Business December 2007

Google’s Tar Pit

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

Six years after settling its antitrust suit, Microsoft now spends around $9 million annually to maintain a powerful presence in the capital. Its example certainly shows that you ignore the government at your peril. But Google has achieved astounding success by doing things differently—by taking what it cloyingly calls a “Googley” approach to business. And it’s now trying to take what one official described to me as a Googley approach to Washington: bringing the company’s quirky style to a place that is a bastion of rules and traditions.

Google says it doesn’t plan to follow the time-tested strategy of hiring lots of Washington lobbyists, the way rivals like AT&T and Verizon do. (Last year AT&T spent $23 million on lobbyists; Verizon $13 million. Google spent less than $1 million.) But it has lured presidential hopefuls, including John McCain and Hillary Clinton, to Mountain View: A tour of the “Googleplex” has become a campaign rite of passage. YouTube, a Google subsidiary, has sponsored presidential debates. In Washington, the company has been offering free classes to Hill staffers, ostensibly to familiarize them with the latest cool apps—but really to familiarize them with the company and to push back against the notion that it has become too big and too powerful.

The “try us, you’ll like us” strategy at the heart of Google’s self-image—the belief that familiarity will breed friends—has usually worked. But not always. A few applications, such as Google Earth, have generated alarm—some people were less than delighted when highly detailed photographs of their front yards began appearing online. And so far the strategy hasn’t been very popular in Washington.

Earlier this year, Google failed to win legislation that would have ensured it could serve customers as quickly as its rivals, using media such as the cable lines and wireless spectrum those rivals control. The telecoms adopted a conventional strategy, buying expensive “issue ads” in Washington newspapers and on cable-television stations. Google chose a nontraditional route, creating ironic Web videos that aimed for viral appeal. The ads were clever, they were Googley, and they didn’t do the job.

The company did win a partial victory on another big issue. In January, the government will auction off the block of wireless spectrum that will become available in 2009 when television broadcasters switch from analog to digital. Google lobbied the Federal Communications Commission to make the block freely available to any Internet-based application—the core of Google’s future business. Instead, the FCC declared that only a portion would be open, leaving Google with the option of deciding if it will participate in the multibillion-dollar auction to buy the entire block or make do with access to just a portion of it.

But the battle it really needs to win— the one it has so far been unable to head off—is easing government antitrust concerns.

Google has yet to hit upon a strategy that combines the innovation it is known for with an appeal to the self-interest that is the currency of the capital’s power brokers. One reason AT&T and Microsoft have succeeded in stoking antitrust interest against Google—quite ironic, given that both companies have been subject to large government antitrust actions—is that they’re better versed in the fine points of lobbying. Both companies, for example, hold sway over many lawmakers by frequently reminding them how many employees live in their districts (“jobs” is a metric lawmakers respond to).

But the number of people who earn money advertising on Google is also impressive: a reputed 2 million to 3 million (Google won’t provide the number), in small businesses and big corporations alike, spread across congressional districts throughout the country. If Google could learn to speak the language of Washington—jobs, small businesses, constituents—and harness these millions of entrepreneurs to support both its interests and theirs, it would be much closer to creating a strategy that is both Googley and effective.

In the meantime, the best thing Goo­gle has going for it is that even though it is by far the leading provider of online advertising, it has displayed none of the hyperaggressive attitude of Microsoft at a similar ascendant stage. But even a responsible company can grow into a monopoly, and Google’s professed desire to “organize the world’s information” suggests no lack of ambition, even if the company also professes that it will do no evil.

Just as Google has begun thinking creatively about Washington, the government has been thinking about Google. In his 2005 book, The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture, John Battelle notes that Microsoft’s control of the PC’s basic operating system in the 1990s made its system a virtual gateway to the Internet, and he posits that as the Internet continues to expand, the search function itself might become a similar gateway. The idea has found purchase among some government lawyers thinking about Google—and could suggest a Googley approach to antitrust law. As Google continues to grow, its greatest challenge may come not from Verizon, AT&T, or any of the other rivals plotting against it. As with Microsoft a decade ago, the challenge may come from the federal government.

Presented by

Joshua Green is an Atlantic senior editor.

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