Nestled among the lofty rhetoric of “hope and change,” Barack Obama made a core promise during the 2008 campaign that he would put an end to the corporate cronyism that has long pervaded the political system. “The days of sweetheart deals for Halliburton will be over when I’m in the White House," he proclaimed.
What President Obama left out however, was that the days of sweetheart deals for his cronies had only just begun–with his chief corporate advocate, Google, quickly emerging as the Halliburton of his administration. Fortunately, Attorney General Greg Abbott has taken a firm stand on behalf of the citizens of Texas to hold the Internet giant accountable.
Though Google recently faced serious federal antitrust charges that might have broken up other companies, it emerged virtually unscathed just two months after President Obama won re-election with significant financial and creative assistance from the company and its executives.
Under Abbott’s leadership, Texas was the first state to step up when the Federal Trade Commission failed to do its job at the national level. The failure to hold Google accountable to federal laws and regulations enforced on competitors has made the Texas-led probe all the more critical. After investigating Google’s practices for nearly 3 years, Abbott spearheaded a five state probe into the company’s practices, with California, Ohio, New York, and Oklahoma following Texas’ lead.
An investigation by the FTC found that Google illegally manipulated search results to favor its own products, scraping content from other websites without any provision allowing those with objections to opt-out, and imposing restrictions that prevent portability of search advertising campaigns across AdWords and other platforms.
While the company was under investigation, however, they contributed $25,000 to honor the FTC Chairman Jon Leibowitz. Unfortunately this is not the first time Google donated money to recognize top regulators while in the midst of a government investigation. According to a recent Bloomberg report, in October 2011, Google spent $80,000 to honor Federal Communication Commission Chairman Julius Genachowski and Commissioner Michael Copps, despite an ongoing investigation into Google’s Street View product.
The result of Google’s questionable lobbying efforts: the Internet giant walked away from the federal case with a non-binding "handshake" agreement in which it says it will make minor changes to some of its search functions. Moreover, there is no way for the FTC or any other agency to enforce the terms of the agreement should Google decide not to comply. When the federal government refuses to step in and stop cronyism, it’s up to the states to blow the whistle.
Abbot argues that Google is withholding thousands of documents in two civil investigation demands. Though the company promised to comply during the general investigation, they later refused to provide the requested documents. Google argues they are justified in keeping the requested 14,500 internal documents under wraps, citing attorney-client privilege.
Google, and particularly its Executive Chairman Eric Schmidt, has a strong, time-tested relationship with President Obama that is too close for comfort. Google’s greatest contribution to Obama, however, was specially-designed technology, not yet available to the public, which allowed Obama to connect with voters in ways his opponents could not.
But Google’s cronyism isn’t just a red state or blue state issue. Although Texas has twice voted against Obama, two of the other states launching probes—California and New York—both have Democratic Attorney Generals and voted to re-elect the President by overwhelming margins last November.
Regardless of how people feel about antitrust laws, the hallmark of corruption is to selectively enforce laws in a way that harms your opponents and accommodates your allies. In this case, an administration that has been aggressive onantitrust enforcement when, for instance, spiking the AT&T and T-Mobile merger, took no enforceable action against Google even after finding wrongdoing. It’s no surprise that that the European Union continues to investigate Google as well.
Some people like Google, hate regulators, and therefore look favorably on the company’s string of free passes. But Google opposes big government only when it restricts Google, and the Obama administration has no commitment to regulatory restraint. Google should play by the same rules as everyone else.