President Obama’s reelection was a triumph of Big Data, technological innovation, and precision targeting over the usual gravity of an incumbent president with a record of economic failure. This was facilitated by largest data trove in the world, Google, lending talent, expertise, and quite possibly data to the cause. Now, Google CEO Eric Schmidt is being rumored as a potential Commerce Secretary or even Treasury Secretary — the top economic policy position — in Obama’s second term. That’s probably far-fetched, but the close relationship between the administration and Google deserves scrutiny.
Obama reportedly met Google CEO Eric Schmidt for the first time in a 2007 campaign event at Google’s headquarters. That was the event where Obama famously said: “I will take a backseat to no one in my commitment to Net Neutrality.” It was music to Schmidt’s ears because net neutrality regulations were the company’s top rent-seeking priority: a legal guarantee they could continue to consume a massive portion of consumer broadband capacity without being asked to pay for it.
The idea of regulating the Internet was basically dead on arrival in Congress, but Obama’s close friend Julius Genachowski jammed it through on dubious legal grounds on a 3-to-2 party-line vote at the Federal Communications Commission. The order is likely to be struck down in court next year.
Google’s top lobbyist, Andrew McLoughlin, was installed as the top tech policy staffer in the White House, where he proceeded to breach ethics rules by maintaining regular contact with his former Google colleagues and conducting his official business from a Gmail account. Ironically, his misconduct came to light because of one of Google’s many privacy failures, a bug that accidentally revealed private information on Google Buzz.
Schmidt also reportedly pressed the Obama campaign, through economic adviser Jason Furman, to make a major push into green jobs, a sidelight business of Google’s. We know how poorly that turned out, with new bankruptcies and scandals breaking every week or so.
There are other reasons to be wary of Google, which has largely built its business by expropriating other people’s property, monetizing it, and then settling if caught.
It was that way from the beginning, when Sergey Brin and Larry Page wrote: “advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers” — but then proceeded to pilfer patented search ad technology from GoTo. They eventually settled for over $300 million with Yahoo, which had acquired GoTo’s intellectual property.
It was that way when Google tried to scan millions of books without permission from authors and later tried to legitimize this grab after-the-fact by inking a licensing deal with publishers that would automatically sweep in authors. That deal was struck down in court.
It was that way when Google got caught red-handed facilitating the sale on counterfeit pharmaceuticals, not only facilitating the theft of intellectual property but also directly endangering safety by bringing potentially dangerous fake drugs into the country. Google forked over $500 million to the Department of Justice to settle the charges.
Yet the Obama administration embraced Google wholeheartedly, conducting the president’s first video address on YouTube, doing Google+ chats, and tailoring procurement requests towards Google’s cloud-based products.
Unsurprisingly, when the Obama team set out to take on the Herculean task of using data and technology to overcome the president’s economic record, they went to Google. According to BusinessWeek, Obama campaign manager Jim Messina looked to Schmidt as a mentor. Messina explained: “For three hours we sat in a conference room, and he just gave me advice about all the mistakes he’d made, about purchasing supply chains, about HR, about the blocking and tackling of growing fast and making sure you have organizational objectives.”
Schmidt’s role went beyond advice. He acted as a facilitator, connecting Messina with the top talent that became the campaign’s vaunted data team, and led a team of top Silicon valley executives who advised Messina on setting up the campaign’s data infrastructure. On election night, Schmidt was seen smiling in the room with Obama’s data team.
Now Schmidt, the CEO of a company with a record of ruthlessly expropriating what it wants, is in a position to be rewarded even more in Obama’s second term.
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