Two interesting factoids came to light recently about Google, the Internet giant that controls the world of online searches. The first was in a financial statement the company published for year-end 2015, surprising on the upside. Google had outstripped Apple, for some days becoming the biggest company in the world with a market cap exceeding half a trillion dollars. The second factoid was that Google spent more than $16 million on lobbying in 2015 – the third-largest such investment by a company, and the biggest of any technology company.
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Are these things related? Is investing in lobbying, relations with government and administrations a condition for reaching a market cap of half a trillion dollars? Were Google’s deeds a moral morass or was it fulfilling its duty to shareholders?
Naturally, Google is not the only high-tech firm to invest millions in political lobbying. Facebook, Amazon and Apple do, too. But its investment stands out for its sheer size and the resolve it reflects. What is all that money going on? The full answer is: Anything that affects the company’s income.
According to U.K. daily The Guardian, Google and other companies are promoting a law to reduce patent theft claims against big companies. It’s fighting for a law that would facilitate import of foreign high-tech workers. It is also pursuing tax breaks on investments in R&D. These are topics that all technology companies are looking to push, but Google has unique issues, too – such as online school education, a trend that sits well with the Chromebook devices it sells to students.
Its lobbying in Washington looks tame compared with the political steamroller Google has unleashed against the authorities in Europe, where there are plans afoot to have the company declared a monopoly and impose fines on it that could reach 6 billion euros ($6.6 billion). According to the Guardian investigation, Google recruited U.S. congressmen – through donations for their own election campaigns – to wield pressure on Europe’s leaders over the antitrust investigation against the company.
Here are some other facts exposed by The Guardian, based on documents obtained through the Freedom of Information act.
1. Google cofounder Larry Page met with the head of the European commission in Google’s California offices to discuss the antitrust probe against the company, even though he’d been warned not to by the European authorities.
2. Google has greatly stepped up lobbying the European authorities in Brussels.
3. Google hired a number of ex-European officials as lobbyists.
4. Google finances academic research and studies that support its position against the European authorities.
5. Some U.S. congressmen who received donations from Google wrote to the European authorities on the company’s behalf. In one case, the chairman of the House Judiciary Committee, Bob Goodlatte, wrote them that he was concerned about entities “encouraging antitrust enforcement efforts that appear to be motivated by politics.” Goodlatte and the members of the committee he headed received more than $200,000 in donations from Google; in fact, Google has donated to no less than 162 U.S. congressmen.
6. A top European official told The Guardian that the really striking thing is the “comprehensive and strategic approach” the company takes. “They are not only doing PR but they are doing everything. They are using proxies, which is much more powerful than just the usual stuff.”
Lobbyist Jacques Lafitte – whose clients include bodies that had complained about Google’s monopolistic power – said that before Google, the most-sophisticated company at using political power had been Goldman Sachs. Google has beaten it hands-down because, unlike Goldman, they don’t focus only on the top; they wield their influence everywhere.
7. Former Google employees are working at the top of various antitrust bodies, and former antitrust employees are now Googlers. “The company’s motto had been Don’t be evil, but now they’re dripping evil in the political world,” says Jamie Court, head of Consumer Watchdog. He accuses some of the company’s staff of “being Mafiosi – violent purveyors of influence – and Obama is their No. 1 fan.”
8. Out of 102 lobbyists that Google hired in 2014, 81 had worked for public bodies beforehand.
Clearly, Google and other companies have no intention of playing the capitalist game according to the existing rules. Nor will it stand idly by while regulators discuss and decide whether it’s a monopoly, and whether it should be dismantled or supervised. Instead, Google is determined to change the rules and influence them according to its own interests.
Donations to politicians? Let’s do it the biggest and broadest. Revolving door for our workers and ex-regulators? Big time. Hiring people with influence? Certainly. Donations and transfers to social institutions, universities, research institutions and maybe the press too, if their position suits our agenda? Check.
This is not a coincidence. Anybody who knows the culture at Google knows that the company does everything as thoroughly and professionally as possible, with total goal orientation; this also applies when it’s trying to influence politicians and regulators.
The rules of the game
Could all this have something to do with Google crossing the half-trillion dollar mark last week? Sure. Google is an absolute monopoly in Web searches; it controls the digital advertising market in most countries. The regulators could decide to tear the company apart like they did to the Rockefellers’ Standard Oil, which had controlled the U.S. oil market at the start of the 20th century. If Google had been forced to split its search off from its operating systems for mobile phones, for example, it couldn’t have become the biggest company in the world.
In fact, looking at the list of companies that invest money in lobbying and ties in government, one sees that most are monopolies – or at least heavily dependent on government decisions. Boeing is the only manufacturer of large passenger planes in the United States and only one of two in the world (Airbus being the other). General Electric controls a number of markets. Google, Facebook, Amazon and Apple are all monopolies in their fields. Pfizer makes Viagra, ExxonMobil and Big Oil depend on government decisions, and Coca-Cola leads the beverage industry.
It’s obvious: If you want to become very, very big, you need relations in government and make sure that some regulator doesn’t come along and decide you’re a monopoly that needs to be constrained or dismantled. The result, of course, is the existence of monopolies, of markets with little competition and high prices – and diminished innovation by entrepreneurs and startups.
Some might say those are simply the rules of the game, and that one rule says the rules of the game can be changed by political lobbying. Some would say, quite rightly, that Google is facing a PR attack financed by the competition – for example, Microsoft – who use exactly the same tools.
And some would say that giant companies don’t owe squat to anybody but their shareholders, and should do everything legal (or everything they don’t get caught doing) to become monopolies and suppress competition. This may well describe the current reality, but it’s a reality that does well by the management, the controlling shareholders and the politicians – but not by the consumers, workers and everybody else.