July 23, 2007 4:00 AM PDT

On antitrust, is Google the next Microsoft?

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 announced last week 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 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 checks to lobbyists--including Rick Rule, a former top Justice Department antitrust official--only after its antitrust headaches began in 1997.

CONTINUED: An awkward alliance…
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26 comments

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Microsoft Punished?
Microsoft punished? When did this happen? The company should have been broken up into at least 4 or 5 companies. Today they can still afford huge loses (entertainment division) without breaking a sweat allowing them to break into any/all other markets they want to conquer and monopolize and still outweigh their competition banking on the gains from their Windows monopoly.
Posted by s1kb0y (6 comments )
Reply Link Flag
This article is not about Microsoft
nt
Posted by hdubya (21 comments )
Link Flag
Google should watch out.
Google is starting to realise that is becoming a monolith of its own making, and it starting to have its ass biting itself with the Department of Justice and an even more vicious opponent, the European Commission. The company with the slogan ?do no evil? is starting to become a fig leaf. I would be surprised if Commissioners Kuneva (consumer protection), Kroes (competition), Reding (information society and media) & Frattini (freedom, security and justice).
Posted by eurobloke (19 comments )
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Re: Google should watch out
(Sorry I didn't finish)
Google is starting to realise that is becoming a monolith of its own making, and it starting to have its ass biting itself with the Department of Justice and an even more vicious opponent, the European Commission. The company with the slogan ?do no evil? is starting to become a fig leaf. I would be surprised if Commissioners Kuneva (consumer protection), Kroes (competition), Reding (information society and media) & Frattini (freedom, security and justice) have a good go at Google for various reasons including privacy breakdowns ie Gmail, causing monopolies with search and acting anti-competitively.
Posted by eurobloke (19 comments )
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Buying political influence?
From the article: "By comparison, last year AT&T wrote checks for at least $27 million to buy political influence and Microsoft spent $8.9 million."

What, is that supposed to be lauded? Are you saying Google is not corrupt enough? Ridiculous!
Posted by adasha76 (250 comments )
Reply Link Flag
lauded
It's possible to describe a situation without saying it's good or bad, which is in fact what our article did.

We didn't say Google should buy political influence -- we just reported on it being outgunned.

If anything, we noted the public choice theory argument about rent extraction, so you should have taken away exactly the opposite conclusion. You may want to reread the article.
Posted by declan00 (848 comments )
Link Flag
Diffrerent starting point
MS had zero footprint in DC, while their competitors had regular breakfast with the DOJ. They were completely unprepared.

Google is not, and certainly has learned from MS' mistakes. They will not be cuaght ignoring DC the way MS did until it was too late. (As noted in the article, MS has since realized that they needed to play the "games" its competiors had pulled to stay ompetitive, and has done so.)

Google will not get caught the same way, they will USE DC, not have it used against them.
Posted by KTLA_knew (385 comments )
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business as usual then
If USA government puts Google through the same antitrust process, then it'll be a minor annoyance during that time and then business as usual when any possible trial is over. Isn't that how things worked out for MS?
Posted by amigabill (93 comments )
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I thought Google could do no wrong?!
I think Msft was the evil empire and Google was our dearly beloved.
Posted by bobby_brady (765 comments )
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Silicon valley broght this on themselves
When all the losers like Sun, etc started going after Microsoft via legal channels when they realized they couldnt compete with MS by offering superior products, all they did was provide a little bit of room for the Camel - government regulators - to get his nose under the tent. Once government regulators get into an arena, they dont get out. I knew this was going to happen back when everybody was bashing MS for being a monopoly. I knew it'd come back to haunt all those companies jumping onto the MS break-up bandwagon.
Posted by LuvThatCO2 (187 comments )
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oops...
Thats 'brought' it on themselves :-)
Posted by LuvThatCO2 (187 comments )
Link Flag
Google Power vs. MicroSoft
If I wanted I could ignore Google almost entirely. A few adds would appear, but I don't need to use their applications to use my computer. I don't have to use their check out. Gmail has alternates.

Not so much with MicroSoft. They are harder to avoid. MS has no business testifying about Googles Monopoly Power. Yes Google has taken over big chunks of the internet and they are worth watching.

In the mean time. Google.com still works and Vista doesn't. I'm stuck with using Vista much more so than Googles search. Interesting how the larger monopoly has more issues with basic products.
Posted by Renegade Knight (13748 comments )
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Lucky you
"If I wanted I could ignore Google almost entirely. A few adds would appear, but I don't need to use their applications to use my computer. I don't have to use their check out. Gmail has alternates."

Thats true for a user, but not for an advertiser or web site owner. Google is fast becoming the only game in town.
Posted by Turlingdrome (22 comments )
Link Flag
MS / DOJ antitust punishment for Google?
Google: Yes?
DOJ : Stick out your arm & roll up your sleeve.
Google : O.K....?
DOJ : Wrist up.
Google : OK
DOJ : "SLAP!!!!" Now you've been "punished just like Microsoft was in the past by us. Did that hurt?
Google : a little...
DOJ : "we'll take our millions in unmarked nonsequencial bills, thank you very much.
Google : OK"
DOJ : "What antitrust actions by Microsoft...errr...I mean Google...?"
Posted by Llib Setag (951 comments )
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Data insulation
I see no problem with Google purchasing DoubleClick, as long as Google/DoubleClick data is kept segregated. Google and DoubleClick both have a great deal of information about us. If that data was integrated we would loose a great deal of our privacy.
Posted by ralfthedog (1589 comments )
Reply Link Flag
But what if...
Google decides to rank pages that include advertisements from Doubleclick higher than pages that use some other advertiser?

How will we know if they do that since they are so very secretive about how they rank pages already?
Posted by aabcdefghij987654321 (1721 comments )
Link Flag
Google and DoubleClick
I don't use Google for anything. I definitely want my privacy protected. If they combine with DoubleClick, which is pervasive in the online ad business, then they will possibly have information on other companies search business, and other areas also. The merger shouldn't be allowed. Let Google continue trying to dominate the world, ignoring their motto, and DoubleClick do its' thing.
Posted by aintnorainbowdorothy (98 comments )
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Hogwash. They are completely different companies
Google's founders have integrity, Microsoft's don't.

Google is BIG, yes. That's where the competitive approach ends.
Posted by technewsjunkie (1265 comments )
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Google versus Microsoft!
Well if I had my choice on who should be the monopoly powerhouse of the world wide web going forward, I'd choose Google over Microsoft any day. Google's approach is open and platform agnostic whereas Microsoft's is closed and Windows-only, which impedes real choice in the market (versus the perceived choice people are brainwashed into thinking Microsoft somehow delivers real choice to the market)!

So uh, yeah, go Google :-)
Posted by JuggerNaut (860 comments )
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In Microsoft's Dreams!
Google is in a far better situation than Microsoft ever was. It has a commanding position in an industry - advertising - that evolves but cannot be eliminated. Business will always spend megabucks on advertising, and Google has a killer business model to extract profits from this business.

Despite the hoo-har advertising is nothing to Microsoft - it is barely 5% of Microsoft's revenues. Microsoft's problem is that it is operating in a mature business area with many, many alternatives for what it produces - many of which are free.

Microsoft's efforts so far in the advertising world reflect it's background as a product company who is not so great at marketing.

More at:

www.digitalmarketing.us/blog/
Posted by Rusty Digital Marketing (13 comments )
Reply Link Flag
Google definitely does evil
But how are they manipulating market forces, even close to what Microsoft has done?

Google became the most used search engine through merit. Microsoft never became market leaders through merit.

Google isn't forcing their software on others, nor are they forcing anyone to use their software exclusively.

No way in hell that I would ever use their spyware, I mean desktop apps and email. But to even compare them to Microsoft is foolish.
Posted by The_Decider (3097 comments )
Reply Link Flag
"Google is seriously outgunned in Washington" ...
... "By comparison, last year AT&T wrote checks for at least $27 million to buy political influence and Microsoft spent $8.9 million."

Huh?

More importantly, shouldn't we really be questioning the constitutionality of "buying political influence" to begin with, along with the threat that this poses to free enterprise and democracy?
Posted by bearded_oneder (2 comments )
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