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Tech Titans' Ties to Washington Grow Closer -- and More Complicated

By Cecilia Kang
Washington Post Staff Writer
Thursday, June 4, 2009

In 1993, well before the introduction of tweets, iPhones and online video, a Silicon Valley engineer was invited to Capitol Hill to teach lawmakers about the future of the Web and how to use it. It would be among many visits to Washington for Eric Schmidt, who was Sun Microsystems chief technology officer.

Now chief executive of Internet titan Google, Schmidt and the company's ties to Washington have only grown stronger.

Schmidt is a member of President Obama's Council of Advisors on Science and Technology. Three other Google executives have left the firm to work in the administration, including the company's former head lobbyist Andrew McLaughlin, who will be the nation's deputy technology officer.

Yet with the company's rapid growth and dominance in Internet search technology has come heightened scrutiny. Google, whose motto is to do no evil, has attracted three antitrust investigations. This week, sources confirmed that the Justice Department is investigating whether Google, Microsoft and other high-tech giants entered into a pact on the recruiting and hiring of one anothers executives, a violation of anticompetitive rules.

The department is already investigating Google's settlement with book authors and publishing companies that would allow the search giant to digitize millions of books. And the Federal Trade Commission is conducting a separate review of whether Google and Apple violate antitrust laws because Schmidt sits on both boards.

It appears, analysts say, that Google's apparent influence and White House connections have run up against the administration's drive to step up enforcement of anticompetitive controls in the tech industry.

"Part of the anxiety about Google stems from how broad Google's reach has become," said Rebecca Arbogast, an analyst at Stifel Nicolaus. "Everything they do will be scrutinized, and they will be as careful as a teenager on probation not to do anything foolish."

Yesterday, consumer groups including the Center for Digital Democracy wrote to the White House protesting McLaughlin's appointment. "We believe no special-interest connected person should assume a position of vital importance to the country's future," they wrote.

Google declined to comment on the letter and McLaughlin's appointment.

Critics say Google's success -- a 70 percent grasp on all Web searches and its reach into areas such as online video, mobile phone services and Web browsing -- has competitors sharpening their lobbying efforts.

Microsoft, which according to the Center for Responsive Politics spent $8.9 million in lobbying fees last year, has painted the Internet search giant as the new tech monopolist. For example, Microsoft-funded public relations firm Law Media blasted reporters last weekend with e-mails saying McLaughlin's appointment "looks like a full embrace of Google by the White House. We do not remember a time when one company had so many executives leave to serve a single administration."

AT&T, among several firms, funds a group run by telecom consultant Scott Cleland. He writes a blog that criticizes Google's push for net neutrality and raises concerns that Google's settlement with book authors could allow the firm to dominate digital books. Microsoft also hired Harvard Business School assistant professor Benjamin Edelman as a consultant. He has criticized Google for inflating costs for advertisers. (Edelman also consults for The Washington Post.)

These are just the latest moves in an image war among tech's biggest companies, with Google at the center. At stake are policy decisions that could affect many billions of dollars. Microsoft learned through its own costly antitrust battle in the late 1990s about the importance of perception. The company, accused of bundling its Web browser with its Windows operating system -- the dominant software for personal computers -- suffered for years from the image of being a monopolist.

"The Microsoft case brought public relations to antitrust in a serious way," said Albert Foer, president of the American Antitrust Institute. "Now an antitrust case can no longer be limited to just the courtroom."

In a recent Senate hearing on the future of newspapers, lawmakers grilled a Google executive on its distribution of wire service and newspaper content without paying for them. Broadcasters last year fought Google on the use of unlicensed wireless spectrum they said would cause interference. Since 2007, phone giants have blasted Google's push for rules to allow all applications on their networks.

Verizon Communications chief executive Ivan Seidenberg has said that Google is "trying to effectively quarantine what our permissible activities are."

The Internet search giant has responded by taking a 26-page presentation titled "Google, Competition and Openness" to lawmakers, regulators and public interest groups in which it argues that the firm is big but not anticompetitive. It says it is "one click away" from losing its dominance in Web search and Internet advertising to rivals like Yahoo and Microsoft. It has criticized Microsoft's attempt last winter to buy Yahoo. And it has criticized Microsoft's bundling of its Internet browser with its Windows operating system in a current antitrust investigation in Europe.

"We went from being a start-up to being an institution very quickly. We have organizations that spend a lot of time complaining about us and criticizing us. That's healthy," Schmidt told reporters last month after he spoke at the University of Pennsylvania commencement.

Google hasn't spent as much on lobbying as its competitors, but it has influenced opinion in myriad ways, experts say.

Schmidt leads the board of the New America Foundation, a Washington-based policy think tank whose areas of interest include technology.

He and the company's chief Internet evangelist Vint Cerf, among others, helped with the Obama campaign and transition. Google also hosted a lavish black-tie ball for the inauguration.

And at the president's first meeting with corporate executives since taking office, Schmidt sat at his right side at a table that included titans of industries across the nation.

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