Google builds some political muscle with Obama

WASHINGTON -- Another inauguration took place in Washington, D.C., this week -- Google Inc. officially became a political power player.

In October, Google was only hours from being sued by the U.S. Justice Department as a Web-search monopolist. Today, fewer than three years after it made its first Washington hire, the Internet giant is poised to capitalize on its support of President Barack Obama and pursue its agenda in the nation's capital.

Google's executives and employees overwhelmingly supported Obama's candidacy, contributing more money than all but three companies or universities. And only DreamWorks employees gave more toward his inauguration festivities.

Google Chief Executive Eric Schmidt campaigned for Obama and was one of four Googlers on his transition team. He is as likely as any corporate chieftain to have his calls to the White House returned.

At the top of the company's policy priorities are two that consumer advocates largely champion. First, it wants to expand high-speed Internet access so people can use its Web services more often. It also is pushing for so-called network neutrality: prohibitions on telecommunications companies charging Web sites for faster delivery of their content.

"Google is not just a benign corporate entity. It has a variety of special interests," said Jeff Chester, the executive director of the Center for Digital Democracy who has sparred with Google over data-privacy issues. "They're in a great position to push their agenda through with the support of the president and the Democrats in Congress."

But Google's newfound political ties heighten concerns about its grip on the online advertising market. The company could play better defense against strong competitors trying to curb its influence.

In the autumn, Justice Department lawyers, who had been lobbied heavily by Microsoft Corp. and large telecommunications companies, were about to sue Google on antitrust grounds. They wanted to block its controversial search-advertising partnership with Yahoo Inc., but Google abandoned the deal rather than fight in court.

Competitors worry about Google's close relationship with the Obama administration, said Bill Whalen, a research fellow at Stanford University's Hoover Institution.

"The question going forward is: Will Google turn into just another business entity looking for favors in Washington, or will it manage to keep the 767 flying at 30,000 feet above the political din?" he said, a playful reference to the Google founders' private plane.

White House officials did not respond to requests for comment. Obama vowed generally this week that his administration would not be beholden to anyone.

Google says the main reason it has improved its standing in Washington is that Obama's tech priorities mirror its own. He has endorsed network neutrality. His technology agenda also calls for expanding broadband Internet access to rural areas and appointing the first government-wide chief technology officer (Schmidt has been mentioned for the position but reiterated this week that he is not interested).

"This administration is more focused on science and technology," Schmidt said. "That's positive for all of technology and particularly Google."

Symbolizing its new stature, the Internet giant co-hosted a glitzy Inauguration Day party here. The event was studded with celebrities, including Ben Affleck, Jessica Alba and Glenn Close. Although Obama did not make an appearance, the event drew influential political figures including Obama transition chief John Podesta and Sens. Charles Schumer, D-N.Y., and John Kerry, D-Mass.

"A lot of people are united to create a grass-roots service democracy, and Google is playing a bigger role in that than anyone knows," Craigslist founder Craig Newmark said as dance music echoed through the grand Andrew Mellon Auditorium.

Obama's campaign and administration have embraced Google products. Video of his weekly address is available on YouTube. During the shift from the transition office to the White House, Obama's press office staff created free e-mail accounts on Google's Gmail until their government accounts were activated.

In November 2007, Obama unveiled his "innovation agenda" during a visit to Google's Silicon Valley campus. And at an economic forum in Florida two weeks before the presidential election, Obama praised the company as "a cutting-edge innovator."

On stage with him in Florida was Schmidt, who publicly had endorsed Obama days before (he said that the support was personal and that the company remained officially neutral). Schmidt also appeared in a 30-minute infomercial for Obama, and he was appointed to the Transition Economic Advisory Board after the election.

Google's spokesman in Washington, Adam Kovacevich, said despite Schmidt's personal support for Obama, the company has a bipartisan strategy.

"We know that the incoming administration supports a lot of things that we like," he said. "But we also know you cannot get anything done here unless you have relationships on both sides of the aisle."

The company's political action committee gave 57 percent of its $264,000 in contributions during the 2008 campaign cycle to Democrats, and 43 percent to Republicans. Google also had a presence at both parties' national conventions.

But Google's employees left little doubt whom they supported. They contributed $782,964 to Obama's campaign and just $20,800 to John McCain's, according to the nonpartisan Center for Responsive Politics. Googlers also donated $166,000 for Obama's inauguration.

Still, the company doesn't have a clear path in Washington.

Its biggest rival, Microsoft, came in third on the list of top Obama contributors (it has more than three times as many employees as Google). And Microsoft's PAC handed out nearly three times as much money in 2008 as Google's did.

Microsoft is an old hand here after facing down the government in an antitrust battle a decade ago. And its savvy shows: Sanford Bernstein analyst Jeffrey Lindsay said Microsoft outmaneuvered Google last year, drumming up opposition that helped derail the Yahoo search deal.

Gigi Sohn, president of Public Knowledge, a digital rights groups that has worked with Google to advance network neutrality, played down concerns about the Web giant's new clout.

"They can put things on the radar screen that might not otherwise be on the radar screen ... but it's a long way from being on the radar screen to being put into law," she said. "There are people on the opposite side of what Google wants who can pick up the phone too."