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.
Though the Internet giant 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 Google and its executives. Unquestionably the president’s most indispensable corporate ally, the terms of Google’s recent antitrust settlement are just the latest example of crony capitalism benefiting the company under the Obama Administration.
An investigation by the FTC found Google to be engaged in activities involving the illegal manipulation of 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.
Google is still facing a litany of cases at the state level–Texas, California, Ohio, New York, and Oklahoma–as well as the European Union. Yet Google 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.
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 on antitrust enforcement when, for instance, spiking the AT&T and T-Mobile merger, took no enforceable action against Google even after finding wrongdoing.
It raises a major ethical conflict when the beneficiary of an agreement with terms so favorable that their propriety is questioned, has such incestuous ties to the very administration granting the dubious arrangement.
Google, and particularly its Executive Chairman Eric Schmidt, have a relationship with President Obama that is too close for comfort. Schmidt has been a top-dollar donor to Obama since 2007, has consulted on his campaigns, and currently serves as a member of the President’s Council of Advisers on Science and Technology. According to press reports, he was offered the post of Treasury Secretary in the second term–but ultimately declined. While holding court as one of Obama’s most trusted and generous confidants, Schmidt has continued to serve as one of Google’s most visible government relations operatives.
Since 2008, there has been a steady flow of cash, personnel, and technology from Google’s California headquarters to the White House. Google employees have given the President over $1.5 million in combined donations. In fact, they were his fourth-largest source of cash in 2008, and in third-largest in 2012. Google’s biggest contribution however was the specially-designed technology, not yet available to the public, that allowed Obama to connect with voters in ways his opponents could not.
The sad truth is that this settlement is just the latest, amid a long line of examples, in what has emerged as the cornerstone of Google’s Obama-era business model: break the law, or make the law, in a way that shackles opponents, while boosting their own bottom line – without suffering any real consequences.
While Google scratched Obama’s back, the favor has been returned in spades. It has happened with “net neutrality” regulations and rigged spectrum auctions being pushed through at the FCC, and in addition to this latest settlement, the DOJ’s voluntary 2011 settlement with Google over additional illegal advertising practices.
Some conservatives 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, like Halliburton, should play by the same rules as everyone else.
Erik Telford is the Vice President of Strategic Initiatives & Outreach at the Franklin Center for Government and Public Integrity.