of the antitrust concern regarding Google tends to center on its search business, the company’s presentation compared itself to older firms with multiple, more established businesses. Comparing itself to Microsoft, AT&T, Verizon, and IBM, Google noted its own revenues, profits, staff, and lobbying budget are smaller.

But Google clearly isn’t shrinking away from lobbying. In fact, the $880,000 it spent in Q1 puts it on pace to spend $3.5 million this year, more than the $2.8 it spent last year, and more than double what it spent on lobbying in 2007. And, while Google’s primary revenue stream is its search ad business, the topics discussed by the company and its lobbyists — from renewable energy policies and online health-related initiatives to cloud computing and broadband policies — exemplify its goals to build several new profit-making ventures.

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