Business December 2007

Google’s Tar Pit

Can Google “not be evil” and still fend off the government?

The lawn outside Google’s headquarters in Mountain View, California, is dominated by the imposing visage of “Stan”—tail thrashing, jaws agape, a full replica of the largest Tyrannosaurus rex fossil ever discovered. Stan mysteriously appeared on the lawn one morning several years ago, and is presumed by Google employees to have been a gift from the company’s quirky founders, Larry Page and Sergey Brin.

Like its corporate mascot, the search-engine giant has established itself at the top of the food chain, which helps explain why it has begun drawing scrutiny from Washington—much as Microsoft did when it was the hottest business of the 1990s. For now, interest is focusing on Google’s proposed $3.1 billion acquisition of the online advertising firm DoubleClick, a deal the Federal Trade Commission delayed earlier this year over antitrust concerns. Any day now, the FTC is expected to decide whether the merger would create an entity that controlled so large a share of the online advertising market that it would be, in effect, a monopoly.

At the same time, many businesses overshadowed by Google have begun looking for political arguments that might slow its seemingly unstoppable ascent. “There is no company on the face of the planet that scares as many businesses as Google,” says Blair Levin, a telecom and media analyst at the financial-services firm Stifel Nicolaus. The most popular and potentially effective argument against Google is the charge that it has become a monopoly that needs reining in. (The political power of this criticism is increased by fears that Google will misuse the vast amount of personal data it has accumulated.) In late September, Congress held the first antitrust hearings concerning Google—the opening salvo in what is likely to be one of the most important business and policy stories of the next few years.

The computer world is in the midst of its next great transition, as many applications and services—word processing, spreadsheets, e-mail, data storage—migrate from the personal computer to the Internet. Success for all sorts of businesses will soon depend on whether customers have easy and fast access to these Internet-based applications. Because gaining primacy will involve winning battles over regulation and federal oversight, companies like Microsoft and the major cable and telephone companies are now squaring off against Google in an arena where it has never competed and they have: Washington.

Until recently, a company’s Washington strategy tended to evolve at the same pace as its business. As the company grew larger, it would add lobbyists and advisers to protect its interests. But as Microsoft grew more powerful in the 1990s, it mostly ignored politics. It had gotten to the top of the new economy without aid or interference from Washington—why change? Microsoft assumed the government posed no threat—until its competitors persuaded the Justice Department to launch an antitrust suit. Though the company avoided a breakup, its stock price stagnated for years.

Microsoft’s example illustrates a pro­blem that can plague any fast-growing tech company: You can control vast markets and terrify your competitors, but still be a Washington rookie. As the government focuses on Google, the city’s familiar machinery is gearing up for battle on the question of whether the company is the large but benign force for innovation its corporate slogan, “Don’t be evil,” suggests—or whether, like Stan, it’s a carnivore on the loose.

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Joshua Green is a former senior editor at The Atlantic.

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