Crony Capitalism: The Love Affair Between the Obama Administration and the World’s Creepiest Company

by Ken Boehm

A major Internet company is under investigation by more than 30 state attorneys-general for alleged wiretapping violations.  In Europe and now Texas that same company faces anti-trust inquiries on whether it unfairly penalizes its competitors, and its operations face criminal wiretapping inquiries throughout Europe, as well as in Australia and South Korea.

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Yet, inside the Beltway, it’s business as usual.  The Obama Administration plans to award the company a sweetheart, no-bid contract for satellite imagery and access to classified data.  After protests, the Administration backtracks, allowing other companies to bid, but still intends to award the contract to the company.  According to industry sources the total spending in that segment on intelligence outsourcing in 2009 was $161 billion.  This is no small contract.

Surprising? Then how about this: This same company’s executives were among the Obama campaign’s largest contributors. Its CEO stumped for candidate Obama, while he and other senior executives ponied up $150,000 to help pay for the inaugural celebration.

But, it gets even better: The CEO and another senior company official serve as technology advisors to the Administration on issues that directly impact their company.  The company’s senior lobbyist has had multiple secret meetings with senior officials at the National Security Council. Meanwhile, the company’s former top Washington lobbyist now works in the White House overseeing national policy over issues on which he used to lobby.

Is it Halliburton? Exxon? Boeing?  Nope.  The company is Google, the CEO is Eric Schmidt and the joke is on us.

Google Goes Creepy

Even on the most sweltering of dog days at Washington DC’s Maine Avenue Wharf Fish Market you’d have trouble finding something that stinks this bad.

And somewhere between Google’s pricey Mountain View, CA headquarters and its swanky Washington, DC lobbying center, there’s plenty of stink.  After all, this is a company that made  $24 billion last year by effectively snooping and analyzing the online habits of billions of consumers worldwide, and is now aggressively getting into the federal contracting business with some of our nation’s most secretive government agencies.  So much for openness and transparency.

At its core, Google’s business model is, and always has been, to amass, analyze, and sell as much information about you as it can.  It tracks you across the Internet.  It watches your house.  It records your Internet searches.  It keeps this information on massive computer server farms across the U.S. and uses it to predict your likelihood to buy things or go places.

In fairness, most people are unaware of the price they must pay for free services such as a Gmail account or software for a smart phone. In theory, there’s nothing wrong with a person voluntarily trading some privacy for personalized ads to get a free or discounted service.

But in Google’s case, it has gone well beyond serving personalized ads.  In a very short time, the company has developed a reputation for practices that violate even the most casual customers’ expectation of privacy. Back in 2007, this cavalier attitude was revealed in an independent survey of the privacy policies of major online companies.  According to a Privacy International survey that probed more than 20 global companies (AOL, Yahoo, MySpace, LinkedIn, Skype, etc.) on their protection of customers’ sensitive personal information — Google was the only company to receive the group’s lowest rating.  The survey found that Google was involved in “comprehensive consumer surveillance” and had an “entrenched hostility to privacy.”

Then, last December, Schmidt showed his true colors, giving this creepy assessment of his customers’ privacy: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”

In May of this year, Google revealed that its Street View cars had been collecting sensitive personal information from unencrypted wireless networks all over the world – a privacy violation of Orwellian proportion.

And then this month, the creepiness factor went stratospheric when Schmidt quipped to a British newspaper, “I actually think most people don’t want Google to answer their questions. They want Google to tell them what they should be doing next.”

Feel better?

Obama’s “Halliburton”

Google’s “entrenched hostility to privacy” is troubling enough.  But its close partnership with the White House as well as its growing and secretive partnerships with the federal government’s alphabet soup of spy agencies is downright frightening.

With each passing day, Google is rapidly becoming to the Obama Administration what Halliburton was to the Bush Administration:  A symbol of appalling corporate coziness and crony capitalism. This, in an Administration that promised “change we could believe in”, and from a company that touts its commitment to “openness and transparency” at every turn.

After all, throughout 2008, candidate Obama blasted the “revolving door” of lobbyists joining the federal government, writing rules that impact their former companies, and then rejoining those companies.  The Obama-Biden campaign platform could not have been any clearer:

“No political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years.”

Only four months into the Administration, that promise was abandoned as Google lobbyist Andrew McLaughlin was brought on board as the White House Deputy Chief Technology Officer in charge of Internet policy.  As Fortune magazine wrote last year, McLaughlin’s direct responsibilities would allow him to “shape policy that affects Google’s rivals.”

And shape he did.  This spring, a Freedom of Information Act (FOIA) request uncovered dozens of email conversations between Mr. McLaughlin and his former Google colleagues.   The emails from McLaughlin’s private Gmail account were a treasure trove of policy shaping to benefit Mountain View and penalize its rivals.  Mr. McLaughlin was officially “reprimanded” for his conduct with a slap on the wrist and continues to work in the White House as the official in charge of the Administration’s Internet policy.

Just as troubling, Google is in a flat-out sprint trying to squeeze anti-competitive deals through pliant Obama regulators as fast as possible while their influence is strong and before the November 2 election which could see a shift in the balance of political power.  Google just got FTC approval to acquire AdMob, their biggest threat in the mobile advertising space, and recently announced a $700 million transaction for control of ITA Software, the company that powers the online travel industry. Online travel is the single biggest driver of Internet commerce – accounting for 40% of all online purchases.  Then there’s a slew of “smaller” pending purchases including Metaweb, Slide.com, Like.com and Jambool.

Who can forget those no-bid contracts to companies like Halliburton during the Bush Administration.  Or the controversy over domestic eavesdropping.  Or the ethics scandals over White House emails. Those were three separate and distinct controversies that dogged the Bush Administration for years.  But in just two short years, the current Administration and just one company (Google) are now embroiled in all three.

The disturbing record regarding Google’s conduct and the Obama Administration’s apparent willingness to look the other way, and in fact reward Mountain View with cozy access and no- bid federal contracts, should not be partisan.   Every American should be concerned about such a cozy relationship, especially when it involves an on-line company as dominant and with such an abysmal privacy record as Google. The fact is that were Google an individual it would never get a security clearance in the first place, and if it had one it would have long since been yanked.

The good news is that even while Congress sleeps, there are those on both the right and left that recognize the dangers.  For evidence, check out this segment on the liberal Democracy Now website that features Amy Goodman, a darling of the progressive movement, and Consumer Watchdog’s John Simpson.  Both are up in arms – and rightfully so — over Google’s latest bit of creepiness; a joint Google-CIA investment project called “Recorded Future” that monitors websites, blogs and Twitter accounts to “assemble actual real-time dossiers on people.”

Recently, Google’s Schmidt raised eyebrows with a comment that young people increasingly might need to start changing their names upon reaching adulthood to escape their youthful past. The irony is remarkable coming from the head of a company who has the world’s largest database of your personal online activity at his fingertips, an extraordinarily close relationship with the White House, and increasingly, a willingness to partner with the most secret agencies of our government to monitor who knows what… or whom.

Even more remarkable is that Schmidt did not appreciate the irony that is increasingly so obvious for everyone else to see.

Ken Boehm is the Chairman of the National Legal and Policy Center, a Falls Church VA-based organization promoting ethics in public life through research, education, and legal action.


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Posted Sep 8th 2010 at 7:37 am in Culture, Federal Spending, News, Obama, Politics, Regulation, Technology | 699 Comments