By KATE PHILLIPS
WASHINGTON, March 27 - For a company that takes pride in being the
quintessential outsider, Google is moving quickly into the ultimate
insider's game: lobbying.
Started less than a decade ago in a Stanford dorm room, Google has
evolved into a multibillion-dollar business, its search engine
ubiquitous on the Internet. Its sprawling growth, fueled by a public
stock offering in August 2004 that created a market behemoth, has now
thrust it into the glare of Washington.
As lawmakers and regulators begin eyeing its ventures in China and
other countries and as its Web surfers worry about the privacy of
their online searches, Google is making adjustments that do not fit
neatly with its maverick image.
It has begun ramping up its lobbying and legislative operations after
largely ignoring Washington for years, in a scramble to match bases
long established here by competitors like Yahoo and Microsoft, as well
as the deeply entrenched telecommunication companies.
Google has hired politically connected lobbying firms and consultants
with ties to Republican leaders like the party chairman, Ken Mehlman;
Speaker J. Dennis Hastert; and Senator John McCain; and advisers say
the company may set up a fund-raising arm for political donations to
candidates. And in a town where Republicans hold the levers of power,
Google has begun stockpiling pieces of the party's machine.
To some, Google is a novice arriving late to the table. To others, the
company's embedding on K Street, which serves as home to many of
Washington's top lobbyists, represents a new and not necessarily
welcome sign of sophistication.
"It's sad," said Esther Dyson, editor of the technology newsletter
Release 1.0 and former chairwoman of ICANN, a nonprofit group that
administers and largely controls the Internet. "The kids are growing
up. They've lost youth and innocence. Now they have to start being
grown-ups and playing at least to some extent by grown-up rules."
In doing so, Google provides another example of how Internet
companies, no matter how unconventional their roots or nonconformist
their corporate cultures, increasingly find themselves wrestling with
the same forces in Washington that more traditional industries have
long faced. Google's executives consider the moves necessary as they
achieve a prominence that allows them to elbow their own interests
onto the political stage.
"We've staked out an agenda that really is about promoting the open
Internet as a revolutionary platform for communication," said Alan
Davidson, brought on board less than a year ago as the company's
policy counsel to set up offices in the Penn Quarter area of
Washington. "It's been the growth of Google as a company and as a
presence in the industry that has prompted our engagement in
Washington."
Even as they emphasize policy over politics to raise their profile,
Google executives and advisers are also fully aware that they are
embracing the lobbying world at a time when it has been rocked by the
Jack Abramoff scandal of influence peddling. Some advisers say the
company may wait until after Congress decides whether or how to
overhaul lobbying laws before it wades more deeply into fund-raising
and politics.
With its stock price closing on Monday near $370 a share and its
vaulting onto the Standard & Poor's 500 stock index this week, the
company also cannot afford to be caught flat-footed by regulatory
agencies or its competitors.
"They are brilliant engineers," said Lauren Maddox, a principal in the
bipartisan lobbying firm Podesta Mattoon that was hired by Google last
year. "They are not politicians."
In signing on Podesta Mattoon and other consultants, Google is
spreading its lobbying dollars on both sides of the political aisle,
increasing its spending on outside firms this year to well beyond
$500,000, officials said, although that does not include its own new
office complex or payments to some of the consulting groups being
added on. (By comparison, the giant Microsoft spent almost $9 million
last year in lobbying, and Yahoo spent more than $1 million for just
part of last year, according to partial-year filings compiled by
PoliticalMoneyLine, an independent campaign finance Internet site.)
Podesta Mattoon is led by Anthony Podesta, a Democrat, and Daniel
Mattoon, a Republican and longtime friend of Speaker Hastert, an
Illinois Republican. The speaker's son Joshua also works at the firm,
along with Ms. Maddox, a former top aide to Newt Gingrich.
Adding to its arsenal is the DCI Group, a firm with top-flight
corporate clients and strong ties to Mr. Mehlman and Karl Rove,
President Bush's senior political adviser. DCI, Google officials say,
will help it establish links to Republicans, as well as promote its
book search project, an effort to make the full text of books
searchable online, among publishers and authors.
At the helm of that operation is Stuart Roy, senior vice president of
DCI and a former aide to Representative Tom DeLay, Republican of
Texas. Mr. Roy also counts as a client Progress for America, the
conservative group that successfully rallied grass-roots support for
Mr. Bush's Supreme Court nominees.
Ms. Maddox said Google's emerging army of advisers would help it fight
fires along several policy lines, including copyright law, access to
the Internet and privacy issues like its successful court fight this
month to narrow a Justice Department subpoena over disclosure of its
users' searches.
"We have a team of Republicans and Democrats who are helping them sort
out these issues," Ms. Maddox said, an effort that recognizes that the
"policy process is an extension of the market battlefield."
The big Internet companies, including Google, are bracing for an
uphill struggle with lawmakers and the titans of the telephone and
cable industries over whether fees should be charged for heavy data
traffic, like video streaming over broadband width.
"Our belief is that this is going to be an issue of great concern for
consumers," Mr. Davidson said. "The telephone companiqqes have been
lobbying these committees for generations. Our industry is very
young."
Google's political awakening was nowhere more evident than on Capitol
Hill last month, when it, Microsoft, Cisco Systems and Yahoo were
slammed by Republicans and Democrats alike over business dealings in
China. Elliot Schrage, vice president for global communications and
public affairs at Google, was lashed repeatedly with the company's
motto, "Don't Be Evil," as House members accused the corporations of
abetting China's government in censoring Internet communications and
imperiling the safety of Chinese Internet surfers.
It is an issue that Google and others know will not go away soon.
Representative Christopher H. Smith, Republican of New Jersey, and
other legislators are demanding that Internet companies be more
sensitive when dealing with foreign countries.
"I think they are just going to lobby to spread this yarn that by
being there, they're going to spread democracy," said Mr. Smith, who
presided at the hearing. "This dictatorship can go on for generations
if it's not unchecked."
Mr. Davidson said companies were trying to address the prickly
subject. "I think we all said in our testimony that we were serious
about trying to work out standards for engaging in countries where
these kinds of censorship issues come up," he said.
By some accounts, China may be so radioactive that even a longstanding
relationship with Congress would not have tempered that hostile
reception. But "the lack of a presence is what they recognized needed
to get remedied fast," said Harry W. Clark, managing partner of the
Stanwich Group, who has just been hired as a management consultant for
Google. A veteran adviser to Internet corporations, Mr. Clark is a
tightly connected Republican who worked in the Bush administration and
who is now doing volunteer work for Senator McCain, an Arizona
Republican.
Google's recruitment of heavy hitters in the nation's capital has not
stopped. While it had already retained the firms of Public Policy
Partners and Capital Tax Solutions, the headhunter Russell Reynolds
Associates is in the midst of a search to fill a senior position
alongside Mr. Davidson. Mr. Clark also predicted that Google would
name a political director, probably a Republican.
Because some Republicans still view the company as Democratic-leaning,
citing the 2004 election analyses that showed nearly all its
employees' contributions went to Democrats, the company will be
careful, Mr. Clark said, to spread its wealth around.
"The folks I've talked to," he added, "everybody recognizes that the
employee contributions were weighted heavily toward Democrats, and
they're waiting to see a course correction."
And despite the climate of indictments and investigations that
pervades K Street right now, industry experts say Google has no choice
but to get into the arena.
Rhett Dawson, president of the Information Technology Industry
Council, admonished that lobbying was not "a dirty word." Google,
Mr. Dawson noted, "is quickly going through a maturation phase that a
lot of companies have gone through that shows it pays to pay attention
to Washington or it can hurt you in ways that don't reflect well on
you."
He added, "It doesn't have to be a system that makes you embarrassed
to talk to your mother about."
Copyright 2006 The New York Times Company
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Kate Phillips (nytimes@telecom-digest.org)