Privacy issues tarnish Google's Washington image

Reps. Edward Markey, D-Mass., and Joe Barton, R-Texas, cochairmen of the Bipartisan Privacy Caucus and longtime members of the House Energy and Commerce Committee, don't agree on much. But after Google was caught last month collecting Social Security information from children who took part in its annual doodling contest, the lawmakers set aside their differences. In a scathing joint statement, they called the action "unacceptable."

The rebuke was just the latest in a series from lawmakers in both parties, and it highlights a deeper problem for the online giant: Its star is falling fast in Washington. Long the darling of the technology community, Google had carefully cultivated an image of corporate responsibility with its "Don't Be Evil" motto and its mission "to organize the world's information and make it universally accessible and useful." But in recent years, the company has distanced itself not only from the motto but also the principles behind it, say experts who monitor its business practices.

And members of Congress are noticing. In recent months, they've criticized Google for its proposed acquisition of an online travel-reservations company; a privacy breach involving the collection of unsecured wireless data; and its short-lived effort to circumvent tough new Internet regulations. "There is an awareness that Google just isn't exactly the warm, fuzzy, cuddly, little start-up that everybody loved [and] that we thought it was," said John Simpson, director of the Inside Google project for Consumer Watchdog, a Los Angeles-based nonprofit and fierce critic of the company. "It's such an all-pervasive force in everyone's lives that it's coming under scrutiny--and deservedly so."

Google's presence in Washington has never been stronger. Even though it didn't have a D.C. office until 2008, the company spent nearly $5.2 million on federal lobbying last year, according to the nonprofit Center for Responsive Politics. That amount dwarfs the $2.2 million that Yahoo spent last year and puts Google in a money chase with Microsoft, which shelled out $6.9 million.

Eric Schmidt, who steps down as Google CEO in April but will remain as chairman, is on President Obama's Technology Advisory Council and served as an informal adviser to his presidential campaign. Andrew McLaughlin was head of global public policy before being tapped as the White House deputy chief technology officer in 2009. And Sonal Shah, formerly head of global development, leads the White House Office of Social Innovation and Civic Participation.

Siva Vaidhyanathan, author of The Googlization of Everything (And Why We Should Worry), said in an interview that the Internet giant's pledge of corporate social responsibility "raised our expectations of Google to unsustainable levels" and "blinded people within Google" to the hard business decisions ahead. "Most of Google's problems are a direct result of its hubris," he declared. Google spokesman Dan Martin declined to comment on the

company's evolving image but pointed to a statement on Google's commitment to users and an open Internet.

Vaidhyanathan, a media-studies and law professor at the University of Virginia, said that while Google increased its Washington presence to help douse the kind of regulatory fires now embroiling it, the move inevitably drew more fire--not only from policymakers but also from rivals that consider the company a threat. With Google's expansion into a widening array of businesses, Vaidhyanathan said, "it is making enemies left and right."

"There are very real pressures to do things that are completely bottom-line driven," Simpson added. But Google also has a tendency to push the limits of what regulators might tolerate--such as collecting Social Security numbers from children--because the company surmises that if it gets caught, it can "always ask for forgiveness," he said.

For Google, the problems in policy circles keep mounting. Its proposed acquisition of ITA Software, a company specializing in flight tickets, has drawn close scrutiny from the Justice Department, which is poised to issue a decision any day. Justice already wants to revise or block a settlement that Google reached with authors and publishers to digitize books for the Internet, fearing that the deal allows it to act as a monopoly. Three years ago, Google and Yahoo abandoned an advertising agreement after Justice threatened to derail it.

Meanwhile, a bipartisan duo in the House last month urged the Federal Communications Commission to look into Google's admission a year ago that its fleet of camera-equipped vehicles gathering images for Google Maps also collected private data from unencrypted wireless networks. And in August, Democratic Rep. Anna Eshoo, whose Silicon Valley district in California includes Google's headquarters, criticized the company for an agreement with Verizon designed to sidestep tough network-neutrality rules barring anticompetitive online behavior, even though Google has long championed the cause.

What's more, Consumer Watchdog asked House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., to examine Google's close ties with the Obama administration. It also wants a broader Justice Department investigation of Google along the lines of the years-long antitrust probe of Microsoft, which culminated in a 2002 settlement with the government.

Today, even Google cofounders Larry Page and Sergey Brin seem to acknowledge the change. In 2004, they told investors in a joint letter, "We will be better served--as shareholders and in all other ways--by a company that does good things for the world even if we forgo some short-term gains." But five years later, they struck a different tone. "Google is now a much larger company, and with size comes scrutiny and a certain amount of skepticism. We get that," they wrote in the company's 2009 annual report.

Although Facebook (which topped Google last year as the most visited U.S. site) has triggered concerns about its privacy policies, it has managed to avoid the same kind of congressional scrutiny. But Google's business is now too big and diversified for lawmakers to ignore. If it wants to soothe hackles in Congress, it may have just one place to search: inward.