Ah, the early days of a bromance.

Photographer: Kimberly White/Getty Images

'Googlement' Pushes Aside 'Government Sachs'

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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You remember “Government Sachs,” right? It’s the nickname that gained currency during the financial crisis for the Wall Street firm and its alumni, who seemed to occupy every crucial position in Washington.

Well, now there’s Govergle. Or maybe it’s Googlement. Alphament, anyone?

We all know Google -- or, technically, Alphabet, the new name of the parent company -- as the pride of Silicon Valley, occasionally the most valuable corporation on the planet,  the company investing billions in self-driving cars and thinking machines. Perhaps it’s time for it also to be recognized as the successor to Government Sachs.

Part of this is just the usual story of a company growing so big that it can’t afford to ignore lawmakers and regulators any more. Google/Alphabet’s annual spending on lobbying, for example, went from less than $1 million a decade ago to $16.7 million in 2015, putting it behind only Boeing and General Electric among American corporations.

But there is also a weirdly tight relationship between the company and the Obama administration. Google was formally neutral in 2008 election, but Eric Schmidt, then the chief executive officer, now Alphabet’s executive chairman, hit the campaign trail for Barack Obama and stood at the victor’s side at a news conference the day after the vote. The director of analytics who got the Obama campaign going on its hugely successful experiments in online fundraising in 2007 was a guy on leave from Google.

Since Obama took office in January 2009, at least 250 people have left Google and related companies  for jobs in the administration or vice versa. Oh, and in 2012 Schmidt actually helped recruit the Obama campaign technology team and spent election night in the campaign “boiler room” in Chicago.

I don’t doubt that much of this interconnection sprang from genuine mutual admiration. “He's fresh, he's new, there's something about him that's Google-like,” a young Googler said after Obama’s first campaign visit to the Googleplex in November 2007.

Now, though, neither Obama nor Google is what you’d call fresh or new. He is a gray-haired dude who has been in office for seven-and-a-half years, and it is a gigantic, powerful maybe-monopoly. The relationship deserves to be judged by different standards -- which is belatedly starting to happen.

The estimate of how many people have moved back and forth between Google and the administration is from the Google Transparency Project that the nonprofit Campaign for Accountability launched in April. The project also recently documented 427 White House visits by employees of Google and associated entities from January 2009 through last October, and found that most of the expert speakers at several recent conferences on privacy and antitrust received funding from Google.

What’s more, David Dayen wrote at the Intercept in April:

In just the past few years, Google has provided diplomatic assistance to the administration through expanding internet access in Cuba; collaborated with the Department of Housing and Urban Development to bring Google Fiber into public housing; used Google resources to monitor droughts in real time; and even captured 360-degree views of White House interiors.

Actually, that stuff sounds pretty cool. This is a key reason, I think, why Google’s close White House connections haven’t gotten nearly as much attention as, say, the oil industry’s ties to the George W. Bush administration.  Google/Alphabet remains a hugely admired and even beloved company. It is building the technologies of the future. Isn’t it great that it’s helping the nation out too?!?

Still, Alphabet is a publicly traded, for-profit corporation. It has interests. How have those interests been served during the Obama years? Here’s a quick review on three topics that immediately sprang to my mind: antitrust, taxes and internet regulation.

Antitrust: In Europe, Google is under constant attack from regulators for using its search-engine dominance to thwart competitors in other areas. In the U.S., the Federal Trade Commission conducted an antitrust investigation for two years but dropped it in January 2013, although it hasn’t stopped asking questions. The Justice Department’s antitrust division, which tried to break up Microsoft starting in 1998, has shown no appetite for going after Google.

In a provocative interview last month with the University of Chicago Booth School of Business’s Stigler Center, antitrust lawyer Gary Reback, a key figure in the Microsoft case in the 1990s and in European efforts against Google now, chalked up the difference partly to the growing influence of corporations in the U.S. since the Supreme Court’s Citizens United ruling in 2010, but also to Google’s special status:

Citizens United makes it easy for Google to give money, but there is also a closeness between Google and Obama. Eric Schmidt is personally very close to Barack Obama. He was one of his early supporters. Obama comes out to California all the time and raises money. Google executives have events for him. And that’s not lost on people like the chair of the FTC.

Then again, history indicates that a Republican-led FTC and Justice Department would probably be even less inclined to pursue antitrust cases. In the interview, Reback said that with the Obama-Schmidt bromance out of the way, a Hillary Clinton administration might be somewhat more activist on antitrust, but “I think it’s going to be hard to get them to do something about Google.”

Taxes: Google and other American tech giants have been extremely creative in finding ways to shelter their overseas income from taxes. The international Base Erosion and Profit-Shifting project, which the Obama administration has supported, could put an end to some of the most-extreme tax-avoidance practices. It’s hard to see how Google’s White House ties have helped it here, but this tax-policy stuff is so complicated that I’m wary of making sweeping statements.

Internet regulation: The Federal Communications Commission has during the Obama years handed victory after victory to Google and its Silicon Valley peers, and defeat after defeat to the incumbent cable and telecom companies. On issues such as net neutrality and breaking the cable-box monopoly, it’s conceivable (maybe even likely) that these decisions are good for consumers as well. When the subject is consumer privacy, where Google and Facebook face far fewer restrictions than the cable and telcos, that’s a harder case to make.

This is a case where a Republican FCC majority would almost certainly be making very different decisions. As I wrote a few years back, “Republicans are from Comcast, Democrats are from Google.” This partisan divide did not exist in the early days of internet regulation in the 1990s, but then again neither did Google. A Clinton administration would probably mean continued good times for Silicon Valley at the FCC, but it would be hard to top Obama’s personal involvement in the FCC’s net-neutrality decision. With a surprise public statement in November 2014, Obama basically forced Chairman Tom Wheeler into taking a much stronger stance than he would have otherwise. It was by all appearances a heartfelt statement consonant with his personal beliefs. But it was also great news for the Googlement.

  1. At the moment Apple is ahead of it again.

  2. A bunch of trade groups spent more, too.

  3. “Google affiliates such as YouTube, related firms like Civis Analytics (whose sole investor is Eric Schmidt), as well as key law firms and lobbyists representing Google.”

  4. I know some readers are going to say liberal media bias is the main reason, but the Google-Obama connection hasn’t even gotten all that much attention in the conservative media. There have been stories from time to time, but I don’t get the impression that there’s been a continuing barrage, or that Republican politicians have seized onto this issue. And the Campaign for Accountability, whose research has driven most recent coverage, has its roots in the political left.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Stacey Shick at sshick@bloomberg.net