Google Joins The Lobbying Herd

By KATE PHILLIPS

WASHINGTON, March 27 - For a company that takes pride in being the quintessential outsider, Google is moving quickly into the ultimate insider's game: lobbying.

Started less than a decade ago in a Stanford dorm room, Google has evolved into a multibillion-dollar business, its search engine ubiquitous on the Internet. Its sprawling growth, fueled by a public stock offering in August 2004 that created a market behemoth, has now thrust it into the glare of Washington.

As lawmakers and regulators begin eyeing its ventures in China and other countries and as its Web surfers worry about the privacy of their online searches, Google is making adjustments that do not fit neatly with its maverick image.

It has begun ramping up its lobbying and legislative operations after largely ignoring Washington for years, in a scramble to match bases long established here by competitors like Yahoo and Microsoft, as well as the deeply entrenched telecommunication companies.

Google has hired politically connected lobbying firms and consultants with ties to Republican leaders like the party chairman, Ken Mehlman; Speaker J. Dennis Hastert; and Senator John McCain; and advisers say the company may set up a fund-raising arm for political donations to candidates. And in a town where Republicans hold the levers of power, Google has begun stockpiling pieces of the party's machine.

To some, Google is a novice arriving late to the table. To others, the company's embedding on K Street, which serves as home to many of Washington's top lobbyists, represents a new and not necessarily welcome sign of sophistication.

"It's sad," said Esther Dyson, editor of the technology newsletter Release 1.0 and former chairwoman of ICANN, a nonprofit group that administers and largely controls the Internet. "The kids are growing up. They've lost youth and innocence. Now they have to start being grown-ups and playing at least to some extent by grown-up rules."

In doing so, Google provides another example of how Internet companies, no matter how unconventional their roots or nonconformist their corporate cultures, increasingly find themselves wrestling with the same forces in Washington that more traditional industries have long faced. Google's executives consider the moves necessary as they achieve a prominence that allows them to elbow their own interests onto the political stage.

"We've staked out an agenda that really is about promoting the open Internet as a revolutionary platform for communication," said Alan Davidson, brought on board less than a year ago as the company's policy counsel to set up offices in the Penn Quarter area of Washington. "It's been the growth of Google as a company and as a presence in the industry that has prompted our engagement in Washington."

Even as they emphasize policy over politics to raise their profile, Google executives and advisers are also fully aware that they are embracing the lobbying world at a time when it has been rocked by the Jack Abramoff scandal of influence peddling. Some advisers say the company may wait until after Congress decides whether or how to overhaul lobbying laws before it wades more deeply into fund-raising and politics.

With its stock price closing on Monday near $370 a share and its vaulting onto the Standard & Poor's 500 stock index this week, the company also cannot afford to be caught flat-footed by regulatory agencies or its competitors.

"They are brilliant engineers," said Lauren Maddox, a principal in the bipartisan lobbying firm Podesta Mattoon that was hired by Google last year. "They are not politicians."

In signing on Podesta Mattoon and other consultants, Google is spreading its lobbying dollars on both sides of the political aisle, increasing its spending on outside firms this year to well beyond $500,000, officials said, although that does not include its own new office complex or payments to some of the consulting groups being added on. (By comparison, the giant Microsoft spent almost $9 million last year in lobbying, and Yahoo spent more than $1 million for just part of last year, according to partial-year filings compiled by PoliticalMoneyLine, an independent campaign finance Internet site.)

Podesta Mattoon is led by Anthony Podesta, a Democrat, and Daniel Mattoon, a Republican and longtime friend of Speaker Hastert, an Illinois Republican. The speaker's son Joshua also works at the firm, along with Ms. Maddox, a former top aide to Newt Gingrich.

Adding to its arsenal is the DCI Group, a firm with top-flight corporate clients and strong ties to Mr. Mehlman and Karl Rove, President Bush's senior political adviser. DCI, Google officials say, will help it establish links to Republicans, as well as promote its book search project, an effort to make the full text of books searchable online, among publishers and authors.

At the helm of that operation is Stuart Roy, senior vice president of DCI and a former aide to Representative Tom DeLay, Republican of Texas. Mr. Roy also counts as a client Progress for America, the conservative group that successfully rallied grass-roots support for Mr. Bush's Supreme Court nominees.

Ms. Maddox said Google's emerging army of advisers would help it fight fires along several policy lines, including copyright law, access to the Internet and privacy issues like its successful court fight this month to narrow a Justice Department subpoena over disclosure of its users' searches.

"We have a team of Republicans and Democrats who are helping them sort out these issues," Ms. Maddox said, an effort that recognizes that the "policy process is an extension of the market battlefield."

The big Internet companies, including Google, are bracing for an uphill struggle with lawmakers and the titans of the telephone and cable industries over whether fees should be charged for heavy data traffic, like video streaming over broadband width.

"Our belief is that this is going to be an issue of great concern for consumers," Mr. Davidson said. "The telephone companiqqes have been lobbying these committees for generations. Our industry is very young."

Google's political awakening was nowhere more evident than on Capitol Hill last month, when it, Microsoft, Cisco Systems and Yahoo were slammed by Republicans and Democrats alike over business dealings in China. Elliot Schrage, vice president for global communications and public affairs at Google, was lashed repeatedly with the company's motto, "Don't Be Evil," as House members accused the corporations of abetting China's government in censoring Internet communications and imperiling the safety of Chinese Internet surfers.

It is an issue that Google and others know will not go away soon. Representative Christopher H. Smith, Republican of New Jersey, and other legislators are demanding that Internet companies be more sensitive when dealing with foreign countries.

"I think they are just going to lobby to spread this yarn that by being there, they're going to spread democracy," said Mr. Smith, who presided at the hearing. "This dictatorship can go on for generations if it's not unchecked."

Mr. Davidson said companies were trying to address the prickly subject. "I think we all said in our testimony that we were serious about trying to work out standards for engaging in countries where these kinds of censorship issues come up," he said.

By some accounts, China may be so radioactive that even a longstanding relationship with Congress would not have tempered that hostile reception. But "the lack of a presence is what they recognized needed to get remedied fast," said Harry W. Clark, managing partner of the Stanwich Group, who has just been hired as a management consultant for Google. A veteran adviser to Internet corporations, Mr. Clark is a tightly connected Republican who worked in the Bush administration and who is now doing volunteer work for Senator McCain, an Arizona Republican.

Google's recruitment of heavy hitters in the nation's capital has not stopped. While it had already retained the firms of Public Policy Partners and Capital Tax Solutions, the headhunter Russell Reynolds Associates is in the midst of a search to fill a senior position alongside Mr. Davidson. Mr. Clark also predicted that Google would name a political director, probably a Republican.

Because some Republicans still view the company as Democratic-leaning, citing the 2004 election analyses that showed nearly all its employees' contributions went to Democrats, the company will be careful, Mr. Clark said, to spread its wealth around.

"The folks I've talked to," he added, "everybody recognizes that the employee contributions were weighted heavily toward Democrats, and they're waiting to see a course correction."

And despite the climate of indictments and investigations that pervades K Street right now, industry experts say Google has no choice but to get into the arena.

Rhett Dawson, president of the Information Technology Industry Council, admonished that lobbying was not "a dirty word." Google, Mr. Dawson noted, "is quickly going through a maturation phase that a lot of companies have gone through that shows it pays to pay attention to Washington or it can hurt you in ways that don't reflect well on you."

He added, "It doesn't have to be a system that makes you embarrassed to talk to your mother about."

Copyright 2006 The New York Times Company

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