After Google and Yahoo announced an ad partnership in June, letters from consumer groups and advertising associations poured into government...
After Google and Yahoo announced an ad partnership in June, letters from consumer groups and advertising associations poured into government regulators, urging them to support or block the proposed deal.
Among the complaints were letters from several farm groups, including the National Association of Farmer Elected Committees and the National Latino Farmers and Ranchers Trade Association. They said that because farmers use the Internet, they worried about a Google-Yahoo monopoly.
The farmers may have had another reason, too. Rudy Arredondo, the chief executive of the Latino Farmers, confirmed that his group got involved in the issue after talking to lobbyists at the Raben Group.
The Raben Group received $30,000 this spring to lobby against the deal — from Microsoft, which unsuccessfully tried to buy Yahoo last spring.
Most Read Business Stories
- 6 Dr. Seuss books won't be published for racist images
- Amazon sued by Black cloud-computing manager over alleged racial discrimination and sexual harassment
- The penthouse atop Smith Tower is on the rental market for the first time
- Frontier cancels flight, citing maskless passengers
- Costco, Whole Foods rise in Greenpeace rankings of grocery chains' plastic use
Behind-the-scenes lobbying is nothing new in Washington, D.C. But the fight over the Google-Yahoo deal shows how much Microsoft, once the piñata of regulators, has learned about operating in that town since its fights during the late 1990s, and how much Google has yet to learn.
The proposed deal would allow Google to sell ads alongside some search results on Yahoo. But because Google dominates the search-advertising market and Yahoo is No. 2, Microsoft and several advertisers argue the partnership could create a monopoly and push up ad prices. Google has said the deal is not exclusive and that the prices are set by auction, so it does not violate antitrust concerns.
A decision from the Justice Department on the deal is expected in the next few days. But Microsoft’s strength in Washington combined with Google’s missteps there may have jeopardized a deal that — because it is a business partnership and not a merger — did not even require Justice approval in the first place.
Lobbyists said Google, which first hired a D.C. lobbyist in 2005, has made several wrong turns. Several suggested Google thought its California spirit alone would charm.
“They’re renowned in this town for not returning phone calls and not showing up to political events,” said a technology lobbyist who asked not to be identified because he occasionally works with both Google and Microsoft.
He noted that Google’s attitude had changed recently — though perhaps too recently to bolster the deal.
After the partnership was announced June 12, Google and Microsoft executives immediately began meeting with industry and watchdog groups, trying to influence their opinion.
Some executives from these groups said Google was unpersuasive. Others groups were surprised at Google’s silence on the issue. “For a fairly large deal, they’ve been quite mum,” said Michael Mothner, whose firm Wpromote buys about $3 million a month in ads on Google for its clients.
Microsoft, meanwhile, was drafting letters and presenting talking points.
“I don’t agree with Microsoft on very much,” said Ed Mierzwinski, of the U.S. Public Interest Research Group, but “there’s no question that there are some serious competition questions.”
In September, the Association of National Advertisers and the World Association of Newspapers said they opposed the deal. In addition, the American Association of Advertising Agencies and the International Advertising Association wrote letters to government officials expressing concern.
Also last month, in a rare move, both the Justice Department and the Canadian body overseeing antitrust matters each hired outside counsel to review the deal.
On Sept. 17, Google CEO Eric Schmidt told reporters his company would begin the partnership in October with or without Justice approval. But he also noted Google had not explained the benefits of the deal clearly.
“I watched that with some amusement because policymakers don’t like to be told that they’re irrelevant, said another technology lobbyist. “Well, they just found out how relevant policymakers are.”
On Sept. 25, more than three months after the deal was announced, Google introduced a Web site explaining its position. Microsoft, by contrast, put up its site opposing the deal on July 15.
This month, Google said it would allow antitrust regulators more time for review before starting the partnership.
A Microsoft spokesman dismissed the notion that its lobbying had derailed Google’s effort.
“Anyone who suggests that lobbying by one party is responsible for the overwhelming opposition to the deal simply isn’t listening to the cacophony of concerns expressed by advertisers, publishers, consumer groups, legal experts and lawmakers,” Microsoft spokesman Jack Evans wrote in an e-mail.
But a Google spokesman had a different take.
“There is no doubt that Microsoft has been the most energetic opponent of this agreement and has worked hard from behind the scenes to generate much of the opposition to this deal,” Adam Kovacevich, a Google spokesman, wrote in an e-mail message.
Google is now extending its reach in Washington in ways big and small.
Over the past few months, it has hired new outside counsel, former members of both the Clinton and current Bush administrations.
It has also created Google policy fellowships, placing students in organizations like the Cato Institute that frequently research policies important to Google.
And it sent executives, including Schmidt, to the Democratic and Republican national conventions to network with bureaucrats and politicians.
All this indicates that Google is learning fast.
Microsoft now sees Washington “as an opportunity to defend their turf,” the lobbyist who works with technology companies said. “They see Washington as an opportunity to create opportunities for the company across the board.
“And the Google people are, I think, learning from that model.”