By John D. McKinnon and Brody Mullins
WASHINGTON -- Google's parent company, Alphabet Inc., made a big
bet on Hillary Clinton winning the 2016 presidential election.
Employees donated $1.6 million to her campaign, about 80% more than
the amount given by workers at any other corporation, and Executive
Chairman Eric Schmidt helped set up companies to analyze political
data for the campaign. Mr. Schmidt even wore a badge labeled
"STAFF" at Mrs. Clinton's election-night bash.
His support of the losing side didn't go unnoticed among the
victors. As President-elect Donald Trump was preparing for a
meeting with tech executives at Trump Tower not long before his
inauguration, he asked strategist Stephen Bannon whether Mr.
Schmidt was "the guy that tried to help Hillary win the election,"
according to someone who heard the conversation.
"Yes," said Mr. Bannon. "Yes, he is."
Google, one of the most powerful players in Washington in recent
years, is now facing the consequences of its lost political clout
-- and is moving mountains to regain it. During the Obama years,
Google held sway with both parties in Congress and members of the
administration. Mr. Schmidt often met with President Barack Obama
at the White House through advisory boards and other events. The
company defeated an antitrust probe by U.S. regulators and secured
favorable rules on net neutrality, online liability and copyright
issues.
Today, the search-and-advertising giant has come under attack
from Republicans on all those fronts, as well as a new challenge
over consumer privacy. Democrats, for their part, are rethinking
their attitude toward regulating the company amid allegations that
Russia used Google and other internet platforms in an attempt to
influence the 2016 presidential election.
For the past two decades, Washington has taken a largely
hands-off role in regulating the internet, helping winners such as
Google and Facebook Inc. grow to spectacular size and influence.
Today, the rise of populist movements in both parties has forced a
reckoning around the concentration of economic power in big
businesses. Populist conservatives are particularly hostile to big
tech, given its size and pervasive influence, as well as its
support for immigration rights and other causes that clash with
their economic nationalism.
"For the populist right, this is a major, major issue of the
2018 election," Mr. Bannon said in an interview. "We're going to
make it a big deal. I can already tell it resonates."
Hearings on Tuesday and Wednesday are scheduled in the Senate on
the Russia issue, in a rare public grilling of the tech giants that
could focus rising concerns. Democratic senators Mark Warner of
Virginia and Amy Klobuchar of Minnesota have introduced a bill
along with Arizona Sen. John McCain, a Republican, that would
require internet firms to disclose the financial backers of
political ads on the internet.
Google, which commented only on specific policy issues, said in
a written statement: "We support efforts to improve transparency,
enhance disclosures and reduce foreign abuse. We're evaluating
steps we can take on our own platforms and will work closely with
lawmakers, the [Federal Election Commission] and the industry to
explore the best solutions."
Google has found that Russian-linked entities bought tens of
thousands of dollars worth of politically motivated ads on its
platform around the presidential election, according to people
familiar with the matter. But, "the further they dig, the more they
come up with," said another person familiar with the matter.
Google executives, including general counsel Kent Walker, met
with Facebook and other tech firms in northern California earlier
this month to map out possible joint strategies to address worries
raised by the hearings, according to a person familiar with the
matter. Tech executives were particularly concerned that
once-friendly congressional Democrats were suddenly criticizing
them. No clear solutions emerged from the meeting, the person
said.
Google's rivals in old-line media companies are encouraging this
new scrutiny in Washington and have in recent years dubbed their
effort "Project Goliath," according to emails among the companies
that were hacked and posted online in 2014. Some companies have
criticized the way Google surfaces news stories, including News
Corp, owner of The Wall Street Journal.
Telecom AT&T Inc. suggested it might accept some legislation
that Google opposed, and lobbyists for software company Oracle
Corp. held a series of briefings behind the scenes for Capitol Hill
aides and reporters designed to show how much information Google's
Android phones collect.
One of the primary reasons for Google's political muscle in
Washington has been its ability to forge ties, particularly with
Democrats. After working closely with the Obama administration to
craft technology policy, Mr. Schmidt threw his full support to Mrs.
Clinton early in the campaign.
"He's ready to fund, advise, recruit talent, etc.," Clinton
confidant John Podesta wrote in April 2014, referring to Mr.
Schmidt, in a hacked email that was posted online by WikiLeaks. Mr.
Schmidt "clearly wants to get going," Mr. Podesta said in the email
to Robby Mook, the campaign manager for Mrs. Clinton. "He's still
in DC tomorrow and would like to meet with you if you are in DC in
the afternoon."
Mr. Schmidt personally helped start companies that analyzed
political data and did other election work for Mrs. Clinton. One,
named The Groundwork, was originally based a few blocks from her
Brooklyn headquarters and eventually was paid $700,000 by the
Clinton campaign.
Since the elections, Google has tried make more connections with
the Republicans now in charge. It contributed $285,000 to Mr.
Trump's inauguration. It funded a party to welcome back the
Republican-controlled Congress. Attending the party, held at
Washington's Smithsonian Arts and Industries Building, were more
than 70 members of Congress and other officials, including
political advisers to Mr. Trump.
Within days of the election, Google posted a help wanted notice
for an employee in Washington who could manage the firm's outreach
to conservative organizations, and ultimately hired someone from
the staff of Sen. Ted Cruz, the Texas Republican.
The company also ramped up its public-service events with
members of Congress back home in their districts. Those events,
focusing on constituent-pleasing topics such as online safety for
children and computer-science education, have often involved key
members of committees that are important to Google and its
corporate siblings.
Overall, Alphabet has spent $13.6 million on lobbying this year
as of October, compared with 2016's full year total of $15.4
million, according to lobbying-disclosure records compiled by the
nonpartisan Center for Responsive Politics. Cumulatively over the
past five years, only Boeing Co. has spent more on lobbying in
Washington than Google.
Google and other tech companies also publicly pledged $50
million each to complement a Trump administration effort to
strengthen computer-science education.
Even before Mr. Trump was sworn in Jan. 20, Google faced its
first tough policy challenge of the new era. During the transition,
opponents of the company began pushing to install a Google
adversary, Utah Attorney General Sean Reyes, as the new chairman of
the Federal Trade Commission, which enforces antitrust laws.
In 2016, Mr. Reyes had called for the FTC to reopen a closed
antitrust investigation into Google -- a major threat to the firm,
which controls more than 80% of the business for internet search by
some measures. Earlier this year, European officials imposed a
groundbreaking $2.7 billion antitrust fine on Google for unfairly
steering web searchers to Google's own shopping platforms.
Earlier, Mr. Reyes had joined with a half-dozen other state
attorneys general in battling with Google over what some viewed as
the company's facilitation of internet ills such as online sex
trafficking. The company says it has made extensive efforts to
combat such harms.
Google responded to the threat of potentially unfriendly
policies from Mr. Reyes by engaging a squadron of GOP lobbyists to
press the incoming Trump administration not to name him to the
position, and instead pick another candidate who was viewed by some
as more Google-friendly, according to several people familiar with
the matter. The lobbyists argued that if Mr. Reyes were tapped, the
company would flex its muscles in the Senate to block his
confirmation.
"Google plays hardball beyond what most companies are willing to
do," said Jon Bruning, the former Nebraska attorney general who was
part of the battle against Google. Google's effort helped keep Mr.
Reyes from being nominated, according to people familiar with the
matter.
President Trump recently named another candidate for the job,
seasoned antitrust lawyer Joseph Simons, a former FTC competition
official during the George W. Bush administration. The White House
announcement emphasized Mr. Simons's aggressive antitrust
enforcement record.
"We're looking forward to collaborating with Chairman-nominee
Simons...on a range of important issues that matter most to
consumers, including combating online fraud, staying safe online,
and fighting scams that impact our users," a Google spokeswoman
said.
As it its lobbyists fought to take down Mr. Reyes, a new
challenge emerged over consumer privacy -- key for a company that
makes the bulk of its money selling targeted advertisements based
on data they collect about consumers' online behavior.
The Obama-era Federal Communications Commission in late 2016
created rules that tightened consumer-privacy rules for cable and
wireless companies such as AT&T and Comcast Corp., which
provide internet connections and are trying to challenge Google's
dominance in online advertising.
The FCC rules gave internet firms such as Google or Facebook,
which operate under the generally friendlier rules of the FTC, a
potentially huge advantage over telecoms, in the view of many
experts.
In March, Republicans in Congress rolled back the FCC's 2016
privacy rules. Online consumer activists, which congressional
Republicans viewed as allies with internet firms, protested.
Within weeks, Rep. Marsha Blackburn (R., Tenn.), who chairs a
House subcommittee with jurisdiction over the internet, proposed
new legislation that would effectively reimpose the Obama-era
privacy rules, but on all the firms, including Google and other
internet companies.
Google and its allies launched an all-out lobbying blitz to
block Ms. Blackburn's legislation. "The act undermines the business
models of all companies that provide online services and threatens
the widespread availability of free services that provide enormous
benefits to Americans," Google said in talking points distributed
to conservative allies.
The bill so far hasn't been scheduled for a vote.
On Friday, the Republican chairman of the House Energy and
Commerce Committee, Rep. Greg Walden of Oregon, raised questions on
online opinion website Medium about consumer privacy and the
business practices of tech companies, including Google. He said he
plans a series of hearings in coming weeks that are "just the
start" of an effort to "illuminate how Americans' data is being
used online, how to ensure that data is safe, and how information
is being filtered to consumers over the web."
A similar battle has been playing out over tech-friendly rules
from the Obama era on net neutrality. The net neutrality regime
could benefit Google and other internet companies at the expense of
AT&T and firms in the telecommunications industry, which
generally own the networks that support the internet. The rules
require the owners of the systems to treat all internet traffic the
same, without blocking, throttling or charging for faster speeds.
Telecom companies have argued the rules were a government overreach
that could choke off investment in networks.
Once Mr. Trump took office, the FCC started the process of
rolling back those rules.
In response, Google and internet firms organized an online "day
of action" for July, in which websites would post information about
unfriendly policies in Washington that they said could harm the
internet and call on users to contact their representatives in
Congress.
In an earlier fight with the movie industry in 2011 and 2012,
Google and the tech industry successfully used the tactic to get
millions of internet users to swamp congressional offices and the
FCC with protests.
Before the planned day of action, aides to Speaker Paul Ryan,
Republican Leader Kevin McCarthy and other Republicans met with
officials from Google, Facebook, Amazon.com Inc. and other tech
representatives. During the generally friendly meeting, a Ryan aide
issued a polite warning: If the internet companies carried through
with their protest, it could endanger relationships with
Republicans in Congress and other legislative priorities, according
to people familiar with the meeting. Among the bills mentioned at
the meeting was Ms. Blackburn's privacy bill, according to the
people.
The day of action went ahead but had little impact on GOP
lawmakers' plans. Some activists said participation by big tech
firms appeared muted.
Perhaps the most emotionally charged issue to haunt Google
involves online sex trafficking. Google and other internet firms
have broad immunity under federal law from many types of lawsuits
over items that other people post on their platforms -- even
advertisements that offer children for sex.
In May, Republican Sen. Rob Portman of Ohio teamed up with
Democratic Sen. Richard Blumenthal of Connecticut to work on a
measure that would curb the immunity when it comes to sex
trafficking. The bill would allow victims to hold internet
companies liable for such content on their platforms in some
circumstances.
Google officials, worried any carve out from the immunity law
would open the door to more exceptions and lead to a rash of
frivolous lawsuits, sought to get Mr. Portman to back off his
legislation. The company dispatched a lobbyist who used to work for
Mr. Portman to meet with the senator's chief of staff.
At the meeting, on July 19, a Google lobbyist told the Portman
chief of staff the company opposed the legislation and would defeat
it, according to lobbyists who spoke to the Portman aide about the
meeting.
The Portman aide countered that Google could hurt its reputation
by opposing it. The Google lobbyist said Mr. Portman would be seen
as a villain trying to regulate the internet. The meeting left a
bad taste, Mr. Portman's chief of staff later told the
lobbyists.
Messrs. Portman and Blumenthal introduced the bill the next
month with more than 20 co-sponsors. A spokesman for Mr. Portman's
office didn't comment on the meeting and said he was confident that
the Senate would pass the bill.
More recently, Google has changed its strategy. Susan Molinari,
Google's vice president for public policy, said recently in a blog
post that Google has "a long standing commitment to eradicating
human trafficking." She said it had proposed amendments to Mr.
Portman's legislation that would give victims and survivors the
right to civil litigation and enable prosecutors to hold bad actors
accountable for their crimes.
--Natalia Drozdiak contributed to this article.
(END) Dow Jones Newswires
October 30, 2017 12:22 ET (16:22 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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