Google’s Government Conundrum

July 27, 2010

By Kelly William Cobb
Americans for Tax Reform Blog

In a free-market system, it is not the role of government to pick winners and losers in the marketplace.  Yet, today Google finds itself pushing for heavy government regulation of its competitors, while simultaneously lobbying to prevent regulations on itself.

On the one front, Google is heading a major coalition lobbying for so-called “Net Neutrality” rules to regulate the Internet for the first time in history.  The effort would essentially turn private Internet service providers (ISPs) into public utilities, by giving the Federal Communications Commission vague authority to dictate how ISPs manage their networks that comprise the Internet.  A win would solidify Google’s powerful place in the market while undercutting ISPs; it would give Google permission to continue “free-riding” across ISPs networks with the government’s blessing.

Yet, Google now finds itself in the unusual position of fighting back against the government on two fronts.  First, Google is pushing back against the Federal Trade Commission’s absurd project on the “Reinvention of Journalism.”  A draft paper from the FTC last month suggested $35 billion in higher taxes to expand public media and undercut private news outlets.  Amidst this proposal was a tax on news aggregator websites, such as Google News and the Drudge Report.  Google fired back with a letter to the FTC stating: “Regulatory proposals that undermine the functioning of healthy marketplaces and stall the pace of change are not the solution.”  If that’s Google’s principled position, then they should probably abandon their push to regulate the Internet.

Additionally, last week a group of 38 state Attorneys General began a joint investigation into how Google’s Street View cars collected personal information from unsecured wireless networks.  Though it has yet to be shown if Google actually violated the law, a letter from the AGs contains detailed and biting questions.  It has also sparked threat of regulation from Members of Congress concerned about possible privacy violations.

Worse for Google, their strongest non-business ally in the Net Neutrality debate is the neo-Marxist organization Free Press, who views Net Neutrality as “the tip of the iceberg” that merely opens the door to other radical regulations.  Free Press founder Robert McChesney has gone so far to state: “there is no real answer but to remove brick by brick the capitalist system itself, rebuilding the entire society on socialist principles.”  Google has found a partner to help enact Net Neutrality regulations, but soon may find its chickens coming home to roost.  For example, the proposal by the FTC to tax Google News was adopted directly from recommendations by Free Press’s McChesney.

These episodes should remind Google that government and radical progressive groups are less a friend than a foe; that their grand plans for the nation also involve telling you what your grand plans are.  Given the close-knit ties between the FCC and Free Press (e.g., the FCC chairman’s press secretary is the former communications director at Free Press), the threat of regulation beyond Google’s desire is very real.

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